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“RISK MANAGEMENT COMPARISON OF ISLAMIC AND CONVENTIONAL

BANKS IN PAKISTAN”

TABLE OF CONTENT
Contents
ABSTRACT........................................................................................................................1
Acknowledgments..............................................................................................................2
Chapter 1: Introduction......................................................................................................3
Background........................................................................................................................3
Research Statement..........................................................................................................5
Purpose of study................................................................................................................5
Objective............................................................................................................................5
Significance of the study....................................................................................................5
Chapter 2: Literature review..............................................................................................6
Risks Management in conventional banks........................................................................6
Risks Management in Islamic bank...................................................................................9
Risks Management comparison of Islamic and conventional banks...............................12
Chapter 3: Methodology..................................................................................................15
Methodology....................................................................................................................15
Sample selection.............................................................................................................15
Data collection and Questionnaire...................................................................................16
Data analysis...................................................................................................................16
Reliability of the measures..............................................................................................17

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Chapter 4: Analysis..........................................................................................................18
Awareness of the Risk managers about various type of Risk of the Bank along with
measurement level..........................................................................................................18
Awareness of the different type of the risk identification technique plus it measurement
level..................................................................................................................................23
Exercise of different risks management technique and the frequency of the uses.........26
Awareness regarding risk mitigation approaches & acceptances level..........................29
Awareness of risk mitigation techniques & measurement...............................................31
Attitude of management towards risk management practices........................................33
Conclusion.......................................................................................................................35
References.......................................................................................................................36
Annexure - Questionnaire................................................................................................39

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ABSTRACT
The study was conduct to find out the comparison of Risk management
practices of Islamic and conventional banks operating in Islamic Republic of
Pakistan. Close ended questioner is used for data collection which covers the
following aspects; awareness and measurement level of risk and risk
identification techniques, risk mitigation approaches, and risk mitigation
techniques, use of risk management techniques and management attitude
toward practices regarding risk management. Data is collected from ten
banks and one respondent from the risk management department from each
of the selected banks. Frequency tabulation is use for the analysis and
Cronbach’s alpha is use for reliability of the collected data. Finding of the
study was that there is difference between the two banking system
awareness regarding different kind of risk, risk identification techniques and
risk mitigation techniques and approaches. Islamic banks are less aware as
compared to conventional banks. And difference found in the use of
mitigation techniques also. Islamic banks use only traditional techniques and
conventional banks use advance techniques beside the use of traditional
techniques. Islamic banks staff are not that much qualified like conventional
banks. The research is beneficial for fund manager, depositor and especially
for Islamic banks.

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Acknowledgments

All praise is due to Almighty “ALLAH”, the most merciful and the most
beneficent, WHO bestowed upon us health, power of communication and
opportunity to successfully complete our undergraduate studies. Countless
salutation is upon the Holy Prophet “Hazrat Muhammad” (Peace Be upon
Him), the most perfect and torch of guidance and knowledge for humanity as
a whole.
We feel honored to express our sincere gratitude to Mr. Muhammad Kamran
for his supervision, guidance and encouragement throughout this research.
We always found him very much alive, full of zeal, vitality and intellectual
curiosity. Without his ideas, remarks and endless interest this work could not
have been carried out and completed.

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CHAPTER 1: INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Risk management is one of the building blocks for banking sector. Now a
day’s all the banks are facing different kind of risk because of the volatility in
the environment such as liquidity risk, credit, market, interest rate and
foreign exchange risk so such kind of risks create difficulties in the successes
and

survival of the

banking sector. Risk management efficiency is

absolutely required .Carey (2001) says that risks management is very
essential for financial institution as compared to other part of the business
environment. The main function of the financial institution is to maximize the
revenue as well as increase the value of the share for shareholder by
providing different financial services and take care of the risk. As we know
that risk is able to be classified into unsystematic and systematic risk.
Systematic risk is related with on the whole economy and on the other side
unsystematic risk is associated with specifically firm or assets. Some part of
systematic risk can be compact not completely eliminate with the use of
transmission techniques and mitigation strategies. According to Santomero
and Oldfield (1997) suggest three strategies of mitigation. Avoid or remove
risk by simple business particles; Transfer risk toward the other participant;
Manage risk actively at the bank level.
The global survey conducted by economist intelligence unit in 2010 whose
findings were based on to examine how the financial institutions are going to
strengthen their risk management in response to global crisis. Fixing the risk
management and quality improvement of data helps to strengthen their risk
management to global crisis are the results of that survey. Moreover the
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1. Initially financial organization meet regulatory requirement for risk measurement and they were wrong to think meeting regulatory requirement is the only solution for risk management.survey suggests that forty % of the respondent are knew that significance of risk management is commonly understood throughout their organization and suggestion was to build and improve the culture of the risk management. Risk is viewed from 2 dimensions.1 RESEARCH STATEMENT To investigate Comparison of Risk Management Practices between Islamic and conventional Banks in Pakistan. And depositors are also not bound to share the risk on the other side the profit and loss will be share which mean share the risk. Because of one system is totally dependent on interest and other one is totally independent. In interest free economic system the concept of risk is also different. Practices of the risk management are widely investigated throughout the world but in the emerging banking sector like in Islamic bank system is very small or approximately zero. 7 . Therefore the researcher needs to find out the gap between both the Islamic and non-Islamic system operating in Islamic republic of Pakistan in term of risk management practices. In the practices of risk management there are mainly three aspects risk identification. All these aspects are different in interest based banking system and interest free banking system. In Islamic Republic of Pakistan Islamic banking is also important part of the economy and also in the development stage. risk measurement and mitigation of the risk. Gharar (uncertainty) is prohibited and there will be freedom in contract. In interest based economic system there are no restrictions. The effect of 2008 financial crisis was on both financial and non-financial sector and because of this every organization want to increase risk management practices.

