Operational Risk Management of Islamic Banks

2020 ◽  
pp. 455-470
Author(s):  
Mahfod Aldoseri ◽  
Andrew C. Worthington
Keyword(s):  
Risk Assessment ◽  
Risk Management ◽  
Saudi Arabia ◽  
Operational Risk ◽  
Islamic Banks ◽  
Operational Risk Management ◽  
Risk Monitoring ◽  
Conventional Banks ◽  
Senior Officers

This chapter investigates the operational risk management and practices of Islamic and conventional banks in Saudi Arabia. Authors employ a sample of four Islamic and eight conventional banks and data gathered through a novel questionnaire administered to senior officers and managers carrying out risk management activity across five aspects of operational risk management: (i) understanding risk, (ii) risk management, (iii) risk assessment analysis, (iv) risk identification, and (v) risk monitoring. The results demonstrate that all of these play an important role in determining the quality of operational risk management. However, risk assessment analysis and risk monitoring are the most influential in determining the overall quality of operational risk management in both conventional and Islamic banks. Overall, conventional banks in Saudi Arabia are better than Islamic banks at operational risk management practices, suggesting the need for careful planning and strategizing, sound recruiting and training policies, and prudent monitoring of capital adequacy by regulators.

scholarly journals Risk management practices in Egypt: A comparison study between Islamic and Conventional banks

2015 ◽  
Vol 5 (4) ◽  
pp. 257-270 ◽  
Author(s):  
Hassan M. Hafez
Keyword(s):  
Risk Assessment ◽  
Risk Management ◽  
Management Practices ◽  
Liquidity Risk ◽  
Risk Identification ◽  
Islamic Banks ◽  
Comparison Study ◽  
Risk Monitoring ◽  
Conventional Banks ◽  
Risk Assessment And Analysis

The purpose of this research is to examine the degree to which the Egyptian banks use risk management practices and techniques to eliminate associated risks to their business. Not only has that but also to compare between Islamic and conventional banked in terms of risk management practices. A standardized questionnaire was used to cover the main aspects of risk management: understanding risk, risk management, risk identification, risk assessment and analysis; risk monitoring and risk management practices and finally the types of risks faced by the two set of banks. The study found that the most challenging types of risks facing Islamic and conventional banks in Egypt are credit and liquidity risks. Conventional banks are more efficient in risk management and use more sophisticated techniques and practices. Liquidity risk is the most prominent and vital risk for Islamic Banks.

Operational risk management in the postal sector: A case study of a developing country

2021 ◽  
Vol 5 (1) ◽  
pp. 37-45
Author(s):  
Ramzi Trabelsi
Keyword(s):  
Risk Management ◽  
Operational Risk ◽  
Regional Level ◽  
Management Unit ◽  
Operational Risk Management ◽  
The Public ◽  
Road Map ◽  
Almost All ◽  
Postal Sector

The Tunisian Post is a multi-business organization and operates in a changing environment; it faces risks, internal or external. The Tunisian Post has taken a step in this new area of expertise, which is reflected in the establishment of an Operational Risk Management Unit. The main purpose of this article is to present the first experience of the Tunisian Post in this area of expertise. A survey was conducted by the risk management unit (RMU) on a sample of 65 postal offices in the period between 2015 and 2017. The survey covers almost all of the Tunisian territory. A database containing all the probable risks was sent to the post managers at the regional level to give their assessment in terms of frequency and impact of each type of risk on their structures. More than 40 executives and employees at the regional and central levels participated in the brainstorming for the development of recommendations and the establishment of a road map. The results showed that the risks related to IT risks are more frequent and critical, which can deter the quality of the services at the regional level. Despite the increasing attention to risk management in the public sector, more research is required, especially in the postal sector. Operational risk management is the unrevealed black box (Bracci, Tallaki, Gobbo, & Papi, 2021). So, this paper presents a practical and professional manner to analyze better the entities’ function at the regional level.

scholarly journals The analysis of drivers of operational risks in Nigerian commercial banks

