
IFSB-FIS Workshops for Regulatory and Supervisory Authorities – Liquidity Risk Management and Stress Testing Standards
Sasana Kijang, Bank Negara Malaysia Kuala Lumpur, MalaysiaThe forthcoming 2012 IFSB-FIS Workshops, which are catered for the Banking Regulators and Supervisors, will focus on Risk Management issues in Institutions offering Islamic Financial Services (IIFS), with particular attention given to Liquidity Risk Management and Stress Testing arrangements for IIFS. The Workshops will cover the following IFSB Standards and Guiding Principles: • IFSB-12: Guiding Principles on Liquidity Risk Management for Institutions offering Islamic Financial Services. • IFSB-13: Guiding Principles on Stress Testing for Institutions offering Islamic Financial Services. Participation is BY INVITATION only. For more information on the Workshops, please email Mrs. Azizakhon Yarlaeva at [email protected] Programme - Event Session(s) Date Time Topics Day 1 26/11/2012 IFSB-FIS WORKSHOP DAY ONE 09:00 - 09:30 Registration 09:30 - 09:50 Opening Remarks by the IFSB 09:50 - 11:10 Session 1 Islamic Finance: Concept and Contracts and Risk Implications for IIFS Overview of Prudential Issues in IIFS 11:10 - 11:30 Coffee Break 11:30 - 13:00 Session 2 IFSB-1: Guiding Principles of Risk Management for Institutions (other than Insurance Institutions) offering only Islamic Financial Services (IIFS) - Credit Risk & Supervisory Perspective - Equity Investment Risk & Supervisory Perspective - Operational Risk & Supervisory Perspective - Market Risk & Supervisory Perspective - Liquidity Risk & Supervisory Perspective - Rate of Return Risk & Supervisory Perspective 13:00 - 14:00 Lunch & Prayer 14:00 - 15:00 Session 3 Case Studies - Case Studies on Risk Management 15:00 - 15:30 Coffee Break 15:30 - 17:00 Session 4 -Challenges in Liquidity Risk Management from Global Perspective and Implications for IIFS - Significance of liquidity risk management for financial institutions in post-crisis world -The regulatory response to global financial crisis – initiatives of global standard setters and supervisory authorities -Challenges in Liquidity Risk Managements by IIFS -The IFSB initiatives and publications on liquidity risk management of IIFS Day 2 27/11/2012 IFSB-FIS WORKSHOP DAY TWO 09:30 - 11:10 Session 1 Guiding Principles on Liquidity Risk Management of IIFS - Funding and Market Liquidity Risk - Necessary Conditions for an effective Liquidity Risk Management in IFSI - Governance Structure: Role of the Board of Directors and Senior Management - Identification of Liquidity Risk - Interactions of Liquidity Risk and Implications of Islamic Financing Contracts Case Study – 1: Liquidity Risk and Financial Distress in an Islamic investment company 11:10 - 11:30 Coffee Break 11:30 - 13:00 Session 2 Guiding Principles on Liquidity Risk Management of IIFS - Measurement of Liquidity Risk - Diversification of the Funding Base - Consolidated Management of Liquidity Risk - Maintaining High-Quality Liquidity Buffer - Preparing a Contingency Funding Plan - Managing Sharī`ah-Compliant Collateral Case Study – 2: Shari’ah Compliant Alternatives to Repo Transactions – Some practices and initiatives 13:00 - 14:00 Lunch & Prayer 14:00 - 15:30 Session 3 Guiding Principles on Liquidity Risk Management of IIFS - Managing Sharī`ah-Compliant Collateral & Collaboration between IIFS - Meeting Payment and Settlement System Obligations - Foreign Exchange Liquidity Risk - Reporting and Disclosure of Liquidity Risk Case Study – 2: Shari’ah Compliant Alternatives to Repo Transactions – Some practices and initiatives Case Study – 3: Insolvency of an IIFS – Management and Supervision of Liquidity Risk 15:30 - 16:00 Coffee Break 16:00 - 17:00 Session 4 Guiding Principles Liquidity Risk Management for Supervisory Authorities - Responsibility for Supervision of Liquidity Risk & Need for Supervisory Regulations - Supervisors’ Role as Provider of Liquidity Support - Supervision of Liquidity Risk at Consolidated Level Case Study – 4: Supervisory arrangements for Shari’ah compliant Lender of Last Resort and other Liquidity Support to IIFS Experience sharing by Central Bank of Sudan: Instruments and Mechanisms for Liquidity Management of IIFS in Sudan Day 3 28/11/2012 IFSB-FIS WORKSHOP DAY THREE 09:30 - 11:00 Session 1 Guiding Principles Liquidity Risk Management for Supervisory Authorities - Home-Host and Cross-Sector Supervision of Liquidity Risk - Contingency Planning - Supervisors’ Role in the Development of Liquidity Infrastructure Group Discussion – 2: Resolution of Issues in the Management of LCR by the IIFS Experience sharing by Central Bank of Bahrain: Regulatory Framework and Central Bank Tools for Supervision, Monitoring and Support of Liquidity for the IIFS 11:00 - 11:30 Coffee Break 11:30 - 13:00 Session 2 Understanding Stress Testing for Financial Institutions - Stress testing as a risk Management tool - Stress Testing and Global financial crisis - International Guidance on Stress Testing and Gap Analysis - Necessary Conditions For An Effective Stress Testing Regime - IFSB Comprehensive Stress Testing Framework for IIFS 13:00 - 14:00 Lunch & Prayer 14:00 - 15:00 Session 3 Issues and Challenges in Conducting Stress Testing: IMF Perspective - Key Issues in Stress Testing for financial institutions and their supervisors - Overcoming challenges in various stages of Stress Testing - Stress Testing and Financial Stability Perspective - Recent EU and USA Stress Testing Key Results & Implications 15:00 - 15:30 Coffee Break 15:30 - 17:00 Session 4 Guiding Principles on Stress Testing for IIFS - Governance Aspects of the Stress Testing Framework - Identification of Risk Factors and Coverage of Scenarios - Specific Elements of IIFS in Stress Testing - Stress Testing Methodologies FSAP and Stress Testing Day 4 29/11/2012 IFSB-FIS WORKSHOP DAY FOUR 09:30 - 11:00 Session 1 Guiding Principles on Stress Testing for IIFS (Cont’d) - Stress Testing Methodologies - Frequency of Stress Testing - Outputs of Stress Testing and Remedial Actions - Disclosure of the Stress Testing Programme 11:00 - 11:30 Coffee Break 11:30 - 13:00 Session 2 Live Simulations and exercises on: - How to conduct “Micro level (or IIFS level) Stress Testing” - Factors and scenarios to consider for Micro Stress Testing - Exercises/Case Studies on Stress Testing for Selected IIFS - Different IIFS’ portfolios related Stress Testing - Capital Requirements Stress Testing - Credit risk related Stress Testing - Liquidity (i.e. funding and/or market liquidity) Risk Related Stress Testing - Shari’ah non-compliance Stress Testing under Operational Risk - Profitability related Stress Testing 13:00 - 14:00 Lunch & Prayer 14:00 - 15:30 Session 3 Guiding Principles on Stress Testing for Supervisory Authorities - Regular and Comprehensive Assessments of IIFS' Stress Testing - Supervisory Evaluation of an IIFS's Stress Testing Methodology - Designing and