Table III. Quantitative analysis of the... | Emerald Publishing

Table III.

Quantitative analysis of the risks of financing by the format of sale of an asset with the exception of the usufruct as implemented by LARIBA

Main risk	Subsidiary risk	LARIBA’s risk management strategy	Probability of risk occurrence	Risk impact	Risk rank	Evaluation
Credit risk	Risk of non-payment	Lien	1	2	2	Acceptable
Equity investment risk	Risk that capital will be consumed	Rapid exit by selling share right after taking ownership	1	2	2	Acceptable
Market risk	Risk that customer will renege on purchase	Including option of annulment in purchase contract	1	2	2	Acceptable
Liquidity risk	Risk of not being able to convert debt or asset into liquidity	Act as investment agent for GSEs	1	2	2	Acceptable
Rate of return risk	Risk of not being able to increase profit rate during the financing period	Act as investment agent for GSEs	1	2	2	Acceptable
Operational risk	Taxation risk	Register asset in name of customer from beginning	1	2	2	Acceptable
Operational risk	Legal risk	Use certain conventional contracts to fit legal environment	1	2	2	Acceptable
Operational risk	Sharīʿah non-compliance risk	Appoint external Sharīʿah auditor to upgrade design of procedures and documents	1	2	2	Acceptable

Main risk	Subsidiary risk	LARIBA’s risk management strategy	Probability of risk occurrence	Risk impact	Risk rank	Evaluation
Credit risk	Risk of non-payment	Lien	1	2	2	Acceptable
Equity investment risk	Risk that capital will be consumed	Rapid exit by selling share right after taking ownership	1	2	2	Acceptable
Market risk	Risk that customer will renege on purchase	Including option of annulment in purchase contract	1	2	2	Acceptable
Liquidity risk	Risk of not being able to convert debt or asset into liquidity	Act as investment agent for GSEs	1	2	2	Acceptable
Rate of return risk	Risk of not being able to increase profit rate during the financing period	Act as investment agent for GSEs	1	2	2	Acceptable
Operational risk	Taxation risk	Register asset in name of customer from beginning	1	2	2	Acceptable
Operational risk	Legal risk	Use certain conventional contracts to fit legal environment	1	2	2	Acceptable
Operational risk	Sharīʿah non-compliance risk	Appoint external Sharīʿah auditor to upgrade design of procedures and documents	1	2	2	Acceptable