Difference between Conventional Banks and Islamic Banks in the Middle East Region: A Risk Management Approach

The financial stability of the global economy and the effectiveness of the monetary policy of any country depends on the integrity of the financial system and in particular the stability of banking systems, as the banking industry is based on the art of risk management in light of what the banking industry of openness to the global financial markets and the prompt development of technological progress, hence the importance of banking risk management is considered as one of the most critical issue in order to maintain the strength and integrity of the banking system and consequently the global economy .Risk is defined as the potential for loss of financial or personal resources resulting from factors that are not foreseeable in the long or short term. Risk also, is a circumstance or situation in the real world in which there is an adverse situation, and more specifically, risk is a situation in which there is the possibility of a deviation from the desired outcome (Mohamed, 2017).The process of risk management requires the bank to deeply understand various types of risks and their sources, so that it can be measured, followed and monitored, because in some cases the distinction between risks is not clear enough accordingly it leads to some difficulties to identifying , measuring and controlling banks’ risks (Hassan,2011).