Risk Grading – Halal Grow

Risk Grading of Entrepreneurs

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Integrating Islamic Ethics with Modern Venture Risk Assessmentoverline

HalalGrow Risk Grading Framework

At HalalGrow, we believe that every investment carries responsibility — both financial and moral. Our Risk Grading Framework combines Islamic principles of fairness, transparency, and accountability with global risk management standards (Basel III, ISO 31000, and AAOIFI guidelines).

Our purpose is to ensure that both investors and entrepreneurs are protected through a balanced and ethical evaluation of risk and return — grounded in Shariah and modern due diligence.

⚖️ Core Risk Categories

Category	Assessment Focus	Weight (%)
1. Financial Strength	Profitability, liquidity, leverage, and cash flow adequacy	20%
2. Business Viability	Business model, market potential, scalability, competition	20%
3. Management Quality	Experience, governance, integrity, succession planning	15%
4. Industry Risk	Sector stability, growth outlook, and barriers to entry	10%
5. Shariah Compliance	Adherence to AAOIFI standards and Islamic principles	15%
6. Operational Efficiency	Internal controls, process reliability, supply chain strength	10%
7. ESG & Social Impact	Environmental, ethical, and community responsibility	5%
Total		100%

🧭Interpretation for Investors

Growth-Seeking Investor

B-, C+
Higher risk, potential high returns

Impact Investor

B, C+, C
Socially impactful but higher volatility

Conservative Investor

A+, A
Stable, long-term Halal profit

Balanced Investor

A-, B+, B
Moderate risk, sustainable returns

📊 Risk Scoring Matrix

Score	Interpretation
9–10	Excellent / Very Strong
7–8	Good / Above Average
5–6	Moderate / Acceptable
3–4	Weak / Below Average
1–2	Poor / Critical

🧮Grade Conversion Table:

Overline

Note: Each venture must pass a Shariah Screening Layer, inspired by AAOIFI standards:

Final Risk Score (FRS)	Grade	Meaning	Investor Guidance	Risk Level
90–100	A+	Exceptional financial and operational strength; Shariah-compliant; minimal risk	Very Low	Ideal for conservative or long-term investors
85–89	A	Strong business fundamentals and strong governance	Low	Highly recommended for stable portfolio
80–84	A-	Solid structure with minor weaknesses; moderate market exposure	Low–Moderate	Suitable for balanced investors
75–79	B+	Good performance but limited scalability or liquidity	Moderate	Suitable for medium-risk investors
70–74	B	Stable but exposed to some operational or industry risk	Moderate	Requires ongoing monitoring
65–69	B-	Weak financial control or moderate Shariah compliance concerns	Moderate–High	Invest cautiously with short-term goals
60–64	C+	Unstable earnings or inexperienced management	High	Only for high-risk-tolerant investors
55–59	C	Serious operational or liquidity challenges	High	Needs restructuring or mentoring support
50–54	C-	Weak business viability, low governance, potential default	Very High	Not advisable without full risk mitigation
Below 50	D	Failing or default condition	Critical	Not eligible for HalalGrow investment

Risk Level Low : (A+,A,A-)

These ventures demonstrate strong financial health, proven business models, and full Shariah compliance. They offer stable, predictable returns with minimal exposure to market or operational volatility — ideal for conservative investors seeking sustainable growth.

Risk Level Moderate:(B+,B, B-)

These ventures show promising potential but face moderate challenges in scalability, liquidity, or management efficiency. With proper monitoring and support, they can deliver balanced returns suitable for investors comfortable with medium-level risk.

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Risk Level High: (C+,C,C-)

These ventures operate under unstable financial or operational conditions, often requiring restructuring or close supervision. They carry higher uncertainty but may offer significant upside for experienced investors willing to engage in higher-risk, impact-oriented opportunities..