Page 132 - ICD AR21 EN

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
(CONTINUED)
30 RISK MANAGEMENT (Continued)
Equity price risk
The Corporation is exposed to equity price risk on its investments held at fair value. The Corporation has only
one investment which is listed and, accordingly, the Corporation is not materially exposed to significant price risk.
Liquidity risk
Liquidity risk is the non-availability of sufficient funds to meet disbursements and other financial commitments as they fall due.
To guard against this risk, the Corporation follows a conservative approach by maintaining high liquidity levels invested in cash and cash equivalents, Commodity Murabaha and Wakala placements and Murabaha financing with short-term maturity of three to twelve months. Please see note 28 for the maturity schedule of the assets.
Shari’ah non‐compliance Risk
The Corporation defines Shari’ah non-compliance risk as the risk of losses resulting from non-adherence to Shari’ah rules and principles as determined by the IsDBG Shari’ah Board. The Corporation attaches value in safeguarding its operations from Shari'ah non-compliance risk (SNCR). Shari'ah compliance forms an integral part of ICD's purpose in line with its Articles of Agreement. Consequently, the Corporation effectively manage SNCR through leveraging on the IsDB Group wide robust framework of procedures and policies. The business or risk- taking unit, as the 1st line of defence, embeds a culture of Shari'ah compliance, while the Shari'ah Compliance function of IsDBG serves as the 2nd line of defence to strategically manage and monitor SNCR pre-execution of transactions / operations. IsDBG’s internal Shari'ah Audit function provides independent reasonable assurance
as the 3rd line of defence post-execution of transactions/operations adopting a risk-based internal Shari'ah audit methodology.
31 FAIR VALUE
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Consequently, differences can arise between carrying values and fair value estimates.
Fair valuation with respect to investments, is disclosed in note 12.
All of the Corporations’ Islamic derivatives are unquoted. Their fair values are estimated using a valuation technique and, accordingly, are level 3.
The carrying value of the Corporation’s all other financial assets and liabilities approximate their fair values.
130 ICD ANNUAL REPORT 2021