Is My Income Lawful as a Risk Methodology Analyst at an Investment Bank?

Answered by Shaykh Faraz Rabbani

Question

I work at an investment bank on a methodology team. The company’s main income comes from wealth management and other financial services, which may involve interest-bearing products. My own work is to build and maintain a model that enables the firm to identify the maximum possible loss it could incur on its current investments, which are positions in bonds, equities, and similar securities. I have no advisory role in those investments and am not directly involved in any interest-bearing transaction; the model simply takes the existing positions as inputs. Is my income lawful?

Answer

In the name of Allah, the Most Merciful, the Most Compassionate.

May Allah reward you for asking about your livelihood rather than assuming the best about it.

Your Work Measures Risk; It Does Not Create the Contract

The work you have described is lawful, and the salary you take for it is lawful. Building and maintaining a model that measures the maximum loss your firm could suffer on positions it already holds is a permissible service, and you are neither a party to an interest-bearing contract nor bringing one into existence for anyone else.

In the Hanafi school, hiring out one’s labor (ijara) is sound whenever the work contracted for is itself permissible, and the wage is owed for that work. Ibn Abidin (Allah have mercy on him), citing al-Khaniyya, gives the case of a man who hires himself out to labor on a church and repair it. There is no harm in it, “because there is no disobedience in the substance of the work itself.” [Ibn Abidin, Radd al-Muhtar]

Allah has commanded us to help one another to righteousness and God-consciousness and not to help one another to sin and enmity [Quran 5:2]. The school takes that seriously, and it does not treat every connection to wrongdoing as one thing. Its measure is whether the wrong subsists in the very substance of what one does. Ibn Abidin sets it out in the law of sales: “whatever the disobedience subsists in by its own substance, selling it is disliked to the degree of prohibition, and otherwise the dislike is one of mere impropriety.” [Ibn Abidin, Radd al-Muhtar] Applied to employment, that is, the line between doing the unlawful thing and standing near it.

See where the Prophet (Allah bless him and give him peace) drew that line. He cursed “the one who consumes interest (riba), the one who pays it, the one who records it, and its two witnesses,” and he said, “They are the same.” [Muslim] Those are the two contracting parties and the two roles that bring the contract into legal being. The scribe writes it, the witnesses make it stand. Your model does neither. It reads existing positions and reports a number to your own management.

This Differs from the Risk Assessment That Underwrites a Loan

You may have come across the ruling that assessing risk at a bank is impermissible. What is meant there is the assessment that goes into making the loan, the underwriting that decides whether it is written at all and on what terms. That work is one of the causes of the contract. Measuring what a portfolio already stands to lose sits downstream of contracts concluded without you.

Mixed Income at This Scale Does Not Taint Your Wage

As for your firm’s income being mixed, the Hanafis look to what predominates rather than to the presence of anything unlawful at all. Ibn Mazah al-Bukhari (Allah have mercy on him) gives the reason plainly: “because people’s wealth is not free of a little that is unlawful, though it is free of much of it, so what predominates is what is taken into account, and the ruling is built upon it.” [Ibn Mazah al-Bukhari, al-Muhit al-Burhani] A bank of that size draws revenue from a wide range of activities, and you are paid for your labor, not out of an identified unlawful sum.

Two Changes That Would Move Your Work Closer to the Wrong

Two things would change this answer. If you were moved into structuring, pricing, marketing, or advising on interest-bearing products, or asked to draw up, record, or sign such contracts, your work would become a cause of the wrong rather than a measurement of its consequences. And if the model were built to enable interest-based deals rather than reporting exposure, the same would follow. Ask again if either comes near you.

So take your salary without unease. If a door opens to work further from all of this, walk through it and thank Allah. Until then, do your work well, give what you can in charity, and let this scruple remain what it is, a sign of a living heart and not a source of fear.

And Allah knows best.

Faraz Rabbani

Related Answers

• Can I Work as a Research Analyst for an Investment Bank? — the closest parallel: an analyst role at an investment bank is sound so long as the work itself never touches an interest-bearing transaction directly.
• Is Working as an Investment Analyst at Development Banks Halal? — the contrasting case: a role built around facilitating interest-bearing loans crosses the line this answer draws.
• Working as an Accountant When Interest Transactions Are Involved — the same cause-versus-consequence reasoning, applied to recording a transaction after the fact rather than writing it into being.
• Does Noting an Interest-Based Transaction Make an Accountant’s Job Impermissible? — reinforces the same distinction from a second, independently answered case.
• Is It Permissible to Work in a Supermarket That Sells Both Lawful and Unlawful Products? — the mixed-income principle from the other direction: a job untouched by the unlawful part of a business remains lawful work.