KarimGinenaKarim Ginena, a 
IGLP Workshop Alum and Senior Researcher at the Center for Islamic Economics & Finance, 
Hamad Bin Khalifa University, would like to share his recent publication: “Shari‘ah risk and corporate governance of Islamic banks”

Abstract:

The purpose of this paper is to help directors, senior management, and stakeholders of Islamic banks understand sharī‘ah risk, a crucial consideration in the corporate governance of Islamic banks, and its impact on these banks.

The paper links dispersed insights drawn from the emerging body of sharī‘ah governance literature, and the guidance issued by the Basel Committee on Banking Supervision, the Islamic Financial Services Board, and the Accounting and Auditing Organization for Islamic Financial Institutions with new insights to clarify the sharī‘ah risk that Islamic banks face. Sharī‘ah risk, an operational risk, poses a credible hazard to Islamic banks and their stakeholders. Possible consequences of sharī‘ah non-compliance include higher costs, financial losses, liquidity problems, bank runs, bank failure, industry smearing and financial instability. The study defines sharī‘ah risk, identifies credit, legal, compliance, market, and reputational risk that it may evoke, and categorizes its causes and events. The study also devises an instrument for assessing sharī‘ah risk, and suggests measures for directors, senior management, and regulators to mitigate this risk.