Risk Management in Bin Dowal Islamic Microfinance Bank
Bin Dowal Islamic Microfinance Bank believes that effective risk management is an essential element of good governance, protecting the funds of depositors, customers, and shareholders, and maintaining the Bank's soundness, stability, and business continuity. Therefore, the Bank adopts an integrated risk management framework that suits the nature and size of its operations, and is linked to its strategy, objectives, and operational plans, in accordance with the applicable legislation and regulatory instructions of the Central Bank of Yemen and others, the provisions and principles of Islamic Sharia, and best global banking practices.
The risk management framework aims to balance growth, return, and acceptable risk levels, support sound decision-making, and enhance the Bank's ability to face economic, technical, and operational crises and changes, ensuring the provision of safe, responsible, and sustainable Islamic financial services.
•Risk Management Governance
The Board of Directors holds the ultimate responsibility for overseeing risk management, approving the risk management policy, the risk appetite framework and associated limits, and monitoring the Bank's level of risk exposure and the adequacy of actions taken to address them. The Risk Committee reviews material risks, monitors them, and submits necessary recommendations to the Board of Directors, while Executive Management implements approved policies and limits, provides required resources, and integrates risk considerations into decisions, operations, new products, services, and projects. The Risk Management Department works with all risk owners in departments and branches to identify, measure, evaluate, monitor, and report risks, prepare risk registers, early warning indicators, and periodic reports, and monitor breaches and remediation plans.
•Risk Management Scope
The Bank's risk management system encompasses various current and potential risks, most notably financing, credit, default, collection, and concentration risks; liquidity, market, and exchange rate risks; operational risks; IT, cybersecurity, and electronic banking risks; fraud and financial crime risks; compliance, legal, strategic, and reputational risks. The system also covers external parties, agents, and service providers risks; business continuity and disaster recovery risks; risks of non-compliance with Islamic Sharia principles; as well as emerging risks related to economic, social, technical, and environmental changes.
•Risk Management Methodology
The Bank adopts a structured methodology that begins with early risk identification and analysis of its causes, probabilities of occurrence, and its financial, operational, legal, regulatory, and Sharia impacts. It then assesses risk levels before and after applying controls, comparing residual risks with approved risk appetite limits and tolerance levels. Based on evaluation results, the Bank takes appropriate measures to avoid, reduce, transfer, or accept risks within calculated and approved limits, while monitoring the implementation of corrective and preventive measures and verifying their effectiveness. The Bank utilizes risk, incident, and operational loss registers, key risk indicators (KRIs), early warning signals, stress testing, scenario analysis, risk assessment of new products and systems, and business continuity and disaster recovery plans.
•Risk Culture and Sharia Compliance
The Bank works to instill an institutional culture based on integrity, transparency, accountability, and early reporting of errors, incidents, and breaches, emphasizing that risk management is a shared responsibility among the Board of Directors, Executive Management, and all departments, branches, and employees. The Bank is also committed to strengthening the governance, control, and Sharia compliance system, verifying that its products, services, contracts, and transactions are consistent with Islamic Sharia principles, and protecting the rights of customers and stakeholders. Through this approach, Bin Dowal Islamic Microfinance Bank seeks to enhance trust and stability, protect its resources and reputation, support safe and sustainable growth, and actively contribute to achieving financial inclusion and socio-economic development.