Operational Risk Exposure to Islamic Banks
1 Centre for Excellence in Islamic Finance Institute of Management Sciences.
2 Centre for Excellence in Islamic Finance Institute of Management Sciences.
3 National University of Modern Languages
The study aims to explore internal risk factors that may lead to overall operational risk in Islamic banks and Islamic window banks of Pakistan. Semi structured interview’s through purposive samplings are conducted along with participant’s observation. New themes, including windows Islamic banking operations and management goal conflict with Shariah are identified after detailed analysis. The study also identifies new themes in existing phenomena mentioned in literature including Shariah noncompliance risk, people risk, and technological risk. The study contributes to operational risk phenomena and highlights the new sources of risk that need to be managed by operational managers. Furthermore, the study highlights need for control mechanism to facilitate managerial decision in maintaining operational risk profile.
Keywords: Islamic banks, Operational risk exposure