2010 ). Level of risk management practices along with different methods of identification and mitigation of risk. Attitude of bank personnel toward risk management practices. In the study determinants of problem loan during 1985-1997 were compared take into account together individual bank-level and macroeconomic variables. portfolio composition. 1. The Gross domestic product growth rate. rapid past credit or branch spreading out.1.3 OBJECTIVE To find out the awareness of banks employee facing various types of risk and management techniques. size. family indebtedness. 1.2 PURPOSE OF STUDY The purpose of the study is to compare risk management practices of interest based and interest free banking operating in Islamic republic of Pakistan. then in 2 nd stage being financial manager we assessed that identified risk in 3 rd stage we measured that risk and then managed that risk for creating economical value are called financial risk management.4 SIGNIFICANCE OF STUDY The analysis and Results of the study is useful for banking sector especially for Islamic banking operating in Islamic Republic of Pakistan and also helpful for the future study. Chapter 2: Literature review Risks Management in conventional banks The process by which we first of all identified the risk. Salas &Saurina (2002)conducted study on credit risk in Spanish savings and commercial banks in which they contributed by providing policy guidance from their study that examined the risk of credit in Spanish banks. firms. (Jorion. 8 .

Linbon (2004) conducted a study on risk versus efficiency in large banks of United states of America. because of changes in asset-liability management practices. He found that most of the Korea commercial Banks are facing both exchange rate and interest rate risk. capital ratio and net interest margin are variables that clarify credit risk. the banks will pay them high deposit rates. The outcomes showed that improvement in financial management and risk management practices are very important in support of booming liberalization. deposit insurance increases risk taking if Banks are competing for deposits only. market power. He found from his study that LTD ratio had maximized over the period studied. Wetmore(2004) checked out the relationship between loan-to-deposits ratio and liquidity risk of a large commercial bank. He found that profitability of a bank is responsive to credit risk along with solvency risk and not responsive to liquidity risk and with the investment. Suggestions are bound to increase essential bank administrative policy issue. Exercise of bank level variables such as before time notice indicators and the role of bank competition and personal responsibility in determining credit risk. which are extensively linked by the efficiency of Korean Banks. Otherwise. Ninima¨ki(2004) mentioned in his article that the attitude of the investor to risk depending on the structure of the bank in term of risk management. He also shows that credit policy and the degree of interest rate are the factors. And concludes that from his study that there is always positive relation between loan-to-deposit and market risk 9 . Ham(2004) has conducted study on exchange risk and interest rate of Korea. On the other side.inefficiency. He says that bank efficiency depends on profit creation and its relationship with risk of those banks. He also found that if the banks are competing in loan market only than the deposit insurance effect on risk will be zero.

According to the result of the study. The main aim of this study was to measure the quantity to which the United Arab Emirate banks exercise practices of management along with their techniques to deal with different kinds of risk and the second aim was to weigh against the practices of risk management between national and foreign banks of United Arab Emirate. Al-Tamimi. the diverse world has proven to help global portfolios. risk management practices. credit score. Empirical results of the study suggested that foreign exchange risk is a high priced. the study as well shows the commitment of the United Arab Emirates commercial banks. risk assessment and analysis. collateral and risk rating. These results suggest that exchange rate risk Taiwanese investment includes valid seek international diversification Tamimi (2002) examines the extent to which commercial banks in the United Arab Emirates use technical risk management in the treatment of various types of risks. to use the most modern techniques of risk management. 1st part covers 6 aspects which are understood risk and risk management. risk monitoring and risk identification and first component include close ended forty three questions on an interval base. and risks facing the sample banks. which are to deal with risk identification. credit worthiness analysis. credit risk analysis. The 2ndpart is based on an ordinal scale and consists of two questions. According to this study the main technique used in risk management to establishment of standards. A study showed check up by the financial statement analysis and branch manager were the main methods used to identify risks. In this study the authors developed questionnaire and divided into 2 parts. The 10 . & Al-Mazrooei(2007) examined one of the good studies about risk management in which they compared the risk management practice of the national and foreign banks of United Arab Emirate. In addition. the commercial banks of United Arab Emirates were suffering from credit risk.Yang(2004) conducted a study on world diversification and foreign exchange risk. The Committee suggested the implementation of a conservative credit policy.

They found that there is a general understanding of risk management and risks of employees in the unit for risk management of commercial banks in Pakistan. Especially the United States require a lot of time to restore their economies with serious regulatory changes. which were operating risk. which was a self-destructive thoughts that such a loss for the world economy 11 . Risks Management in Islamic bank Literature suggested that different methods of risk management in financial institutions are the need of the time. Result showed that there is a significant difference between the practices of risk management of United Arab Emirate Foreign and National Banks. shortly after the financial crisis of the world in the last decade faced.findings of the study were three kinds of risks faced by the United Arab Emirate commercial banks. differences in relation to the identification and management of risks in various banks and financial institutions and organization before and during the crisis. The foreign exchange risk is essential because Pakistan is part of the global market and spills of international financial crises. Each of the independent variable individually regressed dependent on RMP show encouraging results. and risk identification and risk assessment and analysis are the most influencing variables in risk management practices. and mostly Foreign Exchange risk. The main types of risks: Foreign exchange. Shafiq & Nasr ( 2010 ) examine the study about risk management practices of commercial banks of Pakistan. liquidity and credit risk. The study shows that the majority of the daily work they do are risky by nature. operational. such as currency fluctuations and inflation affect Pakistan banks drastically. interest rate. Many analysts after the crisis. credit risk. In terms of efficiency United Arab Emirate banks is very efficient in managing risk.

prevention. However. we need to pull together the two dimensions of risktaking without any permission and information of contract without acceptance of Islamic law. not only.Risk Management defined the need to identify the important risks. Bai 'Salam refers to a tangible product (e. The reason for such a rule. Nevertheless. For example. and transfer through the calculation of risk-weighted return and appropriate control procedures risk situation of the company. where the supplier is to deliver a product. but not in the position of the product means the contract invalid. if the object is in its essence non-existent at the time of the contract. if the goods do not exist at the time of concluding the contract. taking risk is based on educate analysis and understandings of risks that are inevitably present whereas gambling create a risk that would be nonexistent. the gambling is a zero sum game and do not contribute to the development of the economy. better the importance of risk reduction. For banks. the contractual obligation of the supplier. Bai Salam and Istisna'a as the delivery address of the object. The Quran. the one and only guide line for 12 sour the Muslim . In Islamic theory. the contract will be valid in certain specific cases. the gambling is forbidden in Islam. pursue cultural and monitor the best risk-reward ratio. the term risk is also common. (Usmani. To understand this concept of Islamic standpoint. for example. the method of measuring the risk of the development of consistent and accurate. agricultural products). the regulatory response is not essential to avoid bankruptcy or financial harassment. 2002) Sharing risk is the primary concern of the Islamic financial system. Uncertainty regarding the facts should by contractual arrangement results suspects are covered.g. it is certain that at the time of contract and Istisna'a "relate to the construction or manufacture. but also the economic development through the creation of value. risk measurement and management. For example. Bank staff requires reliable identification. which directs the distribution of the risk. it brings risks. but which are detailed specification for engineers.

