Opportunities Arising from this Risk Drive product innovation to be more competitive and well positioned in the industry. Improve operational efficiency to elevate customer experience and engagement. Implement strong Shariah governance structure and risk management strategies help the Group to streamline our operations and increase efficiency. Opportunities Arising from this Risk Strengthen operational resilience with technology to navigate, adapt, thrive in the face of change and uncertainty. Development of customer-centric products and services that elevates customer experience and engagement through digitalisation. Adoption of new and emerging technologies that fosters workforce productivity and supports the future of work. Description Risk of legal or regulatory sanctions, financial loss or non-financial implications, including reputational damage arising from failure to comply with the rulings of BNM Shariah Advisory Council (SAC), standards or decisions or advice of the Group’s Shariah Supervisory Council. Description Risk of financial loss or negative consequences (such as regulatory breaches, disruptions, or reputational harm) arising from the use of technology due to the inadequacy or failures in people, processes, technology, or external events. Response and Mitigating Actions Establish four specialised Shariah functions under BNM Shariah Governance Policy Document (SGPD) to strengthen a Shariah compliance culture within the Group. Implement Shariah assessments for all policies, guidelines, products, services, and processes. Inculcate the process of identifying, measuring, controlling and monitoring of SNC risk inherent in the Group’s products, operations and activities. Leverage on ORM tools for effective SNC management. The SNC risk exposures are actively managed and guided by the various Shariah Risk Management (SRM) policies, guidelines, tools, and programmes put in place. Provide Shariah Risk Awareness Training to the relevant stakeholders. Response and Mitigating Actions Use of a technology risk management methodology that is integrated with the enterprise risk management framework to manage technology risk holistically across the Group. Establish a suite of processes and controls that address technology risks in a proactive, secure, and robust manner. Conduct gap assessments on the Group’s compliance with relevant regulatory requirements. Conduct strategic thematic reviews on selected areas of technology risks. Continuous assessment of the effectiveness of security controls against a rapidly evolving threat landscape. Proactive trend analysis, monitoring and escalation of technology related issues and incidents to Management and Board Committees, with detailed root cause analysis and action plans. How does this impact us? Group’s reputation and credibility to provide customers with Shariahcompliant products and services may be affected, resulting in the erosion of stakeholders’ confidence and trust in Bank Islam. How does this impact us? Group’s ability to provide essential financial services in a resilient and secure manner to our customers may be affected resulting in reputational damage and financial losses as well as erosion of stakeholders’ confidence and trust in the Group. SHARIAH NON-COMPLIANCE (SNC) RISK TECHNOLOGY RISK 58 Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2023 Key Risks and Mitigation
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