---
title: "What is Shariah risk management function? | IslamicOpenFinance™"
description: "The function that identifies, measures, monitors and reports Shariah non-compliance risk across the institution."
url: https://islamicopenfinance.com/glossary/shariah-risk-management-function/
lang: en-GB
source: "IslamicOpenFinance"
---

[Glossary](https://islamicopenfinance.com/glossary/) / [Shariah governance](https://islamicopenfinance.com/glossary/#governance)

Shariah governance

# Shariah risk management function

The function that identifies, measures, monitors and reports Shariah non-compliance risk across the institution.

The Shariah risk management function systematically identifies, measures, monitors and reports Shariah non-compliance risks in an institution's operations and activities. Bank Negara Malaysia's Shariah governance policy document requires it to integrate those risks into enterprise-wide risk management, identify exposures in business lines, assess their potential impact and set mitigation measures, and requires the officers performing it to have knowledge of the relevant Shariah requirements. It sits alongside Shariah review and Shariah audit, which check compliance after the fact.

## Sources

- [Bank Negara Malaysia, Policy Document on Shariah Governance, 2019: Shariah risk management function](https://www.bnm.gov.my/documents/20124/761679/Shariah+Governance+Policy+Document+2019.pdf)

This entry explains a term; it is not a Shariah ruling. Approving a product is for each institution's own Shariah board and regulator.

## Related terms

[**Shariah non-compliance risk** The operational risk that an institution fails to comply with Shariah rules and principles in its products and services.](https://islamicopenfinance.com/glossary/shariah-non-compliance-risk/) [**Shariah review** A regular compliance function that assesses whether an institution's operations follow Shariah requirements.](https://islamicopenfinance.com/glossary/shariah-review/) [**Shariah audit** An independent assessment of internal controls, risk management and overall Shariah compliance, usually by internal audit.](https://islamicopenfinance.com/glossary/shariah-audit/) [**Shariah non-compliance event** An actual failure to meet Shariah requirements, which must be confirmed, rectified and, where required, reported to the regulator.](https://islamicopenfinance.com/glossary/shariah-non-compliance-event/) [**Operational risk** The risk of loss from failed processes, systems, people or external events; for Islamic institutions it includes Shariah non-compliance risk.](https://islamicopenfinance.com/glossary/operational-risk/)

**Shariah governance**

1. [Shariah supervisory board](https://islamicopenfinance.com/glossary/shariah-board/)
2. [Fatwa](https://islamicopenfinance.com/glossary/fatwa/)
3. [Shariah governance system](https://islamicopenfinance.com/glossary/shariah-governance-system/)
4. [Shariah review](https://islamicopenfinance.com/glossary/shariah-review/)
5. [Shariah audit](https://islamicopenfinance.com/glossary/shariah-audit/)
6. [Shariah non-compliance risk](https://islamicopenfinance.com/glossary/shariah-non-compliance-risk/)
7. [Purification of income](https://islamicopenfinance.com/glossary/purification/)
8. [Central Shariah board](https://islamicopenfinance.com/glossary/central-shariah-board/)

[All 221 terms](https://islamicopenfinance.com/glossary/)