Risk management in islamic institutions: a case study at Lembaga Zakat Selangor / Muhammad Afdhal Zikry Mohd Yusop

Globally, there has been significant interest in literature on risk analysis and management in the past decade or so. However, all these developments revolved around the banking and financial institution, due to extensive research, development and innovation of its institution and services. While Islamic institution like Lembaga Zakat Selangor (MAIS) has grown substantively in the last few years, research and studies of its risk character and profile is still low. Effective management of risk in fundamental to the proper functioning of any institution. As for Islamic institution like Lembaga Zakat Selangor, risk" is come across in many different ways; financial, personnel, program and capital expenditure decisions due to interactions with economic, political and social environments. Islamic institutions faced unique risk as a result of special characteristic of the operational structures of the institutions such as operational risk, reputational risk, financial risk and shariah non-compliance risk. This study aims to conduct risk assessment to identify and explain potential risk in the Islamic institutions at Lembaga Zakat Selangor with the main objectives to identify, explain and suggest a risk management framework of Lembaga Zakat Selangor (MAIS). Although potential risk is difficult to be identify, Islamic institutions must explore ways to manage the potential risk as it might significantly damage their reputation and credibility.