Toward Resilient Waqf Institutions: A Conceptual Framework for Operational Risk Management

Abstract

The sustainability and resilience of waqf institutions are increasingly under scrutiny, particularly in light of global financial instability and governance challenges. Operational risks—ranging from human error to systemic mismanagement—pose a serious threat to the institutional credibility and efficiency of waqf entities, both in Muslim-majority and minority contexts. Despite growing scholarly interest in Islamic social finance, the conceptualization and mitigation of operational risk within waqf governance remain inadequately addressed. This paper aims to construct a conceptual framework for operational risk management tailored to the context of waqf institutions. It builds upon both classical Islamic jurisprudence and modern institutional risk management theory to fill a gap in the current literature. Utilizing a qualitative conceptual methodology, the paper synthesizes relevant sources, including classical fiqh references and risk governance models, to identify and categorize key operational risk components in the waqf domain. Findings reveal five critical dimensions of operational risk in waqf governance: compliance integrity, administrative efficiency, trustee accountability, systemic transparency, and asset sustainability. These dimensions are matched with corresponding Islamic legal and managerial principles. The resulting framework provides a structured approach for assessing and mitigating risk while maintaining adherence to sharī‘ah principles. The proposed framework holds significance for policymakers, nazir (trustees), and Islamic financial authorities aiming to build resilient waqf institutions capable of enduring modern operational challenges without compromising their spiritual and social missions.