while liquidity risk has statistically insignificant relationship with size and profitability of Islamic banks in Pakistan. This study aims to examine the determinants of firm’s level risk liquid listed Islamic banks in Pakistan. leverage and profitability are the important factors to the liquidity risk of Islamic banks are to be defined in Pakistan. leverage. Alielgari ( 2003) argues that the concept of risk of a jurist in their studies of the theory identified the Contract has nothing to do with the concept known to risk in modern financial Studies. This study found that the three main types of risks that Islamic banks Brunei Darussalam face are foreign exchange risk. verse 219 Sura Al-Ma'ida verse 90) gambling or game of chance referred to inArabic as maysir. some Practitioners of Islamic finance as a reference to the risk in the jargon of the financial world. & Naqvi. as shown in these verses (AlBaqara. (2011) conducted a study on liquidity risk of Islamic bank.community prohibit us clearly from gambling. The results show that age. Ahmed. Banks as intermediary try to manage the supply and demand of liquidity for making good relation with stakeholder and run the business activity safely. we have our own Theory that relates the unique concept of risk from an Islamic perspective. profitability. tangibility of assets. Hassan (2009) conducted a study on risk management practice of Brunei Darussalam and the aim of this study was to determine the extent to which Islamic banks of Darussalam use practices for risk management (RMP) and techniques with different types of risk. the liquidity risk is being used as the dependent variable. We should take great advances in study of risk and technical risk management in the financial sector. he concluded that However. It also found that Islamic banks 13 . because when lawyers refer to some "at risk" Contracts and make the viewpoint Shariah perspective unacceptable. Ahmed. To this end. That is not true. while the age. operating risk and credit risk. In this study. and size are used as independent variables. This distinction is important.

credit risk analysis. Networking capital . In addition. Standardized questionnaire is used covers six aspects which are understand risk and risk management. Return on Equity and Size of the firm with the management of liquidity risks in interest based and interest free banks in pakistan. Four year of Secondary data is used in this study.are very efficient in managing risk where RAA and RI are the most influencing variables in RMPs. Khalid & Amjad (2012) conduct the study about the practice of risk management and techniques deal with different kind of risk in interest free banks of Pakistan. risk monitoring and risk identification. i.This article describes the significance of theReturn on Assets (ROA). The objective of the study was that the liquidty risk associated with solvency of Banks for the purpose of to find out the management of liquidty risk via compartive analysis of interest based banks and interest free banks. & Sadaqat (2011) examined the compartive study about liquidty risk management of both the convetional and islamic banks. risk management practices. 14 . In both model the study had given positive but insignificant relationship of networking capital to net assets & size of the banks with risk of liquidity. capital adequacy ratio in interest based banks is found to be positive and significant at 10% significance level on the other side return on assets in interest free banks is found to be positive& significant at 10% significance level. interest free banks in Pakistan are efficient in managing risk where understanding risk management. Capital Adequacy. According to conclusion of the study. Risks Management comparison of Islamic and conventional banks Akhtar. The results show evidence of efficiency in the treatment of credit risk Islamic banking system in Brunei Darussalam. risk management and credit risk management are the most influencing variable in risk management practices of Islamic banks in Pakistan. risk assessment and analysis. Ali.e 2006-2009.

For healthy growth of interest free banking system many suggestion were put forwarded for mitigation of the rate of return. assets and credit growth and external evaluations in a group of countries where the 2 banks Islamic and conventional have a significant market share. Additionally. the Islamic banks have been differently affected than conventional bank. risk management practices by the degree to which managers are implicit to be determined risks and risk 15 . Hussain & Al-Ajmi (2012) argued in the study of risk management practices of the interest based and interest free banking systems in Bahrain. risk analysis and risk management.Zainol &Salina (2010)conducted a study to find out the dynamic effects of change in interest rate changes on the rate of return of interest free banks and the of deposits in the interest based banks and interest free banks. they proved that credit. the outcome of the have significant implication on practices of risk management of interest free banks of Malaysia. while weaknesses in risk management practices in some Islamic banks led to a larger decline in profitability in 2009 compared with conventional banks. In addition. Factors associated with Islamic banks business model has "helped. and the classification of appropriate risk assessment.The impact of the global crisis 2008 on profitability. The reason of this paper was to give experimental support for risk management Practices of banks operating in Bahrain. Hasan & Dridi (2010) examined comparative study between interest based and interest free banking system during the global crisis 2008. For the control of risk they have credit scrutiny and practices regarding risk management. According to their analysis. Banks working inside Bahrain are found to have a very plain understanding of risks and risk management. liquidity and operational risks they have different approaches to the main risks for nonIslamic and Islamic banks. In addition. Negative impact on profitability in 2008.

Islamic banks were considerably different as compared to the conventional banks. The finding of the study were that there is difference between the two sets of banking system regarding awareness of risk. ( 2010) conducted comartive study on practices regarding risk management of in interest based and interest free banking system oparating in Bangladesh. Different levels of risk countered by interest free banks were drastically superior to the degree of risk faced by conventional banks. liquidity risk and operational risk and outstanding resolution are to be found advanced in Islamic banks than conventional banks. And the reason was not good enough loan recovery. understand the risk and risk management. risk monitoring and risk assessment analysis. Huq.management. awareness of mitigation techniques and uses of mitigation techniques. Sample selection There are 17 privates conventional banks are operating in Pakistan and for the study take as sample five conventional Banks of 17 banks and in Pakistan 16 . the country risk. Select sample of 14 banks seven Islamic and seven non Islamic banks and one respondent select from every bank for the collection of data. credit risk analysis. Now days there are only five full-fledged Islamic banks operating in Pakistan so that’s why the study select five private conventional banks out of 17 for maintaining the balance between both of them. & Rahman. Similarly. well-organized risk recognition. lack of information regarding risk. Azad. Chapter 3: Methodology Methodology There are five private conventional and five Islamic banks are selected for data collection. identification of risk.

