Project Risk Management | Islamic Perspective

Introduction

Risk Management is one of the leading topics of discussion today in the field of Project Management. Many researches are being conducted and hypotheses are being put to test to enhance project management by focusing on project risk management.

IT projects in general are quite expensive and require some heavy investments. From a project manager’s perspective, it is very important to assess and take the necessary steps to make sure that the project comes to fruition. It is a very recent phenomenon that the major corporations have started to take an interest and invest in risk management techniques and tools in order to reduce the risk to their projects. Risk management heavily relies on risk identification and risk mitigation processes. Risks can be of different types and can occur at various stages of the project.

Risk management as a science might be a recent phenomenon, but we see it being applied across history by kings, war generals, conquerors, builders etc. Most importantly we see risk management play a very important role in the Seerah of the Prophet Muhammad.

What is “Risk”?

Risk is something that can result in an injury or loss of something. It can also be defined as a possibility of something not happening or something that happens which might have a different result other than what was expected. Risk management is the process by which various risk exposures are:

• Identified
• Measured/Assessed,
• Mitigated and Controlled,
• Reported and Monitored.

Even when it comes to something as basic as cooking food, there is a risk that it might be undercooked, overcooked, too salty, too sweet, etc. Irrespective of the project at hand, risk is a factor which is always present at the table. Nothing is perfect and this opens the possibilities for the risks to occur. The logical step after understanding the types of risk, and identifying them is to learn how to manage them. The best industry risk management entails control of possible future events and it involves being proactive. Being reactive is a form of bad planning might lead to emotionally charged decisions instead of data driven. On the other hand, risk reduction is an active process of identifying the risks and reducing the possibilities of that risk to occurring during the course of the project by using different methods.

Risk Management in Islam

Risk traditionally is associated with the conventional industry whereas risk in Islam was assumed to focus on only the business and financial aspects of the risks. Even though we do not have many researches done in the field of risk management from an Islamic perspective, it doesn’t mean that Islamic teachings don’t have anything to contribute. The case is actually quite the contrary. Especially with the recent boom of Islamic finance and banking, many studies have been initiated to learn more about its benefits. When it comes to the risks in project management and risks in Islamic finance, there are many similarities. However the process of managing the risks and the tools associated with the risk management are completely different, but the basic idea behind the risk management is same.

In Islam, risk refers to the possibility of meeting danger or suffering, harm or loss. This is similar to the conventional beliefs, however the main difference is that Muslims believe in fate and that whatever happens has been predestined and decreed to happen by the Almighty. Risks is something that is a part of life and it cannot be avoided. Many Muslims misunderstood the idea of risks in Islam, thus endangering their lives thinking thinking that it was destined for them to have such a fate.

Al-Suwailem (2006) studied the risk factor in Islamic economics. As per this study, risk in Islam is of two types. These have been identified by Imam Ibn Taymiyyah who wrote:

“Risk falls into two categories: commercial risk, where one would buy a commodity in order to sell it for profit, and rely on Allah for that. This risk is necessary for merchants, and although one might occasionally lose, but this is the nature of commerce.”

Another type of risk that has been identified by the author is the risk that is associated with gambling or uncertainty. This type of risk has been prohibited by the Shariah as it is a form of unjust wealth which includes eating the wealth of the other people without putting efforts in obtaining it. This was just a simple game of chances and possibilities were very high to either get it all or lose it all.

Muslim scholars were always aware of those two types of risks from very early days of Islam, have studied those risks and heavily written commentaries explaining them as well. The possibility of identifying these risks is small as they closely resemble each other unless they are closely studied and clearly defined as to which type of risks are involved in each situation.

A framework needs to be defined to make sure that people are aware of those risks and avoid the risk that have been deemed haram as per the Shariah. The Shariah framework clearly defines that there is a risk that is associated with economic activities and that they are meant to occur when doing certain transactions. Ex: The risk that food might get spoiled before the merchant can finish selling them. On the other hand, another type of risks involves the zero-sum game with no wealth is created, but the wealth is transferred from one person to another person. Many financial transactions involve this type of risks and were prohibited by Muslim scholars.

