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  • Monday, April 28, 2025
  • The Financial Encyclopedia
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Islamic Finance

  Islamic Finance   |   Terms
  • 702
  • February 20, 2023
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Operational Risk

The risk that affects the operations of an Islamic bank (Islamic financial institution– IFI) including the risk of loss arising from failure or inadequacy in processes (process risk), systems (system risk), people (people risk), etc. This risk also includes the risk of loss resulting from external events (external event risk) as well as potential loss associated with contraventions to shari’ah rules and principles (shari’ah non-compliance risk) and inability to discharge fiduciary responsibilities (fiduciary risk).

This risk includes legal risk, but excludes strategic risk and reputational risk.


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