Bank Islam Integrated Annual Report 2020

9. INVESTMENT ACCOUNT (CONTINUED) 9.1 Overview (continued) Wakalah refers to a contract where a customer, as the principal, authorises the Group as his agent to perform a particular task on matters that may be delegated i.e. investment, with or without imposition of a fee. In this context, the Shariah contract applied is Wakalah bi al-istithmar (Wakalah for the purpose of investment). In terms of offering, the Group currently has the following two categories of IA: Unrestricted Investment Account (UA) Restricted Investment Account (RA) Unrestricted Investment Account refers to a type of investment account whereby the customer/Investment Account Holder (IAH), without specifying any particular restrictions or conditions, provides the Group with the mandate to make the ultimate decision to invest. Restricted Investment Account (RA) refers to an IA where the IAH provides a specific investment mandate to the Group. The Group also offers RA via Investment Account Platform (IAP) initiated by BNM. IA product is not capital guaranteed and is not protected by the Perbadanan Insurans Deposit Malaysia (PIDM). The IAHs are made informed of the risks associated with IA which include but not limited to the following: • • Market risk – Invested assets are subjected to fluctuations in the market rates. This may negatively impact the overall income performance of the fund. • • Liquidity risk – This risk occurs if withdrawal/redemption exceeds total investment. • • Credit risk – This arises when substantial amount of the asset tagged to the fund turns default. • • Operational risk – This risk may arise due to failed internal processes or system. • • Legal risk – Such risk may arise from improper product documentation which may expose the Bank to legal action by IAH. 9.2 Governance Structure To safeguard the IAH’s interest, the investment mandate, strategy and parameter are carried out in accordance to the Group’s governance set-up. The IA governance structure adopted by the Group is as depicted in the following diagram: Board of Directors Board Risk Committee Management Risk Control Committee Business Units/ Investment Account Units Shariah Supervisory Council BOARD COMMITTEES MANAGEMENT COMMITTEES BANK ISLAM MALAYS IA BERHAD INTEGRATED ANNUAL REPORT 2020 371