The document discusses risk management. It defines risk as the possibility of an adverse outcome from an event. Risk management is the process of identifying risks, evaluating their potential impact, and developing strategies to reduce risks. The document provides examples of risk management failures in banks that led to large financial losses. It also discusses how Islamic banks were more resilient during the 2008 financial crisis due to risk management principles in Sharia law that avoid uncertainty and speculation.

1. Hassnian Ali’s modest presentation

2. Life is full of Risks
 One of the core principles practiced by every
living creature is to identify and assess risks
to its existence. It is because every living
creature on this earth is subject to risks.
Without managing risks properly , it is hard
to imagine a peaceful life.

3. Since humans are distinguished from other
living species by their ability to think and
learn, failure to manage risks is
characterized by inability to decide what to
do, when to do it, and whether enough has
been done.

5. Risk is a condition in which there is
a possibility of an adverse deviation
from a desired outcome that is
expected or hoped for.

13. Risk Management is the process of identifying
and evaluating the risks associated with
activities and operations of an organization;
developing a means to control, reduce or
eliminate those risks, as well as finance them.
These risks include natural disasters, illness,
injury, and loss of property resulting from
unsafe practices or conditions as well as the
financial cost of these losses.

15. EXAMPLES OF RISK MANAGEMENT
FAILURES
• Barings Singapore reported SIMEX (singapore mon ex)
trade losses of 850 million (BRITISH POUNDS)
• Brought down the whole bank… In pound.

16.  FX derivative losses of AUD 360 million…
The Traders’ activities were contrary to the NAB’s
strategy. The risk exposure of the currency options
desk to the US dollar increased significantly in late
2003. This exposure resulted in significant losses
when the US dollar fell by some ten cents against
the Australian dollar.

17. US subsidiary All first reported FX
Options trading losses of USD
750 million

18. •
Lack of Management / Board oversight
Weak risk culture
Risk Management function marginalized
Over-reliance on quantitative tools /
methodologies
Poor liquidity management
Lack of relevant internal valuation models

19. The 2008 financial crisis led to
the failure of a large number of
banks in the United States.
The federal development insurance
cooperation (FDIC) closed
failed banks from 2008 to 2012.

20. IS this U.S.A a Super power?

21. • A new IMF study compares the performance
of Islamic banks and conventional banks
during the recent financial crisis, and finds
that Islamic banks, on average, showed
stronger resilience during the global financial
crisis.

22. HOW DID ISLAMIC BANKS SURVIVE?

24. Preparedyourselfbefore facingRisk(riskof
war)
•ْ‫وا‬ ُّ‫د‬ِ‫ع‬
َ
‫أ‬َ‫و‬‫م‬ُ‫ه‬
َ
‫ل‬‫ا‬ َّ‫م‬‫م‬ُ‫ت‬‫ع‬
َ
‫ط‬َ‫ت‬‫اس‬‫ن‬ ِّ
ِ‫م‬ْ‫ة‬َّ‫و‬
ُ
‫ق‬‫ن‬ِ‫م‬َ‫و‬ْ ِ‫اط‬َ‫ب‬ِّ
ِ‫ر‬ْ
َ
‫خ‬‫ال‬ِْ‫ل‬‫ي‬
ْ
َ‫ن‬‫و‬ُ‫ب‬ ِ‫ه‬‫ر‬
ُ
‫ت‬ِْ‫ه‬ِ‫ب‬َّْ‫و‬ ُ‫د‬َ‫ع‬ِْ
ِّ
‫الل‬َّْ‫و‬ ُ‫د‬َ‫ع‬َ‫و‬ْ‫م‬
ُ
‫ك‬َْ‫ين‬ِ‫ر‬
َ
‫آخ‬َ‫و‬‫ن‬ِ‫م‬ْ‫م‬ِ‫ه‬ِ‫ون‬ُ‫د‬ْ
َ
‫ل‬
ُْ‫م‬ُ‫ه‬َ‫ون‬ ُ‫م‬
َ
‫ل‬‫ع‬
َ
‫ت‬ُْ ِّ
‫الل‬ْ‫م‬ُ‫ه‬ ُ‫م‬
َ
‫ل‬‫ع‬َ‫ي‬َْ‫م‬َ‫و‬‫ا‬ْ‫وا‬ ُ‫ق‬ِ‫نف‬
ُ
‫ت‬‫ن‬ِ‫م‬ْ‫ء‬‫ي‬
َ
‫ش‬‫ي‬ِ‫ف‬َْ‫س‬ِْ‫يل‬ِ‫ب‬ِْ
ِّ
‫الل‬
ْ
َّ
‫ف‬َ‫و‬ُ‫ي‬ْ‫م‬
ُ
‫ك‬‫ي‬
َ
‫ل‬ِ‫إ‬ْ‫م‬ُ‫نت‬
َ
‫أ‬َ‫و‬ْ
َ
‫ل‬ْ
َ
‫ل‬‫ظ‬
ُ
‫ت‬ْ
َ‫ن‬‫و‬ ُ‫م‬‫۔‬
• And, (O Muslims,) muster up as much might as you can
(in the form of weapons and equipment of war) and (also
formations) of war steeds (i.e. war mounts to combat)
them. Cause terror with this (war readiness) amongst the
enemy of Allah and your enemy, and also those besides
them whose (secret enmity) you know not; Allah knows
them. And whatever you spend in the way of Allah, you
will be paid back in full, and you will not be done any
injustice.