Based on Al-Suwailem (2006), it is explained that deeds are based on their usefulness and not on their level of hardship. Not everything that involves a lot of hardship and suffering can be considered to be something useful or beneficial. Some people might end up suffering for no specific reason and it is not what Muslim jurists have been trying to elucidate in the chapter of qadr (pre-destiny). The most important element of the deed is the usefulness. If the deed has a lot of benefits, it is worth the risks associated with it. This involves effort and effort involves hardship. However, this hardship involves benefits and rewards that compensate for that risk. Risks are something like hardships and they are not necessarily desirable. However, when the risks are associated with effort and the reward they have become an integral part of economic activities. Such risk have been allowed by the teachings of Islam. This type of risks have been a huge part of economics and finance.

Risks associated with project management are similar in nature with the risks associated with Islamic finance industry. Many projects involve economic activities and that is a very important aspect of the industry especially with the rise of e-wallets, blockchain technology etc. Project management technically is just another way of doing business and as such, the risks that exists within the banking and finance industry also exists here. The only major difference between them is that projects are much more complex and the risks associated with it are much more different in their nature.

Risk Management in the Quran

Many ayat of the Quran have been analyzed in the works of Ullah Agha and Sabirzyanov (2015) and Al-Saati (2003). Let’s start with first verse:

????? ??????? ??? ????????? ??? ???????? ??????? ??????????? ??? ????????????? ??????? ??????? ??????? ???????? ?????? ????? ??????? ???? ????? ????? ???? ??????? ??? ?????

" Indeed, Allah will not change the condition of a people until they change what is in themselves. And when Allah intends for a people ill, there is no repelling it. And there is not for them besides Him any patron." [Surah Ar-Ra’d, 11].

Allah is the Only One who Knows Everything and He is the Only One who knows the future and what might happen. We as humans do not know what might happen in the future. Allah alone is the One who has the Power to change things and to make things happen. It is important to worship Allah and submit to His Will.

However, this does not mean that we should simply go through hardships. This ayah shows us that if we wish to change our hardships, we need to plan and make an effort from our end also. It encourages us to not just ask Allah and be lazy, but rather work hard towards attaining our goal and ask Allah for help. This ayah is a very good example of the risk management. Whenever faced with risks, one has to plan intensively, take the adequate measures, and then put our trust in Allah to aid our efforts.

A clear example of this from the Seerah of the Prophet is, Anas Ibn Malik reported: A man said, “O Messenger of Allah, should I tie my camel and trust in Allah, or should I leave her untied and trust in Allah?” The Messenger of Allah said, ?????????? ???????????

“Tie her and trust in Allah.” [Sunan al-Tirmidhi?]

Allah tells us in the Quran,

????? ??????? ??????? ?????? ?????????? ??????????? ????????? ?????????? ??? ??? ???????????? ????? ??????? ?????? ??????? ???????? ????? ????? ??????? ?????? ??????? ?????? ??????? ????? ??????? ??????? ???????

Indeed, Allah [alone] has knowledge of the Hour and sends down the rain and knows what is in the wombs. And no soul perceives what it will earn tomorrow, and no soul perceives in what land it will die. Indeed, Allah is Knowing and Acquainted. [Surah Luqman, Ayah 34]

This is another great example from Surah Luqman. This ayah shows that nothing is guaranteed from our end. There are possibilities for profit as well as losses. We also do not have any proof that we will live tomorrow. This ayah teaches us that there are risks in this life and they are a part of life. We are not sure what might occur in the future, but we can plan ahead to avoid any mishaps and work hard hoping that things will work out.

Surah Yusuf has several verses regarding risk:

??????? ??? ??????? ??? ?????????? ??? ????? ??????? ??????????? ???? ????????? ?????????????? ????? ??????? ?????? ????? ??????? ??? ?????? ???? ????????? ?????? ??????? ???????? ??????????? ?????????? ??????????????? ?????????????????