The selected five full-fledged Islamic Privates banks are. & Rahman. 1 Bank Alfalah limited 2 Habib Bank limited 3 United bank limited 4 Faysal bank limited 5 Allied bank limited Data collection and Questionnaire Primary data is used for data collection structure closed end questioner is used for the study. 1 Meezan Bank. risk measurement and risk mitigation practices. 2010 and questioner contains 103 closed ended questions design on ordinal and nominal scales and these questions are based to understand three aspects of risk management practices: understanding risk and risk management. risk identification. Questioner is take from the study of Huq. risk assessment and analysis. Only privates banks are selected because full fledge Islamic public banks are not yet establish in Islamic Republic of Pakistan.only five full-fledge Islamic banks are operating in Pakistan For comparison of risk management practices five full-fledge Islamic banks are selected and for keeping the balance five conventional are also selected and that selection of conventional was based on random sampling method. 3 Dubai Islamic Bank 4 Dawood Islamic Bank 5 Al-barka Islamic Bank Interest based or conventional banks are. 2 BankIslami Bank. Azad. Person involved with risk 17 .

management activity from each of the selected bank is required for data collection.7) is up to standard (Nunnally. The questionnaire consists of 103 questions and the reliability among them is (.736 103 18 .736) which is good result mean acceptable Reliability Statistics Cronbach's Alpha N of Items . 1978). Coefficient greater or equivalent to (0. Use of frequency table is very common beside the frequency table correlation analysis is also part of the analysis of the study. (or consistency) it is not a statistical test. With the use of Cronbach’s Alpha measuring of error is not a difficult task actually Cronbach’s Alpha is simply coefficient of reliability. Data analysis Cronbach’s alpha is used for evaluating reliability through this deviation will be measured of the answers of respondents within a scale. Reliability of the measures For measuring the internal consistency of the question the researcher need Cronbach’s Alpha.

sharia noncompliance risk and price risk there is huge difference between the two different banking system awareness and also little bit difference exist in foreign exchange risk. There is same awareness of Investment/Credit. 2010 Table 01: Awareness of different types of risk faced by respondents 19 . Operational/ Performance. Azad. Liquidity. Environmental and Rate of Return Risks but regarding other type o risk like interest rate .Chapter 4: Analysis The outputs of the questionnaires are sub sectioned in the following heading Awareness of the Risk managers about various type of Risk of the Bank along with measurement level Table 1 communicate that there are little differences between the two set of the banks as regards the understanding of different types of risks. & Rahman. These results are almost same like the pervious study Huq.

Risk Techniques Islamic Banks % Conventional Banks Credit Risk/ Investment Risk Liquidity Risk Interest Rate Risk Foreign Exchange/ Currency 5 5 0 4 100 100 0 80 5 5 5 5 Operational 5 100 5 Risk Performance/ Risk Environmental Risk 5 Rate of Return Risk 5 Shari’a non-compliance Risk 5 Price risk 1 Type of Highly Only Risk Aware Neutral 100 100 100 20 Unaware Not at all 5 5 1 5 aware Aware Islami convention Islami convention Islami convention Islami con c al al al c al Credit Risk/ 100 c c 100 Investment Risk Liquidity 80 100 20 Risk Interest 100 20 Rate Risk Foreign 20 100 Performance 60 100 60 20 Exchange/ Currency Risk / Operational 20 20 20 .

about performance risk 60 % are highly aware. as regard environmental and rate of return risk 40 % are highly aware. But in case of interest rate risk Islamic banks are not aware at all and about price risk the entire respondent are only aware.Risk Environment 40 100 40 al Risk Rate of 40 40 Return Risk Shari'a non. & Rahman. Liquidity risk is in Islamic banking is 80% are highly aware and remaining 20 % neutral. Foreign exchange risk awareness level is 20% highly aware. Which shows that in Pakistan the awareness level is very high as compared Bangladesh Islamic banks especially in sharia non-compliance risk 100 % of the respondent are highly aware Table 1. The awareness level in pervious study Huq. Which mean that they have nothing to do with sharia noncompliance because this the risk for Islamic banking system and not for interest based banking system. On the other side of the coin the level of awareness are very high about all type of risk except sharia non-compliance risk in which they are not aware at all.2 communicate that there is deference in level of awareness also between the two sets of banks except credit risk or investment and sharia non-compliance which is same both of the sets are highly aware. (2010) is low as compared to the finding of this study.100 20 compliance Risk Price risk 100 Table 1.2: Level of awareness of respondents as regards various risks: 21 20 . Azad.

(2010) As a result. performance and environmental risk and in case of price risk 40 % of respondent are highly concerned regarding different type of risks. The results are almost same like the pervious study in Bangladesh by Huq. Table 2: Concernedness of the respondents regarding various types of risks Type of Highly Only Neutral Risk Concerned Concerned Isla conve Isla conve Isla mi ntiona mi ntiona c l c l Credit 10 100 Risk/ 0 20 20 Invest ment Risk Liquidit 80 22 80 Not Not at all Concerned Concerned conve Isla conve Isla conve mi ntiona mi ntiona mi ntiona c l c l c l . And thus our hypothesis is proved in our study. 20 % of respondent are highly concernedness about Foreign exchange. In interest based banking system all respondents are highly concerned about credit risk and interest risk and 80 % respondents are highly concerned about liquidity risks. 60 % of Islamic respondents are involved in environmental and rate of return risks. H1 There is a difference as to the awareness and concernedness of the different kind of risks by interest based and interest free banks. & Rahman. Azad.Concernedness regarding different types of risks The table (2) results shows that there is also difference between the two systems of banks about concernedness of various type of risks. For Islamic banks all the risk managers are highly concerned about credit risk which is same like conventional banking system and liquidity risk concernedness is also same both of the systems 80 % of respondent are highly involve and remaining are only concerned.