25. CRISIS MANAGEMENT
ْ
ُ
‫ف‬ ُ‫وس‬ُ‫ي‬‫ا‬َ‫ه‬ُّ‫ي‬
َ
‫أ‬ُْ‫يق‬ ِّ
ِ‫د‬ِّ
ِ‫الص‬‫ا‬َ‫ن‬ِ‫ت‬‫ف‬
َ
‫أ‬ِْ‫ف‬‫ي‬ِْ‫ع‬‫ب‬ َ‫س‬ْ‫ات‬َ‫ر‬
َ
‫ق‬َ‫ب‬ْ‫ان‬ َ‫م‬ ِ‫س‬َْ‫ي‬َّْ‫ن‬ُ‫ه‬
ُ
‫ل‬
ُ
‫ك‬‫أ‬ْ‫ع‬‫ب‬ َ‫س‬
ْ‫اف‬ َ‫ج‬ ِ‫ع‬ِْ‫ع‬‫ب‬ َ‫س‬َ‫و‬ْ‫ت‬
َ
‫ال‬ُ‫ب‬‫ن‬ ُ‫س‬ْ‫ر‬‫ض‬
ُ
‫خ‬ْ
ُ
‫أ‬َ‫و‬َْ‫ر‬
َ
‫خ‬ْ‫ات‬ َ‫س‬ِ‫اب‬َ‫ي‬‫ي‬
ِّ
ِ‫ل‬َ‫ع‬
َّ
‫ل‬ْ
َ
‫أ‬ُْ‫ع‬ ِ‫ج‬‫ر‬‫ى‬
َ
‫ل‬ِ‫إ‬
ِْ‫اس‬َّ‫الن‬ْ‫م‬ُ‫ه‬
َّ
‫ل‬َ‫ع‬
َ
‫ل‬ْ
َ‫ن‬‫و‬ ُ‫م‬
َ
‫ل‬‫ع‬َ‫ي‬َْ‫ال‬
َ
‫ق‬ْ
َ‫ن‬‫و‬ُ‫ع‬ َ‫ر‬‫ز‬
َ
‫ت‬َْ‫ع‬‫ب‬ َ‫س‬ِْ‫س‬َْ‫ين‬ِ‫ن‬‫ا‬ً‫ب‬
َ
‫أ‬َ‫د‬‫ا‬ َ‫م‬
َ
‫ف‬
ْ‫م‬ُّ‫دت‬َ‫ص‬ َ‫ح‬ُْ‫ه‬‫و‬ُ‫ر‬
َ
‫ذ‬
َ
‫ف‬‫ي‬ِ‫ف‬ِْ‫ه‬ِ‫ل‬ُ‫ب‬‫ن‬ ُ‫س‬ْ
َّ
‫ل‬ِ‫إ‬ْ
ً
‫يال‬ِ‫ل‬
َ
‫ق‬‫ا‬ َّ‫م‬ ِّ
ِ‫م‬ْ
َ‫ن‬‫و‬
ُ
‫ل‬
ُ
‫ك‬‫أ‬
َ
‫ت‬.َّْ‫م‬
ُ
‫ث‬‫ي‬ِ‫ت‬‫أ‬َ‫ي‬‫ن‬ِ‫م‬
ِْ‫د‬‫ع‬َ‫ب‬َْ‫ك‬ِ‫ل‬
َ
‫ذ‬ْ‫ع‬‫ب‬ َ‫س‬ْ‫اد‬ َ‫د‬ ِ‫ش‬َْ‫ن‬‫ل‬
ُ
‫ك‬‫أ‬َ‫ي‬َْ‫م‬‫ا‬ْ‫م‬ُ‫ت‬‫م‬ َّ‫د‬
َ
‫ق‬َّْ‫ن‬ُ‫ه‬
َ
‫ل‬ْ
َّ
‫ل‬ِ‫إ‬ْ
َ
‫ق‬ْ
ً
‫يال‬ِ‫ل‬‫ا‬ َّ‫م‬ ِّ
ِ‫م‬
ْ
َ‫ن‬‫و‬ُ‫ن‬ ِ‫ص‬‫ح‬
ُ
‫ت‬.َّْ‫م‬
ُ
‫ث‬‫ي‬ِ‫ت‬‫أ‬َ‫ي‬‫ن‬ِ‫م‬ِْ‫د‬‫ع‬َ‫ب‬َْ‫ك‬ِ‫ل‬
َ
‫ذ‬ْ‫ام‬َ‫ع‬ِْ‫يه‬ِ‫ف‬ْ
ُ
‫اث‬
َ
‫غ‬ُ‫ي‬ُْ‫اس‬َّ‫الن‬َْ‫و‬ِْ‫يه‬ِ‫ف‬
َْ‫ن‬‫و‬ُ‫ر‬ ِ‫ص‬‫ع‬َ‫ي‬.

