Abstract

This study aims to analyze the effectiveness of the role of the Sharia Supervisory Board (DPS) in minimizing risks to Islamic financial institutions in Indonesia. This study is motivated by the importance of the sharia supervision function in maintaining integrity, compliance, and public trust, although normatively the duties of the DPS have been regulated in Law No. 21 of 2008 and various OJK regulations, but its effectiveness still faces challenges, especially related to the risk of sharia non-compliance and reputational risks. Using a non-doctrinal research design with a legislative and conceptual approach as well as descriptive-analytical methods, primary data was obtained through interviews with DPS members and the management of Islamic financial institutions. The results of the study show that the effectiveness of DPS supervision is influenced by the independence and institutional position of DPS, the competence of DPS members in fiqh muamalah and modern financial practices, as well as the support of an integrated sharia risk management and internal audit system. This study concludes that DPS that functions optimally is able to minimize sharia, reputation, and legal risks and increase the level of institutional compliance with sharia principles.

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