Growth in Islamic Finance Spurs Need for New Risk Management Methodologies

    The Banque du Liban and the Global Association of Risk Professionals
    the lead to develop new financial risk management techniques for Islamic

    NEW YORK, LONDON and BEIRUT, Lebanon, Dec. 6 /CNW/ -- The explosive
growth and sophistication of Islamic financial products around the world is
creating the need for new financial risk management techniques and
methodologies.  Due to the unique structure of Islamic financial products,
conventional ways of assessing the risk inherent in these financial
instruments must be approached differently.  Innovative and standardized
methodologies along with a robust educational platform for the Islamic finance
risk management community are now needed.  Two globally recognized
organizations have teamed up to take on this challenge -- the Global
Association of Risk Professionals (GARP: and the Banque du Liban
(  They will jointly develop a first-of-its-kind Certificate
in Risk Management for Islamic Financial Institutions due to be launched in
late 2008.
    The Banque du Liban possesses unsurpassed expertise in Islamic financial
principles, strong relationships with the central banking community throughout
the world, and a strong interest in seeing the formal development of
standardized approaches to Islamic finance.  The Banque du Liban recognized
this need to develop risk management standards for Islamic financial
institutions in order to promote the growth of Islamic finance and to serve
people around the world who desire to invest or transact in Islamic finance
    The expertise on Islamic finance from the Banque du Liban combined with
GARP's proficiency in creating globally accepted standards on risk management
methodologies, such as their globally recognized FRM program, will result in a
benchmark approach to assessing risk around Sharia'a-compliant financial
products. "There will be much input from experts around the world to make sure
we get this right," said Chris Donohue, PhD, Head of GARP's Research Center.
"We will have a Technical Committee that will work on developing the content
for the Certificate and an Advisory Group comprised of Islamic banking and
derivative product experts to give us feedback throughout the process."
    The Advisory Committee will be co-chaired by Dr. Ahmed Jachi, Vice
Governor of Banque du Liban and Dr. Anthony Saunders, Professor of Finance at
New York University's Leonard Stern School of Business.
    As background, the holistic approach to life Islam imposes on individuals
governs their approach to business and financial activities. The basic tenets
of Sharia'a, the part of Islamic Law that covers practices and activities,
dictate that investors cannot engage in transactions that are speculative, pay
interest or involve contractual uncertainty.  In addition, all transactions
must be asset-backed. The globalization of the financial markets and increased
wealth have accelerated the trend of Islamic banking and specialized products
that are Sharia'a-compliant.
    "This growing demand for Islamic financial products is the driving force
for developing the Certificate in Risk Management for Islamic Financial
Institutions," said Dr. Ahmad Jachi, Vice Governor of Banque du Liban. 
"Further growth in the market will be inhibited unless better transparency
emerges and standardized approaches are developed.  We have observed GARP's
success in designing programs for the risk management community that
ultimately become global standards, such as the FRM designation.  Our aim is
to have generally accepted risk management practices among Islamic financial
institutions which will be of necessary use to bankers around the world."
    About Banque du Liban
    The Banque du Liban is the official entity endowed by law to safeguard
the monetary and economic stability of the country and to safeguard the
soundness of the banking sector. It is also entrusted with the general mission
of safeguarding the national currency in order to ensure the basis for
sustained social and economic growth.  The Banque du Liban regulates
conventional and Islamic banks as well as financial institutions in Lebanon.
It is a legal public entity enjoying financial and administrative autonomy. It
is not subject to the administrative and management rules and controls
applicable to the public sector.
    About GARP
    The Global Association of Risk Professionals (GARP) is a not-for-profit
independent association of over 66,000 risk management practitioners and
researchers representing banks, investment management firms, government
bodies, regulatory agencies, academic institutions, and corporations from more
than 167 countries worldwide.  It also administers the Financial Risk Manager
(FRM(c)), the world's premier certification for the financial risk
professional.  GARP's mission is to be the leading professional association
for risk managers, managed by and for its members dedicated to the advancement
of the risk profession through education, training and the promotion of best
practices globally.

    Contact:  Greg Winsper
              Global Association of Risk Professionals
             Phone:  +1-201-719-7240
             Fax:    201.222.5022

    Contact:  First Vice-Governor's Office
             Banque du Liban
             Phone:  +961 1 34 33 01
             Fax:    +961 1 75 00 21

For further information:

For further information: Greg Winsper, The Global Association of Risk 
Professionals, +1-201-719-7240, Fax: +1-201-222-5022,; 
First Vice- Governor's Office, Banque du Liban, +961-1-34-33-01, Fax: 
+961-1-75-00-21, Web Site:        

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