ItemBook Chapter

Role of AI in Computational Risk Modeling of Financial Stability and Portfolio Risk: A New Perspective

Title
Role of AI in Computational Risk Modeling of Financial Stability and Portfolio Risk: A New Perspective
Creator
Lakshmanjani, Pillada Naga; Rangasamy, Sangeetha
Description
The need to assess climate change-related risks and their impact on the financial stability of banks is imperative. Innovations in technology, especially AI andML algorithms, have improved the efficiency and accuracy of risk analysis models. The obstacle for banks is assessing the climate risk exposure due to their lending portfolio. The climate data are uncertain and unavailable, and the granularity of the data is questionable. To overcome these issues, in this chapter, a hybrid risk predictive model is proposed. It uses a combination of ResNet-50 (to analyze and quantify spatial image data) and CoViaR (risk prediction) models. Using the ResNet-50 model, a climate change risk score is developed from images and feature extraction, which is correlated with the emission volume of the borrower firms. Then, using the proposed model, the impact of climate change-related risk on the lending portfolio is evaluated to understand the financial stability of banks through capital. 2025, Bentham Books imprint.
Source
Computational Modelling Approaches to FinTech Innovation;pp.139-161
Date
01-01-2025
Publisher
Bentham Science Publishers
Subject
AI predictive risk modeling; Artificial intelligence; Capital reserves; Climate change risk score; Climate data; CoViaR; Hybrid model; Lending portfolio; Portfolio risk; Risk analysis model; Spatial image data; Temperature maps; VaR
Coverage
Lakshmanjani P.N., School of Business and Management, CHRIST, Deemed University, Karnataka, Bengaluru, 560029, India; Rangasamy S., School of Business and Management, CHRIST, Deemed University, Karnataka, Bengaluru, 560029, India
Rights
Restricted Access; Hardcopy may be available in the library
Relation
ISBN: 979-889881081-8; 979-889881083-2;
Format
online
Language
English
Type
Book chapter

Citation

Lakshmanjani, Pillada Naga; Rangasamy, Sangeetha, “Role of AI in Computational Risk Modeling of Financial Stability and Portfolio Risk: A New Perspective,” CHRIST (Deemed To Be University) Institutional Repository, accessed June 18, 2026, https://archives.christuniversity.in/items/show/24490.

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