THE RISK MANAGEMENT SYSTEM IN ISLAMIC FINANCE AND ITS FEATURES
Abstract
The article explores how risk is managed in Islamic finance and what makes this system unique compared to conventional finance. Islamic finance operates under Sharia principles, which prohibit interest (riba), excessive uncertainty (gharar), and investments in unethical activities. Because of these rules, risk management in Islamic financial institutions is based on different approaches. The study discusses the main types of risks such as credit, market, and operational risks, and explains how Islamic financial tools help reduce them. Instruments like profit-and-loss sharing contracts, asset-backed financing, and diversification are highlighted as key methods. The research shows that proper risk management strengthens the stability and reliability of Islamic financial institutions.