26. • Reaching the prison, he said: ‘O Yusuf (Joseph), the
embodiment of truth, explain to us the interpretation (of
this dream) that there are seven fat cows whom seven
lean ones are devouring and there are seven green ears
of corn and seven others which are dry, so that I may
return to the people (taking the interpretation) and they
may realize (your value and dignity. Yusuf (Joseph) said:
‘You will cultivate as usual consecutively for seven years.
So whatever you reap, keep it (in store) leaving the grains
in their ears except a small quantity (to thresh) for your
(yearly) consumption. Then after this there will come
seven hard years (of drought) which will consume that
(store) which you will have laid up for these years except
a small quantity (which will fall surplus and) which you
will keep in reserve. Then, following this will come a year
during which people will be blessed with (plenty of) rain
and (the yield of fruits will be such as) they will press
juices (of fruits that year).

28. Quranic verse
• RISK MANAGEMNT:
•ََ‫ل‬‫ا‬َ‫ق‬ َ‫و‬‫ا‬َ‫ي‬َ‫ي‬ِ‫ن‬َ‫ب‬ََ‫ل‬َْ‫ا‬‫و‬ُ‫ل‬ُ‫خ‬ْ‫د‬َ‫ت‬‫ن‬ِ‫م‬َ‫اب‬َ‫ب‬َ‫د‬ ِ‫اح‬ َ‫و‬َْ‫ا‬‫و‬ُ‫ل‬ُ‫خ‬ْ‫د‬‫ا‬ َ‫و‬َْ‫ن‬ِ‫م‬َْ‫ب‬َ‫أ‬َ‫اب‬ َ‫و‬
َ‫ة‬َ‫ق‬ِِّ‫ر‬َ‫ف‬َ‫ت‬ُّ‫م‬‫ا‬َ‫م‬ َ‫و‬‫ي‬ِ‫ن‬ْ‫غ‬ُ‫أ‬‫م‬ُ‫ك‬‫ن‬َ‫ع‬ََ‫ن‬ِِّ‫م‬‫ا‬َِ ِّ‫لل‬‫ن‬ِ‫م‬َ‫ء‬ْ‫ي‬َ‫ش‬َِ‫ن‬ِ‫إ‬َُ‫م‬ْ‫ك‬ُ‫ح‬ْ‫ال‬َ‫ل‬ِ‫إ‬َِ ِّ ِ‫لل‬
َِ‫ه‬ْ‫ي‬َ‫ل‬َ‫ع‬َُ‫ت‬ْ‫ل‬‫ك‬ َ‫و‬َ‫ت‬َِ‫ه‬ْ‫ي‬َ‫ل‬َ‫ع‬ َ‫و‬ََ‫ت‬َ‫ي‬ْ‫ل‬َ‫ف‬َِ‫ل‬‫ك‬ َ‫و‬ََ‫ون‬ُ‫ل‬ِِّ‫ك‬ َ‫و‬َ‫ت‬ُ‫م‬ْ‫ال‬(‫يوسف‬،12:67)
•And he said: ‘O my sons, do not enter (the city) all of you by
one gate but enter (dispersed) through different gates. And
I cannot save you by any means from Allah’s (Decree)
because Judgment (Destiny) rests will Allah alone. In Him
have I put my trust, and all those who trust must trust in
Him alone.’

29. •One of them is on a Bedouin Arab
who asked the Prophet Muhammad
on which is better; to leave his camel
untied and ask for the protection of
Allah for his camel, or to tie it. The
Prophet told him to tie his camel first
and then have tawakkal (trust and
dependence) to Allah

30. Holy prophet S.A.W.W message to Abu Umamah.


31. Explanation of Hadith
• 1:Depressed and sad >> confining great potential that God has
given each of His creatures without exception and due to the
narrowness of the heart.
• 2:Helpless and Malas >> kill creativity and productivity as well
as being easily lead against every challenge, likely negative
thinking.
• 3: Cowards & Files >> erode responsibility and fertilizer
egoistic charity
• 4: >> Debts due to style consumerism qonaah and simple
and have priority
• 5: >> Under pressure because of debt service or intimidated
independent, iffah and together with the righteous people

32. Ibn Taimiyyah’s view
• “There is no Shariah evidence to categorically prohibit
all forms of risks. In fact, Allah and His Messenger do
not prohibit all types of risks, or all activities which
are doubtful in terms of whether it is profitable or loss
or safe (neither profitable nor loss)....Instead, the type
of risk which is prohibited concerning consumption of
property in an unjust or wrongful manner. The main
reason for prohibition from Shariah viewpoint is
mainly concerned the unjust consumption of property
even without the element of risk. Risk alone does not
constitute prohibition.."

34. • (Al Nisa,04:29)

35. • (harm must be eliminated)
• Harm should neither be initiated nor
reciprocated‫۔‬
• Harm must be eliminated as much as possible

36. Result : Islamic risk management like
this