Proposed Risk Management Framework for the Development Waqf Asset Portfolio in Malaysia

The lack of a focused risk management division within the waqf organisation of The State Islamic Religious Council (SIRCs) in Malaysia has resulted in financing limitations owing to exposure to unmanaged risks. Moreover, the lack of this division indirectly impacts the overall waqf operational activities, particularly the development of the waqf asset portfolio. Consequently, it is imperative to establish a risk management section inside the SIRCs waqf organisation to enhance the performance and reputation of the endowment, which is perceived to be deteriorating. This study will analysis the challenges and issues that lead to risk exposure, as well as the causes contributing to the absence of a risk management division inside the waqf organisation. The analysis of suitable risk management strategies will thereafter be included in the primary findings of this study. This study employed semi structured interview and content analysis, which will then be analysed descriptively. This study identifies the absence of a systematic risk management strategy in waqf operations, highlighting a lack of initiatives to address risk exposure effectively within waqf organizations. To overcome this gap, an integrated risk management mechanism, based on the COSO Enterprise Risk Management framework, is proposed. The findings underscore the framework’s potential to mitigate risks, enhance governance, and support the development of a sustainable waqf asset portfolio, ultimately ensuring better accountability and long-term benefits for stakeholders.