Operational Risk in Islamic Banking

Chapter 7 discusses the Islamic bank's operational risk; it covers the concept and definition of operational risk, the relation between operational risk and Islamic bank's business, the importance of building consciousness on the presence of risks when operating the business, the definition and scope of operational risk, identification of the various determining factors of operational risk, how to measure operational risk in an Islamic bank, and how to build a reliable operational risk management in an Islamic bank. Operational risk is tightly connected with the bank's daily business. This risk exists before all other risks exists, and will always be present in a business's operations. This risk usually occurs due to human factors, internal processes, systems, technology, noncompliance with legal/internal rules, or other external factors like natural disasters, riots, war, etc.