 And he said, "O my sons, do not enter from one gate but enter from different gates; and I cannot avail you against [the decree of] Allah at all. The decision is only for Allah ; upon Him I have relied, and upon Him let those who would rely [indeed] rely." [Surah Yusuf, Ayah 67].

????? ??????????? ?????? ??????? ??????? ????? ?????????? ????????? ??? ????????? ?????? ???????? ??????? ???????????

????? ??????? ??? ?????? ??????? ?????? ??????? ?????????? ??? ??????????? ??????? ?????? ???????? ??????? ???????????

????? ??????? ??? ?????? ??????? ????? ????? ??????? ???????? ??????? ???????????

[Joseph] said, “You will plant for seven years consecutively; and what you harvest leave in its spikes, except a little from which you will eat. Then will come after that seven difficult [years], which will consume what you saved for them, except a little from which you will store. Then will come after that a year in which the people will be given rain and in which they will press [olives and grapes]” [Surah Yusuf, Ayat 47-49].

This beautiful surah, as its name suggests contains the Story of Prophet Yusuf. In this story, Yusuf is capable of interpreting the king’s dream. This dream reveals that there will be drought after several years and it will last for seven years. With this knowledge Prophet Yusuf and king develop a solution in order to reduce the risk and the effect of the impeding catastrophe. This is a very good example of risk management. Prophet Yusuf has gotten the signs that there will be hardship and risk. As a project manager of Egypt, he helps to develop a solution to avoid and mitigate this situation. This is one of the examples that show that Islam allows the removal of hardship and risk management.

This is a clear evidence of risk management, where the risk of hunger and starvation was reduced by growing the produce and storing it in the first 7 years of produce, the years of prosperity.

Another example is from Surah Al-Baqarah and it is related to financial risks:

??? ???????? ????????? ??????? ????? ??????????? ???????? ?????? ?????? ????????? ???????????? ??????????? ??????????? ??????? ??????????? ????? ?????? ??????? ??? ???????? ????? ????????? ??????? ???????????? ???????????? ??????? ???????? ???????? ??????????? ??????? ??????? ????? ???????? ?????? ??????? ????? ????? ??????? ???????? ???????? ???????? ???? ???????? ???? ??? ??????????? ??? ??????? ???? ???????????? ????????? ??????????? ??????????????? ??????????? ??? ???????????? ????? ????? ???????? ?????????? ???????? ?????????????? ?????? ?????????? ???? ???????????? ??? ??????? ???????????? ??????????? ???????????? ??????????? ????? ?????? ???????????? ????? ??? ?????? ????? ?????????? ??? ??????????? ???????? ???? ???????? ?????? ???????? ????????? ???????? ????? ??????? ?????????? ????????????? ?????????? ?????? ??????????? ?????? ??? ??????? ????????? ????????? ????????????? ?????????? ???????? ?????????? ??????? ?????? ???????????? ???????????? ????? ????????????? ????? ???????? ??????? ????? ??????? ????? ?????????? ????????? ??????? ?????? ?????????? ??????? ??????????????? ??????? ????????? ??????? ?????? ???????

“O you who have believed, when you contract a debt for a specified term, write it down. And let a scribe write [it] between you in justice. Let no scribe refuse to write as Allah has taught him. So let him write and let the one who has the obligation dictate. And let him fear Allah , his Lord, and not leave anything out of it. But if the one who has the obligation is of limited understanding or weak or unable to dictate himself, then let his guardian dictate in justice. And bring to witness two witnesses from among your men. And if there are not two men [available], then a man and two women from those whom you accept as witnesses - so that if one of the women errs, then the other can remind her. And let not the witnesses refuse when they are called upon. And do not be [too] weary to write it, whether it is small or large, for its [specified] term. That is more just in the sight of Allah and stronger as evidence and more likely to prevent doubt between you, except when it is an immediate transaction which you conduct among yourselves. For [then] there is no blame upon you if you do not write it. And take witnesses when you conclude a contract. Let no scribe be harmed or any witness. For if you do so, indeed, it is [grave] disobedience in you. And fear Allah . And Allah teaches you. And Allah is Knowing of all things.” [Surah Al-Baqarah, Ayah 282].