2021 ◽  
Vol 3 (3) ◽  
pp. 1-14
Author(s):  
Olajide Solomon Fadun ◽  
Diekolola Oye
Keyword(s):  
Risk Management ◽  
Commercial Banks ◽  
Operational Risk ◽  
Primary Data ◽  
Microsoft Excel ◽  
Internal Process ◽  
Operational Risk Management ◽  
Operational Risks ◽  
It Systems

Despite the institutionalization of operational risk management in banks and the strict supervision of bank regulators, operational risk events are still on the increase. It is becoming evident to banks that there is a need to identify the drivers of this risk and nib it at the root to reduce the probability of recurrence. Hence, this study examined the drivers of operational risks in Nigerian commercial banks and the extent to which each driver contributes to operational risk. To achieve the study’s objectives, primary data were collected from the Operational Risk Management Desks of six (6) sampled commercial banks and analyzed using SPSS and Microsoft Excel. The result showed that Internal processes, IT systems and Quality of Risk Officers are determinants of operational losses in banks. The internal process was however indicated as having the most impact. The study concluded that Internal Process is the major driver of operational risk in Nigerian Commercial banks. The researcher, therefore, recommends that bank management must have defined procedures for core activities and prioritize regular review of their critical processes to reduce operational risk events and the associated costs.

scholarly journals The analysis of drivers of operational risks in Nigerian commercial banks

2020 ◽  
Vol 2 (2) ◽  
pp. 19-35
Author(s):  
Olajide Solomon Fadun ◽  
Diekolola Oye
Keyword(s):  
Risk Management ◽  
Commercial Banks ◽  
Operational Risk ◽  
Primary Data ◽  
Microsoft Excel ◽  
Internal Process ◽  
Operational Risk Management ◽  
Operational Risks ◽  
It Systems

Despite the institutionalization of operational risk management in banks and the strict supervision of bank regulators, operational risk events are still on the increase. It is becoming evident to banks that there is a need to identify the drivers of this risk and nib it at the root to reduce the probability of recurrence. Hence, this study examined the drivers of operational risks in Nigerian commercial banks and the extent to which each driver contributes to operational risk. To achieve the study’s objectives, primary data were collected from the Operational Risk Management Desks of six (6) sampled commercial banks and analyzed using SPSS and Microsoft Excel. The result showed that Internal processes, IT systems and Quality of Risk Officers are determinants of operational losses in banks. The internal process was however indicated as having the most impact. The study concluded that the Internal Process is the major driver of operational risk in Nigerian Commercial banks. The researcher, therefore, recommends that bank management must have defined procedures for core activities and prioritize regular review of their critical processes to reduce operational risk events and the associated costs.

scholarly journals Niezawodność techniczna inspiracją dla zarządzania ryzykiem operacyjnym i publicznego zarządzania kryzysowego

2020 ◽  
pp. 33-46
Author(s):  
Janusz Zawiła-Niedźwiecki ◽  
Anna Kosieradzka ◽  
Grzegorz Kunikowski ◽  
Katarzyna Rostek
Keyword(s):  
Risk Assessment ◽  
Risk Management ◽  
Crisis Management ◽  
Critical Infrastructure ◽  
Operational Risk ◽  
New Approach ◽  
Operational Risk Management ◽  
Public Crisis ◽  
Public Crisis Management ◽  
Technical Reliability

Teoria niezawodności to ważna inspiracja nauk społecznych w zarządzaniu ryzykiem operacyjnym oraz publicznym zarządzaniu kryzysowym. Artykuł podaje nowe podejście do publicznego zarządzania kryzysowego, zastosowane w krajowych metodykach: oceny ryzyka w ochronie infrastruktury krytycznej państwa oraz planowania cywilnego i ratownictwa. Technical reliability as an inspiration for operational risk management and public crisis management The theory of reliability is an important inspiration of social science in operational risk management and public crisis management. The article provides a new approach to public crisis management, used in national methodologies: risk assessment in the protection of critical infrastructure of the state as well as civil and rescue planning.

scholarly journals Impact of Ownership Structure and Firm Size on the Operational Risk Management of Islamic Banks in Pakistan

