Proposed Framework for Measuring and Evaluating the Causes of Operational Risks in Banks According to Basel Requirements:A Comparative Study between Conventional Banks (CBs) vs. Islamic Banks (IBs)

International banks have seen huge financial collapses during the recent global financial crisis, and losses have reached hundreds of billions of dollars. The reasons for the collapse were attributed to the failure to identify risks - especially operational risks - and the absence of effective internal control systems. Thus, previous studies focused on risks analysis. The Basel Committee also introduced operational risk as one of the core components of bank risk to be measured. The committee noted that banks need more than $ 50 billion to address operational risks only. Therefore, this study aims to measure the operational risks according to the requirements of Basel accords and whether there is a difference between conventional and Islamic banks regarding this type of risks. In addition, this study added the banking governance and its impact on the performance of banks. The study concluded that there is no difference between conventional and Islamic banks in the causes of operational risks and in the use of quantitative and qualitative operational risk approaches. Second, this study concluded that changing the jurisprudential views of Islamic banks is significant, which support multi-level governance (i.e.,Sharia supervisory board) perspective. There are also differences in the correlations among liquidity, profitability, capital adequacy and financial and non-financial indicators  of operational risks in Islamic and non-Islamic banks.