Artificial Intelligence for Risk Mitigation in the Financial Industry

1Artificial Intelligence in Risk Management

Pankaj Yadav, Priya Gupta, Rajeev Sijariya and Yogesh Sharma*

Atal Bihari Vajpayee School of Management and Entrepreneurship, Jawaharlal Nehru University, New Delhi, India

Abstract

The financial industry is well known for a high level of complexity in addition to a rapid rate of change; hence, it is important that effective risk management practices should be put into place. Traditional methods of risk management have many limitations, such as their inability to manage huge amounts of data, their inability to react quickly to swings in the market, and their inability to give real-time monitoring of market trends. Artificial intelligence (AI) can enhance the efficiency and effectiveness of risk management in the financial sector using deep learning, machine learning algorithms, and natural language processing. These methods can be used to ascertain the existence of potential threats, unearth fraudulent activities, and provide predictive analytics that are helpful in making decisions. The application of artificial intelligence to risk management has the potential to significantly improve decision-making and to reduce risks and raise overall financial stability. These benefits could be achieved through the use of artificial intelligence. The chapter presents an in-depth review of the potential ways in which AI could improve risk management methods in the financial industry. The chapter includes types of risks in the financial industry ...