Importance of Using AI and ML in the Financial Sector for Risk Prevention and Management

Abstract

The financial sector has increasingly recognized the transformative potential of Artificial Intelligence (AI) and Machine Learning (ML) for risk prevention and management. This paper explores the pivotal role these technologies play in enhancing the accuracy and efficiency of risk assessment, fraud detection, and regulatory compliance. By leveraging vast datasets and sophisticated algorithms, AI and ML can identify patterns and anomalies that traditional methods might overlook, thus providing a more robust framework for mitigating financial risks. The integration of AI and ML into financial systems facilitates real-time data analysis and predictive modeling, enabling institutions to proactively address potential threats and optimize decision-making processes. Moreover, the adoption of these technologies supports the development of innovative financial products and services, ultimately contributing to a more resilient and secure financial ecosystem. This study also highlights key applications, benefits, and challenges associated with AI and ML in financial risk management.