This ayah holds the esteemed position of the longest ayah in the Quran. It contains many risk pre-emptive measures and instructions for the contracting parties regarding debt and financial activities. This ayah clearly states all the rules and regulations and those rules and regulations work as risk management measures. This ayah does not ask us to put our trust blindly in Allah and have no assurance or documentation. This way anyone could just fail to perform their duties based on contract and say that it was the will of Allah and it was meant to happen. In reality, we have to make sure that everything is going to be smooth. We cannot just ignore the risks and let the project fail. We have to do our best to make sure that everything is going to work out and succeed. When even after all the effort it is still unsuccessful, this means that it was meant by Allah to happen this way. However, only when we put all our effort and manage the risk we can believe so. Even then at the end of the day as long as there are no shortcomings from our side, as Muslims we believe that there is some good in the project not working out and it is from the wisdom of Allah.

Allah in the Qur'an also tells the story of Prophet Ya’qub:

??????? ??? ??????? ??? ?????????? ??? ????? ??????? ??????????? ???? ????????? ?????????????? ????? ??????? ?????? ????? ??????? ??? ?????? ???? ????????? ?????? ??????? ???????? ??????????? ?????????? ??????????????? ?????????????????

And he said, "O my sons, do not enter from one gate but enter from different gates; and I cannot avail you against [the decree of] Allah at all. The decision is only for Allah ; upon Him I have relied, and upon Him let those who would rely [indeed] rely." [Surah Yusuf, Ayah 67].

In this story Prophet Ya'qub, who is Prophet Yusuf’s father, tells us about identifying and managing risks accordingly over the duration of a project. Ya'qub commanded his sons to enter Egypt from different gates. This was done in order to make sure that the risks are lowered. If they would all have entered through the same gate, any mishaps or unfortunate events might cause them to lose everything they owned or even their lives. When they entered through different gates, they had higher chances to succeed.

This surah can be closely associated with the famous saying in the finance industry: Do not put all your eggs in the same basket. It means that do not invest all the money into same investment. This teaches us a very important aspect of risk management regarding planning and having backup plans. One should invest in a variety of different places and not all in the same place so that if one fails, he doesn’t go completely in loss. This is another great example of risk management in Quran.

Risk Management from the Seerah of the Prophet (??? ????? ???? ????)

Pre-Hijrah

In the words of Alphonse de La Martaine, “If greatness of purpose, smallness of means, and astounding results are the three criteria of human genius, who could dare to compare any great man in modern history with Muhammad? The most famous men have created arms, laws and empires only. They founded, if anything at all, no more than material powers which often crumbled before their eyes. This man moved not only armies, legislations, empires, peoples and dynasties, but millions of men in one-third of the then inhabited world; and more than that, he moved the altars, the gods, the religions, the ideas, the beliefs and souls . . . his forbearance in victory, his ambition, which was entirely devoted to one idea and in no manner striving for an empire; his endless prayers, his mystic conversations with God, his death and his triumph after death; all these attest not to an imposture but to a firm conviction which gave him the power to restore a dogma. This dogma was twofold, the unity of God and the immateriality of God - the former telling what God is, the latter what God is not.

Philosopher, Orator, Apostle, Legislator, Warrior, Conqueror of Ideas, Restorer of Rational beliefs... The Founder of twenty terrestrial empires and of one Spiritual Empire - that is Muhammad. As regards all standards by which human greatness may be measured, we may ask, is there any man greater than he?” ['Historie de la Turquie', v. ii, Paris, 1854]

As the above quote shows, Prophet Muhammad showed us that its not just money, inventory and resources that matter in the success of a project, but more importantly the brains and the right mindset. Risk management can be seen employed throughout the life of the Messenger of Allah. It won’t be wrong if one asserts that applying risk management techniques was one of the reasons of the widespread success of his mission

From the Seerah of the Prophet we have already mentioned the famous hadith about tying the camel.

