Risk management practices of conventional and

Islamic banks in Bahrain

1.0 INTRODUCTION
Effective risk management is accepted as a cornerstone of banking management by practitioners and
regulators. Recognizing this reality and the need for comprehensive approach to banking risk
management, the Basel Committee on banking supervision adopted the Basel I agreements, followed by
the Basel II agreements and recently by Basel III, to address the issue. Nearly half of the survey
participants reported that they had, or planned to conduct, comprehensive reform of their risk
management, including Improvements to data quality and availability, enhanced risk management, and
action towards a company-wide approach to risk and deeper integration of risk across lines Business.
however, only 40% of the respondents mentioned the importance of risk management is widely
understood throughout the company, which suggests more must do to inculcate a strong culture of risk
management in finance institutions. Risk management is a continuous process which directly depends
on the evolution of the internal and external environment of banks. These require changes in the
environment constant attention to hazard identification and risk control. In response to the call to
enhance the effectiveness of risk management, banks in Bahrain, like those in many other countries. In
addition, risk management is turns out to be one of the determinants of bank stock returns. Banks in
Bahrain face an exceptional challenge in managing their risks the exposure that came as a result of the
ongoing social and political upheaval that arouse. The government's struggle to deal with democracy the
movement led to a decline in non-oil economic activities, and credit deterioration rating and declining
stability of the banking industry. Among those results: Estimated domestic growth rate of GDP,
downgrading the credit rating two notches by Standard & Poor's to the second lowest level investment
grade, Review of Country Risk Assessment in the Banking Industry by Standard & Poor's from groups if
group one is lowest risk while group five is high risk. the primary aim of this study is contribute to the
discussion about risk management by investigating banks' refrigerant management plans operating in
Bahrain. Specifically, the aims of the study are three fold. to investigate empirically the degree to which
conventional and IslamicBanks in Bahrain use gas management plans and effective methods in dealing
with various types risk, identify the most important types of risks facing Islamic banks in Bahrain, to
compare refrigerant management plans for conventional and Islamic banks.

1.2. Brief literature review and hypotheses