Unique Characteristics of Risks in Islamic Financial Institutions (IFIs)

Abstract

For financial institutions, whether it is Islamic financial institutions (IFIs) or conventional financial institutions, making a right decision to finance is often a difficult task to do and crucial as well. A through and strict risk appraisal of the business must be performed and if they are uncomfortable in taking a certain business risk, normally they will then insist on certain terms and conditions with protection in the form of security and guarantees to overcome the risk identified. The objectives of this study are to understand the unique characteristics of risks facing the Islamic financial institutions due to their compliance with Shari’ah rules and principles.