Anas ibn Malik reported: A man said, “O Messenger of Allah, should I tie my camel and trust in Allah, or should I leave her untied and trust in Allah?” The Messenger of Allah, peace and blessings be upon him, said,

?????????? ???????????

“Tie her and trust in Allah.” [Sunan al-Tirmidhi?]

This hadith is a prime example of how to manage the risk. It is important to trust Allah, but at the same time we have to do our best and to make sure that risks are managed in order to reduce the possibility of any losses (Ullah Agha and Sabirzyanov, 2015).

From the very start of his blessed mission, Prophet Muhammad managed his project to spread the true message of monotheism in the best of manners. During the infant days of Islam we see that the Prophet was ordered by Allah to call upon only his family members and immediate friend circle. This was an important risk assessment, because had the new spread amongst the Quraysh at that point that somebody was calling out to abandon their fathers beliefs, it would have caused havoc. Even from a project perspective, they had to take into account the nature of the people. Gradual progression was required. People at the time were used to worshipping idols and if the Messenger of Allah would start to preach monotheism directly in the streets, it would cause a heavy backlash from the community for this was an alien concept to them. To reduce the risks the Prophet invited only those who might accept Islam easily before officially starting to preach Islam publicly (Ullah Agha and Sabirzyanov, 2015).

It was only when the Prophet had established a strong foundation within his immediate family and friends did he move forward with spreading his message. This was when the famous Dar al-Arqam (House of Arqam) was set up. It was a secret meeting place for new converts to Islam who would come and learn from the Messenger of Allah about Islam. Here is a very good example of negative and positive risks as mentioned in the earlier chapters. This house was situated merely a few meters from the Kabah which used to be the main meeting point of the seniors and nobles from pagan Quraysh. Everyone would expect this new group to have chosen a far off and hidden place to teach the new religion. No one in their wildest dreams would have expected them to take such a risk. The positive risk in this was ease for the new reverts, and strategically central to finding out first if the Quraysh would take any decision against them.

In this house we see the Prophet, as a project manager, teach his new team how to adhere to the basics of Islam. The foundation and knowledge passed on to them was so impactful and strong that these few members would go on to become leaders of the Arabs. What’s important to note is that the Prophet removed the risk of doubt and mistrust from the hearts of the new converts to Islam. An organization cannot function if the core team doesn’t understand, value and implement the foundational mission and vision of the organization.

Another incident which helps highlight the positive and negative risk was the acceptance of Islam by the Prophet’s uncle, Hamza Ibn Abdul Muttalib. The Prophet of Allah was one day heavily abused by one of the pagans leaders of the Quraysh. On hearing this, Hamza in anger went up and declared his acceptance to the message being preached by Prophet Muhammad. The positive risk in this situation to a large extent was the Prophet himself not responding to the abuse as that could potentially turn into a negative risk for his message. Sometimes it is the small decisions and plans taken by the project manager that have a huge impact on the quality of the results produced by the team. The Prophet’s immense forbearance and forgiving attitude saw Hamza Ibn Abdul Muttalib and even Umar Ibn al-Khattab down the line to accept Islam. These 2 men were literally the greatest assets to the new and weak faith cradled in Makkah. Other companions of the Prophet narrate that after the acceptance of these 2 men, they felt such strength and confidence swell their ranks that the Muslims could perform tawaf around the Kabah openly without the fear of retaliation. This again shows an example of how positive risk was chanced to good results and negative risk was overturned. 

Hijrah

Risk Management in Islam takes its roots from application of the Quran in the Seerah of the Prophet. During the Hijrah from Makkah to Madinah, many Muslims left the city in small bands and groups. This shows the understanding of the risks inherent in the migration and the attempt to mitigate this risk by moving in small groups.

