History of Risk Management in Islamic Banking

Chapter 3 discusses the history of risk management development in Islamic banks. The beginning of the chapter discusses why the bank will need to be managed and supervised, why various regulations emerged, and the reason it is necessary to create an agreement on operating ground rules in the global financial system. After that, Basel I, Basel II, and Basel III are discussed consecutively. The development of these three frameworks is discussed to understand the reason for various amendments and revisions. Then, this chapter specifically discusses Islamic bank accounting standards. This discussion is important, considering various measurements, methods, and risk models are based on accounting systems and reporting. The end of Chapter 3 discusses the risk management framework in IFSB as a community of global Islamic financial institutions, and various regulations that are specifically issued by Bank Indonesia as Indonesia's banking regulator.