Abstract

The purpose of this paper is to discuss the operational risk disclosure practices of selected Islamic Banks in Indonesia.

The methodology utilized in this study is analytical descriptive. The approach of the study is to evaluate the

informational content of the operational risk disclosure in the bank’s annual report using an index used by Neifar &

Jarboui (2017). The index measures the presence of operational risk disclosure. The result is then analyzed for its

effectiveness.

Three Indonesian Islamic Banks were chosen to reflect different backgrounds of Islamic banks where each bank has its

own uniqueness. Bank x is chosen since it is of the pure full-fledged Islamic Bank in Indonesia. The Bank y is selected

because it is a state owned company. While Bank z was previously a conventional bank, which is then converted into

Islamic bank and is owned by one of Indonesian largest non-Islamic Bank.

The result shows that for Bank x and Bank y provide information as requested in the checklist. While for Bank z some

information is missing and need further improvement.

Keywords: Operational Risk, Disclosure, Basel Accord, Islamic Banks