Risks in Islamic Banks

The study deals with risks prevalent in Islamic banks because some of such risks are internal and others are external, and they vary in their degree of risk based on individual bank or its surrounding environment. The study has revealed the most significant risks facing Islamic banks and studied them via highlighting the concept of risk, its nature and its sources, and then the discussion was made about management of such risk and their treatment. The study derived a set of results and conclusion, and the most important ones are variation of internal and external risks of Islamic banks, such risks are not arranged as per the degree of risk due to difference of circumstances and environments surrounding each bank. However, Islamic bank may apply the latest international banking standards to benefit in managing all types of the risk such as financing risk, operational risk, market and liquidity risk, business risk, reputation and business continuity risk, information security risk, and this will result in attaining transparency. Also, the study suggested Islamic banks to enact the supervisory role of managing the risk.