In Islamic banking industry, the need to cater operational risk issue has been discussed by Akkizidis and Kumar (2008), Archer and Haron (2007), Hossain (2005), Iqbal and Mirakhor (2007), Khan and Ahmed (2001), and Sundararajan and Errico (2002). Khan and Ahmed (2001) show that operational risk is relatively higher and serious than credit risk and market risk for Islamic banks. Unfortunately, there has not been any single literature which thoroughly tackles the issue. This may be due to the fact that operational risk carries complexities and it is relatively new area which calls for more academic inquiry. This is the motivation from which this paper is developed.
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Hylmun Izhar (2010) studied this question.