Page 82 - Exim iar24_Ebook

EXIM BANK MALAYSIA
80

DISCLOSURE ON
SHARIAH GOVERNANCE

The main function of Shariah risk management as follows:

• To identify, measure, monitor, control and report the Shariah non-compliance risks exposures associated with the operations,
business, affairs, and activities of the Bank.
• Responsible for the development, maintenance and enhancement of the Shariah Risk Management governance, policies and
procedures and its implementation, including reporting of the Shariah non-compliance risk exposures to the Management,
Risk and Compliance Committee (MRCC), Shariah Committee (SC), Board Risk Committee (BRC), and the Board.
• Ensure that any incident of Shariah non-compliance is reported to BNM as requirement outlined in BNM Policy Document
on Operational Risk Reporting (ORR).

The management of Shariah risk is targeted at preventing and managing loss events and potential Shariah Non-Compliance (“SNC”)
risk by leveraging and using operational risk management tools namely; Risk and Control Self-Assessment (“RCSA”), Key Risk
Indicator (“KRI”), Loss Event Data (“LED”), Key Control Testing (“KCT”), Scenario Analysis (“SA”) and Stress Test (“ST”).
The tools are facilitated by the automation system known as EXIM Governance, Risk & Compliance (GRC) System. The EXIM GRC
System is a web-based application that is used as a tool in risk identification and assessment. Its key objective is to improve
monitoring and reporting of risk activities in all departments through the Risk & Control Self-Assessment (“RCSA”) and Key Risk
Indicator (“KRI”).
Shariah Review

Dedicated Shariah review of EXIM Bank is established under the purview of Compliance Department which undertake the roles
of conducting regular review to ensure EXIM Bank’s businesses, operations, affairs, and activities of Islamic Banking and
Takaful are conducted in compliance with Shariah requirements as per the BNM’s SAC and the Bank’s Shariah Committee’s
resolution.
Shariah review functions mainly include:

• Evaluating EXIM Bank’s level of compliance to the Shariah.
• Propose remedial rectification measures to resolve Shariah non-compliance issue.
• Put control mechanism to avoid recurrences.

Shariah review is guided by its Shariah Review Plan in performing regular review exercise to provide assurance to the Senior
Management, Shariah Committee, and the Board on the state of Shariah compliance in EXIM Bank.
Shariah Review Plan is developed mainly by the risk-based approach in evaluating the adequacy and effectiveness of the
policies and procedures emplaced in managing Shariah non-compliant and approved by relevant committees including Shariah
Committee. Subsequently, the outcome of Shariah review activities shall be reported periodically to the relevant internal
committees including the Shariah Committee.

Shariah Audit
Shariah Audit of EXIM Bank resides under the Audit & Assurance Department (AAD) and it is classified as a regulatory audit with
the execution guided by an annual audit plan and audit programme prepared by AAD.
Reporting independently to the Board Audit Committee (BAC) with accountability to the Shariah Committee within the Bank’s
governance framework and BNM’s SGPD, the function of Shariah Audit includes:

• Providing independent assessment on the quality and effectiveness of EXIM Bank’s internal control, risk management systems,
governance processes as well as overall compliance of the Bank’s operations, business, affairs, and activities with Shariah
requirements.
• Providing independent assurance on the effectiveness of internal control systems and related policies and procedures i
mplemented by EXIM Bank to govern the conduct of its Islamic business operations and activities.

The methodology and scope of Shariah Audit are established by AAD in line with areas stipulated by BNM’s SGPD as well as
accepted auditing standards.