y Risk Interes t 100 10 Rate 0 Risk Foreign 20 40 60 80 20 80 Exchan ge/ Curren cy Risk Perfor mance / Operat ional Risk Enviro 60 20 20 80 Rate of 60 20 20 60 20 nment al Risk 20 20 Return Risk Shari'a 10 non- 0 compli ance Risk Price risk 23 40 60 20 60 20 100 .

inspection by outside experts and scenario analysis in interest based banking are 100 % of respondent are aware. FSA and physical inspection or audit. So this show that interest based banking system are aware about both the traditional and as well as the advance methods of risk identification methods but Islamic banks are aware about traditional but not that much aware about advance tools of risk identification. About SWOT analysis conventional banks respondents are 100 % on the other side 80 % are aware. Regarding process analysis. So all the risk manager of both sets of banks are aware about identification methods mention in the table check up by the risk manager.Awareness of the different type of the risk identification technique plus its measurement level Table 3 communicate about the awareness of respondents of regarding risk identification and measuring level. Table 3: Awareness of the respondents of the risk identification techniques and measurement level Risk Techniques Inspection by Islamic banks the 5 % Conventional Banks % 100 5 100 100 5 100 100 5 100 bank risk manager Audits or physical 5 inspection Financial statement 5 analysis Risk survey 2 40 1 20 Process analysis 1 20 5 100 SWOT analysis 4 80 5 100 Inspection by 2 40 5 100 outside expert 24 .

Benchmarking Scenario analysis Internal 1 20 1 20 4 80 5 100 2 40 4 80 communication According to the result of table 3. (2010). & Rahman. Table 3.2: Level of awareness of risk identification techniques Type of Highly Risk Neutral Unaware Aware by 25 Not at all aware Isla conve Isla conve mi ntiona mi ntiona mi ntiona mi ntiona mi ntiona c l c l l c l l Inspecti 10 on Only Aware 100 Isla conve c Isla conve Isla conve c . Azad. Results are almost same like the pervious study by Huq. FSA and substantial inspection or audit. Regarding remaining techniques of risk identification majority of the respondents in interest bases banking systems are highly aware as compared to interest free banking system like SWOT analysis 60 % of respondents are highly aware in conventional and on the other side only 40 % are highly aware so same difference exist in the remaining techniques also. There is similarity somehow like both sets of banks are highly aware about the mention identification techniques like check up by the risk manager. So with respect of all these result so our 2 nd hypothesis is also proved. H2 There is a variation between the interests based and interest free banks in the practices of risk identification.2 there is difference between the levels of awareness regarding identification methods.

the 0 bank risk manag er Audits 10 or 0 100 physica l inspecti on Financi 10 al 0 100 statem ent analysi s Risk 20 20 60 10 20 20 40 20 60 40 40 40 20 20 survey Process analysi s SWOT 40 60 Inspecti 20 40 40 20 analysi s on by outside expert 26 20 40 20 60 .

As the result show that all the respondents of both sets of the banks use credit rating.Bench 20 20 20 40 20 20 20 Internal 20 40 80 60 20 40 markin g Scenari 20 20 o analysi s 20 60 20 20 commu nicatio n Exercise of different risks management technique and the frequency of the uses Table 4 the result shows that there is also difference between the uses of different management techniques. The use of simulation management techniques is very high in conventional 100 % and on the other side 60 % of the Islamic banks use simulation 27 . All of the respondents of Conventional banks use maturity analysis but in Islamic banking system only 40 % use maturity matching management techniques. For gap analysis 100 % respondents are from Islamic side and 80 % are from the conventional and the same percentages are for stress testing management techniques. In case of duration analysis 100 % of Islamic banks are use but on the other side only 20 % use duration analysis. Using of earning at risk management techniques are same but ratio is very low only 20 % in both of the sets of the banks. 80 % of the Islamic banking industry use scenario analysis and in conventional 100 % are use scenario analysis for management of risk. value at risk. internal based rating system and credit scoring.

The pervious study result differences are difference in case of duration analysis. gap analysis and Credit committee use in Pakistan is very high with comparison of Bangladesh study conducted by Huq. & Rahman. value at risk. (2010) and remaning variable reluts are almost same. Azad.management techniques and the same case for credit committees. Table 4: Use of risk management techniques Type of risk Islamic % Banks Conventional % Banks Credit Ratings Gap Analysis Scenario Analysis 5 5 4 100 100 80 5 4 5 100 80 100 Duration Analysis 5 100 1 20 40 5 100 20 1 20 Value at risk 5 Simulation 3 100 60 5 5 100 100 techniques Stress testing 5 Risk adjusted 1 100 20 4 5 100 100 return on capital Internal Based 5 100 5 100 rating system Credit Scoring Credit 100 60 5 5 100 100 Maturity 2 Matching Earning at risk committees 28 1 5 3 . The use of risk adjusted return is very high (100 %) also in conventional banks and very low only 20 % in Islamic banks.

The results show that the using frequency of both of the banking system is different.In the 2nd table of (4) is regarding the using frequency of the management techniques in the previous table 4.2: Frequency of use risk management techniques Type Mostly used of Frequently Neutral Rarely used used Not at all aware Risk Isla conve Isla conve Isla conve Isla conve Isla conve mic ntiona mic ntiona mic ntiona mic ntiona mic ntional 20 20 Credit 10 Ratin 0 l l 20 80 l l gs Gap 20 20 60 60 40 20 20 20 Analy sis Scena rio Analy 29 60 40 . Results are almost same with Huq. (2010). Table 4. According to the finding our study there is gap between the two sets of so our 3rd hypothesis is also proved H3. There is a gap between the interest based and interest free banks in the understanding of risk and risk management practices. Islamic bank use management techniques most of the time and frequently but in conventional banks is note case like that they are not stuck to frequently or mostly but they rarely use most of the techniques except credit scoring and credit committees mostly use by all of the respondents of the sample. & Rahman. Azad.2.

sis Durati 80 20 20 80 80 80 on Analy sis Matur 20 20 20 20 60 60 20 20 ity Match ing Earni 20 60 40 40 40 80 60 60 40 40 100 80 100 80 ng at risk Value at risk Simul 20 ation techni ques Stress 60 testin g Risk 20 adjust ed return Intern al Based rating 30 20 .

