<![CDATA[Inherent risk in Islamic banking refers to risks arising from business activities that can impact the bank’s financial position, whether measurable or not. Reputation risk is a critical concern, influenced by factors such as ineffective communication strategies and negative media coverage. This risk affects not only individual banks but the entire Islamic banking industry, as a negative event involving one bank can damage the reputation of others. Effective risk management requires active oversight by the board of commissioners, management, and the Sharia Supervisory Board (DPS), alongside clear policies, risk limits, and methods for identification, measurement, and control. The most effective approach to managing reputation risk is through proactive prevention and reputation maintenance programs. Reputation is an intangible yet valuable asset for Islamic banks, and addressing reputational risk preventively is crucial, given the high costs and potential industry-wide damage that can result from reputational crises.]]>
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