Risk Management Strategies and Schemes.

Takaful (Islamic Insurance) Assignment. Please go through the attachments

Risk Management
Strategies and
Schemes
Name of the Student:
Name of the University:
Author’s Note:

Briefing of the Issue
• Channel Maldives Limited is a transportation company that
is in operations since the last four years
• Audit was conducted that revealed the company has paid a
lot of amounts as compensation during its short journey
• The company plans to develop a second year plan and
generate justifiable profits
• The company also aims to minimize the losses and propose
schemes to the Board of Directors

Types of Risks in Transportation
• Weather and climate
• Theft, pilferage
• Mishandling
• Accidents
• Natural calamities
• Delay in transportation

Shari’ah Prohibition of Conventional
Insurance
Insurance and Gharar
• Uncertainty in the consequence as
well as existence (Aven, 2016)
• Uncertainty in the result of the
give-and-take
• Uncertainty concerning the
contract period
• Uncertainty in the receipt of
reimbursement (Aven, 2016)
Insurance and Riba
• Riba in deferred premium
payments
• Riba in the commercial
insurance contract (Aven,
2016)
• Riba and the investments of
the commercial insurance
company

Principles of Takaful to be applied to
Takaful
• Insurable Interest
• Utmost good faith
• Indemnity
• Contribution
• Subrogation
• Proximate cause

Principles of Takaful
• Members must cooperate amongst each other
• Invest in Shari’ah compliant funds (Ho et al., 2015)
• Divide losses and liabilities through a pooling
system
• Each member must pay the subscription fee (Ayinde
& Echchabi, 2012)
• Elimination of uncertainty in respect of
compensation

Risk Management and Hazards
• Risk of the consignment being delayed
• Risk of natural calamities and disruptions
• Risk of hazardous material
• Risk of cross-border tariffs
• Third party provider unqualified
• Product damage and contamination

Strategies and Schemes
• Use of alternative
routes
• Use of modified
containers
• Use of low risk
transportation models
• Amendment of
chemical as well as
physical properties

Strategies and Schemes (contd.)
• Ensure suitable controls
in place (Ho et al., 2015)
• Insurance covers must be
adequate
• Review the regulations
prior to the shipment
• Weekly meetings to
analyze the issues and
concerns

Challenges
• Lack of enthusiasm to assent
and address the concerns that
risk management will detect
• Attainment of organizational
support at all levels for risk
management
• Developing as well as funding
organizational expertise

Challenges (contd.)
• Implementing a new
process for risk
management (Aris,
Taspir & Talib, 2012)
• Exertion in applying
risk allocation
substitutes
• Evolving the prevailing
organizational culture

Reference List
Aris, N. A., Tapsir, R., & Talib, M. K. B. A. (2012). Risk and risk management of
takaful industry. Journal of Global Business and Economics, 4(1), 29-39.
Aven, T. (2016). Risk assessment and risk management: Review of recent advances
on their foundation. European Journal of Operational Research, 253(1), 1-13.
Ayinde, L. O., & Echchabi, A. (2012). Perception and adoption of Islamic insurance
in Malaysia: an empirical study. World Applied Sciences Journal, 20(3), 407-415.
Ho, W., Zheng, T., Yildiz, H., & Talluri, S. (2015). Supply chain risk management: a
literature review. International Journal of Production Research, 53(16), 5031-5069.