Given that $y = \sin^{-1} x$, we can differentiate both sides with respect to $x$:
\[
\frac{dy}{dx} = \frac{1}{\sqrt{1 - x^2}}
\]
Now, differentiating again with respect to $x$, we get:
\[
\frac{d^2y}{dx^2} = \frac{-x}{(1 - x^2)^{3/2}}
\]
Multiplying both sides by $(1 - x^2)$, we obtain the desired result:
\[
(1 - x^2) \frac{d^2y}{dx^2} = -x^2 \frac{dy}{dx}
\]
Thus, the correct answer is $-x^2 \frac{dy}{dx}$.