60 % are aware about transferring of risk. Table 5: Risk mitigation approaches Approaches 31 Islamic Banks % Conventional Banks % . transferring and risk retaining approaches and only 20 % of respondent are aware about risk avoidance. sharing. Hence we can say that the conventional banks awareness regarding risk mitigation approaches are more than that of the Islamic banks.syste m Credit 80 100 20 60 100 40 Scorin g Credit comm ittees Awareness regarding risk mitigation approaches & acceptances level In the table 5 the result show that conventional banks are more aware about risk mitigation approaches as compared to Islamic banking system like in conventional all the respondents mean 100 % of the sample are aware about risk reduction. But in Islamic banks 100% of respondents know only the risk reduction approaches 80 % are aware about risk avoidances. 40 % are aware about risk sharing approaches and 20 % are aware about risk retention approaches.

So the the result show that in Islamic banks the respondents are highly agreed to use the risk mitigation approaches and the conventional banks are only agreed to use some of the approaches.2: level of acceptance of various risk mitigation approaches Type of Highly Only Risk Agreed Agreed Isla conve Isla conve mi 32 ntiona mi Neutral Diagreed Highly Disageed Isla conve ntiona mi Isla conve ntiona mi Isla conve ntiona mi ntiona . The result shows that the pervious study results are higher than the study conducted in Pakistan the using risk mitigation approaches.Risk may be avoided 4 80 1 20 Risk may be retained 1 20 5 100 Risk may be 3 transferred Risk may be shared Risk may be reduced 5 60 40 2 5 5 100 5 100 100 In the table 5(b) the result shows that level of use of risk mitigations approach is very high in Islamic banks as compared to conventional banks like in case risk avoidance 60 % of Islamic banks are only agree to use this approach and on the other hand no one use this approach. For risk reduction mitigation approach 80 % of the respondents use in Islamic banks and only 20 % of the respondent use in conventional banks are highly agreed. 20 % of respondent are only agree to use risk retaining approach in conventional banks but not at all in Islamic banks. Table 5. In case transferring and sharing the risks 40 % respondent of the Islamic banks are highly agree to use but no one from the conventional banks.

On balance sheet netting awareness are 80 % in Islamic banks and 40 % in conventional banks.c l c Risk l c l 60 c l c l 20 20 100 20 40 40 40 20 60 20 60 80 20 20 60 may be avoided Risk 20 may be retaine d Risk 40 40 may be transfer red Risk 40 may be shared Risk 80 20 may be reduced Awareness of risk mitigation techniques & measurement Table 6 communicates regarding the awareness of mitigation techniques. Third party enhancement techniques of mitigation awareness are 80 % in conventional banks and 60 % in Islamic banks. Parallel contracts awareness in Islamic banks is 20 % and in conventional the awareness about parallel contract is 100 % which mean that all of the respondents are aware. Both set of the banks are 100 % aware about collateral arrangement. loan loss reserves and guarantees of mitigation techniques. 33 .

Along with the whole consequence shows that the interests free banks are less aware regarding the risk mitigation techniques as compared to the non-Islamic banks. Table 6: Awareness of respondents about risk mitigation techniques Risk Techniques Islamic Banks % Conventional Banks % Collateral 5 100 5 100 60 4 80 100 5 100 80 2 40 100 20 5 5 100 100 80 5 100 Arrangement Third party 3 enhancement Loan loss reserves On balance sheet 4 netting Guarantees Parallel contracts Over the 5 5 1 Counter 4 derivatives Table 6. Third party enhancement is highly use in interest free banks as compared to interest based banks along with the same case is for loan loss reserves highly use in interest free banks as compared to interest based banks.2 communicate the level of using the risk mitigation techniques.Over the counter derivatives techniques of mitigation awareness is 100 % in conventional banks and 80 % in Islamic bank. The using level of on balance sheet netting conventional is neutral and from 34 . All the respondents highly use collateral arrangement in conventional banks and in Islamic 80 % of the respondents highly use collateral arrangement.

2: Level of using specific risk mitigation techniques Type of Highly Risk Neutral Not Used Used Not at all Used Isla conve Collater Only Used Isla conve Isla conve Isla conve Isla conve mi ntiona mi ntiona mi ntiona mi ntiona mi ntiona c l c l l l c l 80 100 20 40 20 20 60 20 20 40 20 20 60 40 20 c c al Arrange ment Third 20 party enhanc ement Loan loss reserve s 35 . Results are almost same with the pervious study of Huq. & Rahman. The uses of guarantee in Islamic is very high all of the respondent use it and on the other hand conventional banks are using it neutrally. Azad. So the results suggest that Islamic banks are not that much aware about risk mitigation techniques as compared to interest based banks but the interest free banks using level of risk mitigation techniques is more than that of conventional banks which show that Islamic banks need high awareness about all these techniques. (2010). Parallel contract are highly use by interest free banks as compared to interest based banks.Islamic side majority of respondents are not uses on balance sheet netting. Table 6.

So its mean that the Islamic banks 36 . In case of liquidity from Islamic banks all of the respondents are highly positive but on the other hand conventional banks management are not that much positive about liquidity risk management. 20 % Islamic banks management attitude toward foreign exchange risk are highly positive and conventional banks management attitude toward risk management is not that much positive. In case of interest rate conventional banks are positive to manage it for Islamic there is no need of interest rate management because they are not based on interest they run interest free banking system. The entire respondent of both of the banks attitudes toward credit risk is very high.On 40 20 60 40 20 20 balance sheet netting Guarant 10 ees 0 Parallel 20 100 100 80 contrac ts Over 20 60 80 60 the Counter derivati ves Attitude of management towards risk management practices Table (7) communicates about the management attitude toward the following types of risk. Islamic banks management are highly positive for performance risk 80 % of the respondent are highly positive on the other hand 20 % are only positive for performance risk .

