Artificial Intelligence: The Strategy of Financial Risk Management

Abstract

This research examines the use of artificial intelligence (AI) as a financial risk management tool. The concept is motivated by the revolutionary effects that financial technology has on business operations. Traditional methods of financial risk management are no longer effective and require revision. The purpose of the study is to assess the role of artificial intelligence in the management of financial risks and offer recommendations for its further use in the financial sector of the economy. Methodological analysis of relevant scientific literature showed that AI, in particular machine learning, can help in managing financial risks. It has been concluded that AI improves the management of market and credit risks in model verification, risk modelling, stress testing and data preparation. AI helps to monitor the quality of information received, detect fraud and search for the right information on the Internet. In the future, financial technology will continue to influence the financial sector as operating companies modify their operations. Thus, financial risk management tools will include AI. The study examines the possibilities of AI use in financial (market and credit), risk management and operational sectors (business continuity and emergency recovery). The paper presents the most promising AI technologies and techniques such as RPA, Data Management, Blockchain, MRL, MRC, CRU, Deep Learning, OML, Modelling and Stress Testing, Machine Learning and Algorithms, Neural Networks, Decision Trees, CPM, CRA, Black Box, etc. to improve “Financial Risk Management (FRM)”.

Keywords

• artificial intelligence (ai)
• credit risk (cr)
• operational risk (or)
• market risk (mr)
• machine learning (ml)