© IJARW | ISSN (O) - 2582-1008 June 2021 | Vol. 2 Issue. 12 www.ijarw.com IJARW1493 International Journal of All Research Writings 46 RISK MANAGEMENT IN INDONESIA ISLAMIC BANKING Lasty Agustuty 1STIE Tri Dharma Nusantara Makassar, Indonesia ABSTRACT Islamic banks will always be faced with various types of risks with varying complexity and embedded in various business activities. This underlies the importance of implementing risk management in Islamic banking by identifying, measuring, and controlling various risks that will be faced. There are ten types of risks inherent in Islamic banks, credit risk, market risk, operational risk, liquidity risk, compliance risk, legal risk, reputation risk, strategic risk, return risk, and investment risk. The application of risk management in Islamic banks must be adjusted to the objectives, business policies, size, and complexity of the business as well as the bank's capabilities. Business complexity is the diversity in the types of business network product/service transactions. Meanwhile, bank capabilities include financial capacity, supporting infrastructure, and human resource capabilities. Keyword: Risk Identification, Risk Management 1. INTRODUCTION Bank is a financial institution that functions as an intermediary between the surplus and deficit parties. In carrying out this function, of course, banks are faced with various risks in the activities carried out. Islamic banks as intermediary institutions that carry out their business activities with sharia principles and in line with the external and internal banking environment are experiencing rapid development, will always be faced with various types of risks with varying levels of complexity and inherent in their business activities. In the banking context, risk is a potential event, both predictable and unpredictable and has a negative impact on bank income and capital. These various risks cannot be avoided, but can be managed properly and controlled. Therefore, Islamic banks as banking institutions in general, of course really need a series of procedures and methodologies that can be used in terms of identifying, measuring, monitoring, and controlling risks arising from business activities, or what is commonly referred to as risk management. The rapid development in the banking world, both in the external and internal banking environment, which is followed by the increasingly complex risk of banking business activities, thereby increasing the need for sound bank governance practices (Good Cooperate Governance) and the application of risk management which includes active supervision of bank management, policies, procedures and determination of risk limits, as well as the internal control system. The great benefits of implementing risk management will have an impact on both banks and bank supervisory authorities. For banks, the benefits of implementing risk management are increasing share holder value, providing an overview to bank managers regarding the possibility of bank losses in the future, improving methods and systematic decision-making processes based on the availability of information, used as a basis for more accurate measurements of bank performance, to assess the risks inherent in relatively complex instruments or bank business activities and to create a robust risk management infrastructure in order to improve bank competitiveness. (Rivai 2013:28) Islamic banking which is experiencing rapid development of the external and internal environment of Islamic banking has resulted in the risk of sharia banking business activities being increasingly complex. Banks are required to be able to adapt to the environment through the implementation of risk management in accordance with Sharia principles. In its application, the principles of risk management in Islamic banking in Indonesia are directed in line with the standard rules issued by the Islamic Financial Services Board (IFSB). The application of risk management in the Islamic banking environment is adjusted to the size and complexity of the business as well as the Bank's