With the comparison of pervious study difference occurred in case of foreign exchange risk in Bangladesh the management attitude toward foreign exchange risk is high as compared to Pakistan. Table 7: Attitude of Management towards risk management practices Type of Highly Only Neutral Risk Positive Positive Isla conve Isla conve Negative Highly Negative Isla conve Isla conve Isla conve mi ntiona mi ntiona mi ntiona mi ntiona mi ntiona c l l l l l Credit 10 100 Risk 0 Liquidit 10 y Risk 0 Interest c 60 20 20 40 c c c 20 40 Rate 10 0 Risk Foreign 20 40 60 20 40 20 20 80 Exchan ge Risk Perform ance Risk 37 80 20 .management are more highly positive towards risk management practice and on the other hand conventional banks management attitude are not that much highly positive toward risk management practices like Islamic banks. Other results are same.

Islamic banks need qualified staff also for risk management department because majority of them are unaware about the advance techniques. In case of the approaches of risk mitigation the finding of the study conclude that the conventional banks awareness regarding risk mitigation approaches are more than that of the Islamic banks. Islamic banks also need awareness regarding approaches of risk mitigation. Islamic banks are not that much aware about risk mitigation techniques also as compared to conventional banks but the Islamic banks using level of risk mitigation techniques is more than that of conventional banks which show that Islamic banks need high awareness about all these mitigation techniques. They are not aware actually otherwise Islamic banks use the risk mitigation approaches more than that of the conventional banks.Conclusion The finding of the study concludes that there is variation between the two systems in term of awareness of risk identification. 38 . mitigation and management techniques. The Islamic banks management is more highly positive towards risk management practice and on the other hand conventional banks management attitude are not that much highly positive toward risk management practices like Islamic banks. which shows that management of Islamic banks want to manage their practices of risk but they need awareness and for the need of such awareness they need qualified staff and on the other hand conventional banks management need to focus also on the practice of risk management for the survival in the market. For risk identification conventional banks are more aware than Islamic banks and conventional banks use advance techniques for risk identification beside the traditional techniques of risk identification and on the other hand Islamic banks use only traditional techniques for identification of risk and they need to come up with the advance techniques which is beneficial for future because banking industry is develop with passage of time and such traditional techniques lead them to failure.

Z. “Effective risk management in financial institutions: the Turnbull approach”. (2007). 1–4. Liquidity Risk Management  A Comparative Study between Domestic and Foreign Banks in Pakistan. Espan. Q. a. Vol. H. 3. (2011). JH 2004. (n.. 203–224. (2002).1108/15265940710777333 Ashraf. (n. Finance India. Applied Economics. Banks’ risk management: a comparison study of UAE national and foreign banks. &Sadaqat. I. & Khan. (2011). 8(4). doi:10. 13. 16 No. 24-7. Vol. A 2001.). A.References Abdullah. H.d. (2002). S. N.d. (1998). Liquidity Risk Management : A comparative study between Conventional and Islamic Banks of Pakistan. Al-Tamimi. pp. The Journal of Risk Finance. B. 394–409.. Balance Sheet. “Risk management practices: an empirical analysis of the UAE commercial banks”. Ahmed. Al-Tamimi.. Liquidity Risk and Islamic Banks : Evidence from Pakistan. Vol. & Al-Mazrooei. Examining the prudence of Islamic banksA risk management perspective.35– 44. “Interest rate and exchange rate exposures of banking institutions in pre-crisis Korea”. 9 No. 99–102. pp. H. Carey. M. 140919. & Ahmed. F. 3. pp. 39 . 1(2001).). Credit Risk in Two Institutional Regimes : Spanish Commercial and Savings Banks.. A. 36 No. K. Hahm. 1045-57. M. Akhtar.. Ali. F. De.

(n. 10(1). “Risk management in financial institutions”.. Sloan Management Review. &Saurina.S. V. 67–79. A. Journal..)..d. The Journal of Risk Finance.. Linbo FL 2004. Managerial Finance. 1–20. 1-19 Niinima¨ki. Risk management practices of Islamic banks of Brunei Darussalam. A.1108/15265941211229244 Ismat. & Al-Ajmi. (2002).. 3. The Journal of Risk Finance. V. 308–325. Salas. Issue.) 2010. S. A. & Nasr. (n. M. G.1108/15265940910924472 Hussain. “The effects of competition on banks’ risk taking”.. A. Vol. 81 No. A. 215–239. 39 No. Oldfield. The Journal of Financial Services Research. 199-222. 9. 7(2). & Gee. Vol. Shaikh. Centre for Policy Initiatives ( CPI ) Off-Balance Sheet Activities and Performance of Commercial Banks in Malaysia. Huq. “Credit risk in two institutional regimes: Spanish commercial and savings banks”... 22 No. International Review of Business Research Papers Risk Management Practices Followed by the Commercial Banks in Pakistan Shafiq& Nasr. &Rahman. Shafiq..(2004). 6(2). H. 13(3). Risk Management in Banks-A Comparative Study of Some Selected Conventional and Islamic Banks in Bangladesh. doi:10. A. 30 No. &Santomero. pp. S. (2010). (1997). “Efficiency versus risk in large domestic US”. Azad. A. M. pp. 33-46. Z. A. A.M. Journal of Economics. 3. Vol.-P. 203-16. J. (2009). Risk Management in Islamic and Conventional Banks A Differential Analysis. doi:10. 1. Risk management practices of conventional and Islamic banks in Bahrain. J. 23–37. pp. K. A. I. (2012). J. (2009). Vol. B. &Jalbani. Abd.d. pp.Hassan. 40 .

(2004). 2. Annexure .Questionnaire “Risk Management comparison of Islamic and Conventional in Pakistan” Zainab Asif Siddiqui &SumairaAltaf City University Of Science And Information Technology. &Sheng-Yung. 755-8.L. J. 11 No. A. pp. 99-107 Wang. world diversification and Taiwanese ADRs”. Y. Vol. “Panel data. 22 No. (2004). Vol. Applied Economics Letters. Questionnaire Respondent Name: Respondent Designation: 41 .T. 12. pp.Wetmore. Peshawar. “Foreign exchange risk. liquidity risk. American Business Review. and increasing loans-to-cor deposits ratio of large commercial bank holding companies”.

Respondent Company: 42 .

