Risk management is well-established concept in financial industry. However, it is still unknown to the zakat sector. None of zakat institution globally has implemented risk management in its operation, although zakat institution may face risk that can jeopardize zakat operation. For example, ineffective muzakki complaint management may reduce muzakki’s trust to zakat institution, and hence, the institution may lose its collected zakat fund. This is an example of risk faced zakat institution that needs to be mitigated and solved. Similarly, failure to provide audited financial report may end up with reputation and credibility degradation. People will question capability and transparency of zakat institutions.

In the light of the importance of risk management, working group on zakat discussing technical notes on risk management for zakat institution was held in Surabaya on Friday (10/28). It was attended by Azrin Abdul Mannan (Pusat Pungutan Zakat – PPZ, Malaysia), Amin Ibrahim (Lembaga Zakat Selangor – LZS, Malaysia), Syed Zafar Mahmood (Zakat Foundation of India), Abdallaahi Mohamed (IRTI – IDB), Nana Mintarti (Board Member of BAZNAS), and Ascarya (Bank Indonesia). A team of Puskas BAZNAS comprising Irfan Syauqi Beik, Muhammad Hasbi Zaenal and Khonsa Tsabita also attended the meeting.

The working group was discussing four groups of risk: country and transfer risk, reputation risk and lack of confidence, allocation risk, and operational and shariah compliant risk. There were 8 types of risks identified for the first group of risk along with their definitions and indicators. Meanwhile, 14, 9 and 16 types of risk were identified for the second, third and fourth group of risk, respectively, along with their definitions and indicators as well.

These risks should be mitigated and managed. Otherwise they may create problems that endanger entire zakat system and operation. Dedicated unit handling risk issues should be established within the zakat organization. Puskas BAZNAS director, Irfan Syauqi Beik, said that this technical notes document was needed by zakat organizations as guidance in handling various risks faced in their operations. On the other hand, Ascarya said that this document could be the breakthrough in managing zakat so that the quality of zakat management could be improved. It is expected the full draft of this document will be made accessible to public after editing process is completed. (PUSKAS NEWS)