RISK MANAGEMENT METHODS IN ISLAMIC FINANCIAL INSTITUTIONS

This article explores risk management methods in Islamic financial institutions. It examines how Islamic finance, which operates based on Sharia principles, addresses various types of financial risks while maintaining compliance with ethical and religious guidelines. The study highlights key risk management tools such as profit-and-loss sharing mechanisms, asset-backed financing, diversification strategies, and risk mitigation through Islamic contracts like Murabaha, Musharakah, and Mudarabah. The article also analyzes the differences between conventional and Islamic risk management approaches, emphasizing the importance of balancing profitability with ethical responsibility. The findings suggest that effective risk management practices are essential for ensuring the stability, sustainability, and competitiveness of Islamic financial institutions in the global financial system.