A risk exposure, in Islamic banks and financial institutions (IFIs), whereby the institution attempts to remain competitive and withstand commercial pressure by paying its investment account holders a rate of return above normal or actual rates. To that end, it forgoes part or all of its equity holders’ profits. This tactic is meant to maintain investment account holders so that they do not withdraw their funds and close their accounts. This type of risk may negatively impact capital, as it relates to unrestricted investment accounts (URIAs) and profit sharing investment accounts.

This risk is displaced or transferred from investment account holders to the institution’s own capital.