relation: https://digilib.uin-suka.ac.id/id/eprint/76641/
title: AI Risk Governance in Islamic Digital Finance
creator: Darmawan, -
subject: Keuangan Islam
description: Purpose – The rapid integration of artificial intelligence (AI) into digital financial systems has created   opportunities for innovation while simultaneously generating complex governance challenges. Although   AI improves efficiency and financial inclusion, it also introduces risks related to cybersecurity, data   governance, institutional readiness and regulatory compliance. This study aims to identify and prioritize   AI-related risks in digital financial systems and examine their implications for AI governance, particularly   in the context of Islamic digital finance.  Design/methodology/approach – This study employs a quantitative approach based on a survey of   260 respondents to evaluate perceptions of AI-related risks in digital financial environments. The Failure   Mode and Effects Analysis (FMEA) framework is used to assess risks across four dimensions: potential   occurrence, frequency, impact and detection capability. Risk Priority Numbers are applied to rank and   classify risks, complemented by multilevel analysis at both category and item levels.  Findings – The findings indicate that the most significant risks are primarily governance-related rather   than technological. Risk management capacity, human capital constraints and Sharia compliance emerge   as dominant dimensions shaping AI risk governance. The analysis also shows that AI risk structures are   nonuniform. While aggregate-level analysis identifies governance-related risks as dominant, item-level   analysis reveals concentrated vulnerabilities, particularly cybersecurity risks, that may remain obscured   within broader classifications. The findings further suggest the presence of a governance execution gap,   where institutional awareness of AI-related risks is not always followed by effective mitigation practices.  Research limitations/implications – This study relies on perception-based survey data, which reflects   respondents’ assessments of AI-related risks rather than direct observations of technological failures in   real financial systems. Future research could extend the analysis by using case studies or institutional   data from financial organizations that implement AI technologies.  Practical implications – The findings highlight the importance of strengthening institutional capacity   through risk management frameworks, training and organizational readiness. Policymakers and financial   institutions should adopt governance approaches that integrate technological safeguards with regulatory   and ethical oversight, particularly within Islamic financial systems.  Social implications – Effective AI governance can strengthen public trust, support financial inclusion,   and enhance the stability of digital financial systems. In Islamic financial contexts, alignment between AI   systems and ethical as well as Sharia principles remains essential for maintaining institutional legitimacy   and societal acceptance.  Originality/value – This study contributes to the literature by applying FMEA to AI risk governance in   digital financial systems and by introducing a multilevel risk assessment perspective. The study further   advances understanding of AI governance by identifying governance execution gaps and emphasizing   the need to integrate technological and Sharia-based governance frameworks.
publisher: DIGITAL POLICY, REGULATION AND GOVERNANCE
date: 2026
type: Article
type: PeerReviewed
format: text
language: en
identifier: https://digilib.uin-suka.ac.id/id/eprint/76641/1/AI%20Risk%20Governance%20in%20Islamic%20Digital%20Finance.pdf
format: text
language: id
identifier: https://digilib.uin-suka.ac.id/id/eprint/76641/2/surat-surat-pernyataan1780969247.pdf
identifier:   Darmawan, -  (2026) AI Risk Governance in Islamic Digital Finance.  Emerald Publishing Limited.   ISSN 2398-5038     
relation: http://10.1108/DPRG-03-2026-0121