As we know, in Islamic banking, the risks inherent in it are different from the risks that inherent in conventional banking. In Mudharabah, there are many type of risks that inherent in the management such as credit risk, equity investment risk, liquidity risk market risk and others. As for example, the risk that inherent in credit risk is the risk that the counterparties failed to meet their obligations in making or taking the delivery of the asset and also receive the payment has been delayed. While, the risk in the equity investment risk is risk of profile which is the conditions stipulated record and the quality of the business plan and the management, and human resources which engage in business activities. In addition, in the liquidity risk, the ability of repayment strongly warranted as every time the supplier has the right fund for which they may withdraw their funds back.
Mudharabah contract is a contract which involving two parties and fund providers mudharib of an agent which with their own business acumen in providing the management. In this contract, profit sharing ration is agreed upon in advance and capital losses will be borne by the financier. In the case of deposit products, it refers to the profit-sharing agreement between the bank (mudharib) and depositors (financier) for the bank to invest the funds of depositors to generate the profits.
There are two ways in which Islamic banks will be involved in Mudharabah contract. First, the contractual relationship between the bank and its customers is based on the principle of Mudharabah and the bank will act in its capacity as mudharib after customers open an investment account. And secondly, Islamic banks can also be the capital provider where they wil...
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...ts or liabilities. While there are core deposit rolled over and will not be volatile, but provide a cushion is an important thing for Islamic banks. Moreover, the deposit that remaining the uncertainty cannot easily be matched with short-term liquid assets except other than cash and assets other low returns.
Finally, after understanding the concept of mudharabah, as we realized there are many types of risks that arise at any time in any contract in Islamic banking. However, risk management therefore also has their own roles to mitigate it. In addition, Islamic banking operations also are mostly different from conventional banking. Each of risk that occurs will have their own solution to reduce the risks. So, all the shareholders, depositors and others must take a note and be aware of how to reduce the risks that their face as described in the above discussion.
Salomon is a company in the manufacturing business that specializes in ski and snowboard equipment. Recently there have been a number of machine malfunctions and problems with the manufacturer machines that cause major delays in the production process. This is a problem because customers’ expectations and the demand for products have to be met and on time. If this problem were to continue we would lose business and would not be able to meet the production needs. Our CEO for Salomon has requested me to write a report on what I believe is the best way to solve this problem in order to improve production time and prevent delays from reoccurring.
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