Page 299 - Full Book_24.4.2021

NOTES TO THE
FINANCIAL STATEMENTS in retrospect

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for the financial year ended 31 december 2020 (continUed)
the Will to Suceed

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49 FINANCIAL RISk MANAGEMENT POLICIES (CONTINUED)
49.4 Market risk
Overview achieving a leading repute
all the Group’s businesses are subject to the risk that market prices and rates will move, resulting in profit or losses to the
Group. the following are the main market risk factors that the Group is exposed to: |
• profit Rate Risk: also known as the rate of return risk is the potential impact on the Group’s profitability caused
by changes in the market rate of return, either due to general market movements or due to issuer/borrower specific
reasons;
• Foreign Exchange Risk: the impact of exchange rate movements on the Group’s currency positions; Paving the Way for a Sustainable future

• Equity Investment Risk: the profitability impact on the Group’s equity positions or investments caused by changes
in equity prices or values;
• Commodity Inventory Risk: the risk of loss due to movements in commodity prices;
• Liquidity Risk: the potential inability of the Group to meet its funding requirements at a reasonable cost
(funding liquidity risk) or its inability to liquidate positions quickly at a reasonable price (market liquidity risk). 293
the key features of the Group’s market risk management practices and policies are represented by the banking and
takaful segments.
(a) Banking
bank islam separates the market risk exposures into either trading book or banking book portfolios. trading book
portfolios include those positions arising from market making, proprietary position taking and other marked-
to-market positions as per the bank’s board approved trading book Policy Statements. banking book portfolios adhering to the best Governance Practices
primarily arise from the bank’s profit rate management of the bank’s assets and liabilities and investment portfolio
mainly for liquidity management.
Market risk governance
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Laying the Foundation for Financial Growth
the management of market risk is principally carried out by using sets of policies and guidelines approved by the
bank’s asset and liability management committee (“alco”) and/or brc, guided by the bank’s board’s approved
risk appetite Statement.
the alco is responsible under the authority delegated by the bank’s brc for managing market risk at strategic
level.

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additional information & disclosure Summary

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24 th aGm information