Questionnaire Question 1-a: Awareness of different types of risk faced by respondents a) b) c) d) Risk Techniques Credit Risk/ Investment Risk Liquidity Risk Interest Rate Risk Foreign Exchange/ Currency Islamic □ □ □ □ Conventional □ □ □ □ e) f) g) h) i) Risk Performance/ Operational Risk Environmental Risk Rate of Return Risk Shari’a non-compliance Risk Price risk □ □ □ □ □ □ □ □ □ □ Question 1-b: Level of awareness of respondents as regards various risks Highly Aware Only Aware Neutral Unaware Not Isla Conven Isla Conven Isla Conven Isla Conven aware Isla Conven mic □ tional □ mic □ tional □ mic □ tional □ mic □ tional □ mic □ tional □ ent Risk b) Liquidity □ □ □ □ □ □ □ □ □ □ Risk c) Interest □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ a) Credit at Risk/ Investm Rate Risk d) Foreign Exchang e/ 43 all .

Currenc y Risk e) Perform □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ of □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ ance/ Operatio nal Risk f) Environ mental Risk g) Rate Return Risk h) Shari’a noncomplia nce Risk i) Price risk 44 .

Question 2: Concernedness of the respondents regarding various types of risks Highly Only Neutral Not Not Concerned Isla Conven mic □ Concerned Isla Conven Isla Conven Concerned Isla Conven Concerned Isla Conven tional □ mic □ tional □ mic □ tional □ mic □ tional □ mic □ tional □ ent Risk k) Liquidity □ □ □ □ □ □ □ □ □ □ Risk l) Interest □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ of □ □ □ □ □ □ □ □ □ □ j) Credit at Risk/ Investm Rate Risk m) Foreign Exchang e/ Currenc y Risk n) Perform ance/ Operatio nal Risk o) Environ mental Risk p) Rate Return Risk 45 all .

q) Shari’a □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ noncomplia nce Risk r) Price risk 46 .

Question 3-a: Awareness of the respondents of the risk identification techniques and measurement level (Tick or cross) Risk Techniques Islamic a) Inspection by the bank risk □ b) c) d) e) f) g) h) i) j) manager Audits or physical inspection Financial statement analysis Risk survey Process analysis SWOT analysis Inspection by outside expert Benchmarking Scenario analysis Internal communication Conventional □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ Question 3-b: Level of awareness of risk identification techniques Risk Highly Techni Aware Only Aware Neutral Unaware Not at all aware ques Isla a) Inspecti on Conve Isla Conve Isla Conve Isla Conve Isla Conve mic ntional mic ntional mic ntional mi ntional mic ntional □ □ □ □ □ □ c □ □ □ □ □ □ □ □ □ □ □ □ □ □ by the bank risk manage r b) Audits or physica 47 .

l inspecti on c) Financi □ □ □ □ □ □ □ □ □ □ analysis d) Risk □ □ □ □ □ □ □ □ □ □ survey e) Process □ □ □ □ □ □ □ □ □ □ analysis f) SWOT □ □ □ □ □ □ □ □ □ □ analysis g) Inspecti □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ analysis j) Internal □ □ □ □ □ □ □ □ □ □ al statem ent on by outside expert h) Bench markin g i) Scenari o commu nication 48 .

Question 4-a: Use of risk management techniques Management Techniques Credit Ratings Gap Analysis Scenario Analysis Duration Analysis Maturity Matching Earning at risk Value at risk Simulation techniques Stress testing Risk adjusted return on capital Internal Based rating system Credit Scoring Credit committees Islamic □ □ □ □ □ □ □ □ □ □ □ □ □ Conventional □ □ □ □ □ □ □ □ □ □ □ □ □ Question 4-b: Frequency of use risk management techniques a) Credit Mostly Used Frequently Neutral Rarely Used Not at Isla Conven Used Isla Conven Isla Conven Isla Conven used Isla Conven mic □ tional □ mic □ tional □ mic □ tional □ mic □ tional □ mic □ tional □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ Rating s b) Gap Analys is c) Scena rio Analys is d) Durati on Analys is 49 all .

e) Maturi □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ at risk h) Simula □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ ty Matchi ng f) Earnin g at risk g) Value tion techni ques i) Stress testin g j) Risk adjust ed return 50 .

Question 5-a: Risk mitigation approaches Management Techniques Risk may be avoided Risk may be retained Risk may be transferred Risk may be shared Risk may be reduced Question 5-b: Level Islamic □ □ □ □ □ of acceptance Conventional □ □ □ □ □ of various risk mitigation approaches Highly agreed Risk Only agreed Neutral Disagreed Highly Isla Convent Isla Convent Isla Convent Isla Convent Disagreed Isla Convent mic □ ional □ mic □ ional □ mic □ ional □ mic □ ional □ mic □ ional □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ may be avoide d Risk may be retaine d Risk may be transfe rred Risk may be shared 51 .

Risk □ □ □ □ □ □ □ □ □ may be reduce d Question 6-a: Awareness of respondents about risk mitigation techniques Collateral Arrangement Third party enhancement Loan loss reserves On balance sheet netting Guarantees Parallel contracts Over the Counter derivatives 52 Islamic □ □ □ □ □ □ □ Conventional □ □ □ □ □ □ □ □ .

used Isla Convent Not at all used Isla Convent mic □ ional □ mic □ ional □ mic □ ional □ mic □ ional □ mic □ ional □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ netting Guarant □ □ □ □ □ □ □ □ □ □ ees Parallel □ □ □ □ □ □ □ □ □ □ s Over the □ □ □ □ □ □ □ □ □ □ Collater al Arrange ment Third party enhance ment Loan loss reserves On balance sheet contract Counter derivativ es Question 7: Attitude of Management towards risk management practices Highly Positive Only Positive 53 Neutral Negative Highly .Question 6-b: Level of using specific risk mitigation techniques Highly used Isla Convent Only used Isla Convent Neutral Isla Convent Not.

Isla Convent Isla Convent Isla Convent Isla Convent Negative Isla Convent Credit mic □ ional □ mic □ ional □ mic □ ional □ mic □ ional □ mic □ ional □ Risk Liquidit □ □ □ □ □ □ □ □ □ □ y Risk Interest □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ □ Rate Risk Foreign Exchan ge Risk Perform ance Risk 54 .