The very emigration of the Prophet from Makhah to Madinah is a masterclass in risk management. We see that there was proper risk identification, risk mitigation, planning and even backup plans in place for the emigration. From the project manager’s perspective, we see that the Prophet informed only his trusted companion, Abu Bakr about his proposed emigration. [Sahih al-Bukhari]

From this we learn that in the initial stages of the project, it is wise to discuss crucial and sensitive matters only with the members directly involved. This reduces the risk of speculation, team morale loss and fear of failure especially in such sensitive projects. This is important to take into note because the Quraysh had made a plan to assassinate the Messenger of Allah before he could emigrate to safety. 11 men stood guard outside the Prophet’s house peeping now and again to make sure he was on the bed, and waiting for him to emerge in the morning so that they could assassinate him.  

The Prophet has asked his cousin, Ali Ibn Abi Talib to take his place on the bed with a full assurance of protection of Allah. When the assassins entered the house in the morning, they found that their plan had failed and the Prophet had succeeded in evading all risks and managed his project perfectly.

Allah refers to this incident in the Quran,

?????? ???????? ???? ????????? ???????? ????????????? ???? ??????????? ???? ??????????? ????????????? ?????????? ??????? ????????? ?????? ?????????????

And [remember, O Muhammad], when those who disbelieved plotted against you to restrain you or kill you or evict you [from Makkah]. But they plan, and Allah plans. And Allah is the best of planners. [Surah al-Anfal, Ayah 30]

This ayah and the actions of the Prophet show us a perfect example of what it means to tie your camel and then place your trust in Allah. The Prophet could have just said, ‘Allah will help me as I’m His Messenger’. But no, he took all possible precautions against the risks coming towards his project.

Even after this, we see the Prophet as a manager over the duration of his project to migrate to Madinah assess the risks posed at different stages. He didn’t make the mistake of assessing and fixing the risks faced only at the beginning and leave risk identification and assessment after that. Instead of taking the usual route to Madinah from the North, he walked along a road least expected which lies to the South of Makkah and on the road to Yemen instead. Some reports even narrate that the 2 blessed companions walked on their tiptoes to avoid leaving behind footprints. The Quraysh had placed an armed watch on all exits leading outside Makkah and a bounty of 100 camels on them. The 2 blessed companions stayed hidden in the Cave of Mount Thawr for 3 days waiting for the situation to settle down a bit before resuming their journey to Madinah. This phase of Hijrah is the epitome of risk management which should be mentioned in gold for all project managers around the globe to learn from.

Even after settling in Madinah, we see how the Prophet kept in mind the importance of stability and security by managing and planning risk management. Whenever the Prophet used to leave the city for travel or for a battle, a caretaker was placed in charge of Madinah to take care of the day to day operations of Project Madinah. As a project manager no matter how many side tasks come up, the main project and its course should not get effected.

There are plenty of other examples of risk management in the blessed life of the Messenger of Allah but we can highlight one of the most important cases towards the end of his life. Before he passed away, he appointed Abu Bakr to lead the people in Hajj as well as become their Imam in the daily congregational salah. The Prophet would not have anyone but Abu Bakr lead the people. The scholars of Islam are unanimous in decision that this was the Prophet’s way of indicating to the Muslims on who would be their leader after him. Had the Prophet not seen this risk and taken steps to mitigate it, it could have caused bloodshed and a return to tribal allegiances immediately after the Prophet’s death. As a project manager, it is very important for the team to know the hierarchy and who to report to. If not, people would take advantage of situations and there would be no proper person to answer to. We see this arise later down in Muslim history when there were disagreements over the seat of the caliphate. 

Risk Management in Islamic Business Transactions

In Islamic finance, the first systematic discussion on risks was produced by Elgari (2003), who defined the concept of mukhatarah (risk) as “the situation that involves the probability of deviation from the path that leads to the expected or usual result” and “the likelihood of loss.” This is in line with Ibn Manzur in the book of Lisan ul-Arab, who explained the concept of risk in accordance with the Arabic language, as mukhatir or mukhatarah or khatr. The experts have revealed the meaning of khatr from the language parlance as an exposure to damages or very close to being perished. On the contrary, a majority of scholars have claimed that khatr has various meanings such as gambling (maysir), uncertainty (gharar) or compensation.

