How do Shariah committees perceive their role in risk management practices in Islamic Banks in KSA?

Abstract

Abstract

Purpose: The study aims to provide a comprehensive understanding of how Shari'ah committees can play an enhanced and effective role in shaping risk management practices within Islamic banks, contributing to the broader discourse on Islamic finance. Focusing on the intricacies of risk management within the Saudi Arabian context, the research intends to explore the pivotal role played by Shari'ah committees in upholding Shari'ah compliance.

Research Design: The research employed a qualitative approach, conducting semi-structured interviews. 34 participants were selected through purposive sampling. Collected data was subjected to thematic analysis, facilitated by NVivo software which aided in discerning patterns from interviews conducted in Arabic. Ethical considerations are paramount, with explicit permissions obtained from participants, assurance of confidentiality, and adherence to ethical guidelines outlined by RMIT University.

Findings: The research revealed the significant role of Shariah committees in implementing Shariah Compliance. It highlights that fostering collaboration between Shari'ah committees, senior management, and risk management professionals within Islamic Banks is a key factor to ensure compliance which can be achieved through regular forums, workshops, and training sessions. It further emphasizes the need to embrace technological tools for risk management which include leveraging advanced software solutions for risk assessment and monitoring while ensuring compliance with Islamic finance standards.

Originality: This study addresses a notable research gap by investigating avenues to enhance the engagement of Shari'ah committees in risk management practices within IBs.The findings contribute valuable insights into the intersection of Shari'ah compliance and risk management in Islamic banking.