EFFECTIVENESS OF RISK MANAGEMENT POLICIES IN ISLAMIC BANKS: A QUALITATIVE ANALYSIS OF PRACTICES IN INDONESIA

Abstract

Risk management is a key element of banking, including the sharia-based financial system. The challenges faced by Islamic banking include not only general risks such as liquidity and credit, but also risks related to compliance with sharia principles. This gives the characteristics of risk management in Islamic banks different from conventional banks. The purpose of this study is to analyze the effectiveness of Islamic bank risk management policies through a qualitative approach. By exploring the challenges and best practices in this field, it is hoped that this study can provide relevant recommendations to policy makers and practitioners of Islamic banking in Indonesia. This study uses a literature study research methodology that focuses on collecting, processing and analyzing data from various literature and secondary sources. Risk management in Islamic banking is very different from conventional banking. A comprehensive approach that incorporates the values of Maqasid al-Sharia will help Islamic banking gain a global competitive advantage while maintaining public trust in the sharia-based financial system.