 In this module, we shall look at risk management in Salem as an Islamic mode of finance. Like in our previous two modules, we have looked into Murabha and Izara in the context of Kijara Muntahiya Bitam League, the risks and risk management. We would follow the same pattern in this module as well to see what kind of risks are there in different stages of Salem and how they can be mitigated. So, there are some presale risks and there are some post sale risks. Presale risks, they are withdrawal risk applicable to almost all the Islamic modes of finance because the bank always faces this risk of withdrawal of application before the lease or sale agreement has been signed and because in all these cases an asset is involved and asset is going to be bought by the bank and it is going to be sold or lease to the customer, there is always a supply related risk and of course, of ownership related risk they are applicable as well. Let us analyze a typical Salem financing deal to highlight these risks and possible mitigation of these risks. Again pre transaction risks and post transaction risks. In case of Salem, an important risk before the Salem transaction has taken place is again withdrawal of application but it is not a very significant risk but we have to highlight it, it could be a possibility. After the Salem transaction has taken place, the price has been paid or received depending on who we are referring to, depending on what role the Islamic bank is playing. Is it playing the role of a seller or the role of a buyer? So, depending on that one once the price has been exchanged after that there is a credit risk, credit risk in the sense that the commodity is going to be delivered and if there is a default that would have implications for credit risk. Price however credit risk in the context of default on the delivery of the asset. Markuprisks like in case of Murabha, we mentioned that Murabha price is fixed once, then in the benchmark rate, that price cannot be changed especially in the advanced market banks would like to have the option of changing the return whenever there is a change in what is known as the base fate. For example, Bank of England base rate is considered as a benchmark. Now, if the change in the benchmark goes up, then banks would like to start off bringing financing according to that change, financing would be expensive. In case of Murabha, in case of Salem, the return gets fixed for the duration of financing. Hence, whatever happens to the benchmark rate, the banks hands are tied, bank cannot change the Salem price that is known as markup risk or benchmark rate risk. Commodity asset price risk is very much relevant to Salem transaction because at the end of the day, a commodity is going to be delivered and its price is going to be very relevant to the profitability of the transaction. And of course, market risk in this case is very important as well. Anything happens in the market, there is a disruption. Commodity is not available readily or it is not available at all. Then there would be problem. Now, from a Salem seller's viewpoint, the operational risks are there, of course, which can be mitigated with the help of technology, training and audit. And we have mentioned previously as well. Hence, I'm not going to spend a lot of time on explaining parallel Salem or WAD. This is an important risk mitigation tool in case of a Salem structure, Salem as a mode of finance. So commodity asset price risk that can be taken care of by parallel Salem. Of course, its delivery can be taken care of, market risk can be taken care of by parallel Salem or WAD. From Salem buyer viewpoint, again these considerations are there. It's only that first we were looking this word, now we are looking that word. So all the risks associated with the Salem or parallel Salem with the seller or the buyer, they are relevant. We have actually discussed and covered this topic in great detail when we studied Salem risk management in Salem contract. That discussion is applicable to this module as well and the students are encouraged to once again watch that module to refresh their memory.