It is clear that there is a risk in Islam and Islam recognizes the risk. The risk that involved the consumption of other people’s wealth was prohibited in Islam, however risk associated with everyday activities and risks that involve effort and work were never prohibited in Islam. This was just done to make sure that there is no unjust practices among the Muslims. Islamic rules regarding risk is that risk cannot be severed and separated from real transactions. This will make risk transfer a zero-sum game and thus a form of consuming illegal wealth for nothing. This means that the risk will always be there and no matter how much the project is risk proof, there will be a window for risks to occur. This creates the need for risk management even for the projects that are considered to be successful and risk free. Even though we cannot fully remove the risks we can still reduce the risk or reduce the impact of those risks (Al-Suwailem, 2006).   

In Islamic finance, musharakah is a contract based on a capital partnership and joint venture. Each party involved in the business works on the capital and enjoys the profit and loss of the business together. Risk is shared equally. For mudharabah contracts, the profit and loss is shared between the capital providers (investors) and entrepreneurs. Even though the investors only provide capital and leave the remaining management of the business to its operators, in the event of a risk or business failure due to the unintentional negligence of the operator, the employer will not have to pay compensation to the investors.

Objectives of Shariah or Maqasid al-Shariah is an important concept in understanding the concept of risk management from an Islamic perspective. Based on this concept there are five elements that must be protected in Islam. These five things are:

1.    Protection of Religion

2.    Protection of Health

3.    Protection of Intellect

4.    Protection of Lineage

5.    Protection of Wealth

Risks management falls into this category as it is intended to protect those five elements in one way or another. Maqasid teaches us that in order to protect those five elements we have to make sure that the risks are managed and reduced. The only way for the Maqasid to succeed is by managing the risks and make sure that the projects are well protected.

Conclusion

Risk management has become more and more important in the recent years as the industry is moving and growing at a faster pace. Risk factors are such a phenomenon that can cause the result to be different from what we are expecting. For many projects risk management was considered to be a hindrance as it would affect the time span of the project and reduce the freedom of the workers and affect their creativity. However, more and more companies now realize that risks are dangerous and might cause lasting negative impacts on the companies. Risk management is an ongoing process and it exist through the life-time of the project.

Islam does not states that we should just leave everything to Allah and just accept everything as Allah’s will. We should put our effort in order to achieve something or in order to make our project successful. Only when we do something about the situation Allah will help us. This means that if we want our project to be successful, then we have to reduce the possibilities that risks will affect its performance. This can be done only by using risk management strategies.

We can conclude that risk management consists of processes, methods, and tools for managing risks in a project. Based on the Seerah of the Prophet Muhammad, the following points can be highlighted into a project managers risk management plans:

• Assess continuously at every stage of the project for potential risks.
• Determine the level of each risk in terms of importance and deal with them accordingly to optimize usage of time and resources.
• Strategize and implement measures to mitigate risks.
• Monitor progress and keep tracking the project flow so that potential risks can be controlled.

References

Al-Saati, A. (2003). The permissible gharar (risk) in classical Islamic jurisprudence.

Jalbani, A., & Shaikh, S. A. (2009). Risk management in Islamic and conventional banks: A differential analysis.

Agha, S. E. U., & Sabirzyanov, R. Risk Management in Islamic Finance: An Analysis from Objectives of Shariah perspective.

Al-Suwailem, S. (2006). Hedging in Islamic finance (Vol. 10). Islamic Development Bank, Islamic Research and Training Institute.

Raz, T., & Michael, E. (2001). Use and benefits of tools for project risk management. International journal of project management, 19(1), 9-17.

Elgari M. A. (2003). Credit risk in Islamic banking and finance. Islamic Economic Studies, 10(2), 1-25.