2021 ◽  
Vol 4 (1) ◽  
pp. 209-217
Author(s):  
ADNAN ◽  
Dr. MUHAMMAD IBRAHIM KHAN ◽  
Dr. MUHAMMAD IBRAHIM KHAN ◽  
SYED IMRAN KHAN
Keyword(s):  
Risk Management ◽  
Firm Size ◽  
Ownership Structure ◽  
Stock Exchange ◽  
Operational Risk ◽  
Islamic Banks ◽  
Data Set ◽  
Operational Risk Management ◽  
Minimum Capital ◽  
The Impact

This study investigates the impact of ownership structure and firm size on the operational risk management (ORM) in the context of Islamic banks in Pakistan. ORM is the excess capital acquired after subtracting actual capital from minimum capital required for handling operational risk. While, the bank size is measured as deposit plus advances or log of total assets. The Basic Indicator Approach (BIA), and Standardize Approach (STA) is used to measure the minimum capital required for managing operational risk. A panel data set of 19 Islamic banks listed on the Pakistan Stock Exchange (PSX) is analyzed over the period from 2012 to 2016.Three important observations are provided by the results; first increase in the size of the Islamic banks tend to lower the surplus capital maintain by banks for managing operational risk. Second, a significant positive relationship is reported between excess capitals required for managing operational risk and public owned Islamic banks. Third, the results are reported as robust as all three regression model provided similar results.

scholarly journals РИЗИК-МЕНЕДЖМЕНТ В УПРАВЛІННІ ФІНАНСОВОЮ БЕЗПЕКОЮ СУБ’ЄКТІВ ГОСПОДАРЮВАННЯ

2018 ◽  
Vol 2 (5(17)) ◽  
pp. 20-23
Author(s):  
Черчик Л. М. ◽  
Стащук О. В. ◽  
Коленда Н. В. ◽  
Черчик А. О.
Keyword(s):  
Risk Assessment ◽  
Risk Management ◽  
Financial Risk ◽  
Operational Risk ◽  
Financial Security ◽  
Financial Risk Management ◽  
Operational Risk Management ◽  
Business Structures ◽  
The Relationship ◽  
Institutional Process

The article deals with the essence of financial security and the place of risk management in ensuring the necessary state of financial security of economic entities. The relationship between the concepts of risk and the threat to the financial security of business structures and the peculiarities of their interaction is shown. The essence of the system of financial risk-management is determined on the basis of system, institutional, process and functional approaches. Formulated principles, functions, objects, tasks of financial risk management as an instrument for achieving financial security of enterprises. The basic methods of risk assessment of business structures in the system of their financial security have been identified. Depending on the levels of implementation of financial risk management, strategic, tactical, operational risk management can be identified.

scholarly journals OPERATIONAL RISK MANAGEMENT APPROACHES WITHIN AN INVESTMENT FUND. SIF MOLDOVA CASE STUDY

2016 ◽  
Author(s):  
Costel Ciocea
Keyword(s):  
Risk Management ◽  
Operational Risk ◽  
Investment Fund ◽  
Operational Risk Management ◽  
Complex Process ◽  
Adequate Quality ◽  
Potential Risks ◽  
Management Approaches

Operational risk management consists in the identification and measurement, as complete as possible, of these risks, so that the company to be able to establish appropriate measures to avoid, reduce, transfer or accept, consciously, the risk. The main goal is prevention. Operational risk management is a complex process which involves their identification, assessment, monitoring and management. Starting from the European legislation, SIF Moldova has developed and adapted its own operational risk management system, targeting mainly its identification and evaluation, the analysis of activities vulnerable to operational risk, the establishment of the potential risks for each type of activity, the limitation of the operational risk caused by improper data processing, the implementation of internal regulations on the prevention and discovery of facts that can generate losses. To ensure an adequate quality of operational risk management and of the activities related to their control as well as for maintaining an appropriate level of accuracy on information provided to the supervisory authority (ASF), it is essential that the investment fund to build a stable and viable database, containing information relating to extended periods, and to ensure continued maintenance of this database.

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