The risk management function must implement appropriate credit management systems and administrative procedures to undertake early remedial action in the case of financial distress of a counterparty or, in particular, for managing problem credits, potential and defaulting counterparties⁷. This system must be reviewed on a regular basis. Remedial actions must include both administrative and financial measures.

⁷ In certain jurisdictions, the Shari'a may differentiate between two kinds of defaulter; (a) the affluent or able (wilful defaulter or procrastinator); and (b) the insolvent defaulter who is unable to pay his debts due to reasons permitted by Shari'a, to determine whether a penalty can be imposed which should be disposed of.