Proceedings of the Global Innovation and Technology Summit “AAROHAN 3.0”_Engineering track (GITS-EAS 2025)

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AI-Driven Risk Management in Financial Markets: A New Paradigm

Authors
Yash Vadhar1, *
1B.S Finance and Accounting, The Pennsylvania State University, University Park, Pennsylvania, USA
*Corresponding author. Email: yashvadhar.star@gmail.com
Corresponding Author
Yash Vadhar
Available Online 19 April 2026.
DOI
10.2991/978-94-6239-644-9_4How to use a DOI?
Keywords
Risk Management; Explainable AI; Machine Learning; Natural Language Processing; Deep Learning; Financial Markets
Abstract

This study examines how artificial intelligence (AI) and explainable AI (XAI) are reshaping financial risk management (FRM) by improving speed, accuracy, and transparency of decision-making in volatile markets. Drawing on three case studies, the paper looks at the use of hybrid LSTM-GARCH-Transformer models combined with Fin BERT sentiment analysis for liquidity forecasting, the integration of robot-advisory platforms that balance algorithmic tools with human expertise, and AI-driven audit technologies such as Mind Bridge that apply anomaly detection and dynamic risk scoring. The findings indicate that these AI applications consistently outperform traditional models, offering greater forecasting precision, real-time anomaly detection, and more effective advisory outcomes. Beyond technical efficiency, the study highlights the role of AI tools such as SHAP and automated rebalancing engines in enhancing transparency and compliance, while also pointing to the broader ethical need for responsible adoption of intelligent systems.

Copyright
© 2026 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of the Global Innovation and Technology Summit “AAROHAN 3.0”_Engineering track (GITS-EAS 2025)
Series
Advances in Engineering Research
Publication Date
19 April 2026
ISBN
978-94-6239-644-9
ISSN
2352-5401
DOI
10.2991/978-94-6239-644-9_4How to use a DOI?
Copyright
© 2026 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Yash Vadhar
PY  - 2026
DA  - 2026/04/19
TI  - AI-Driven Risk Management in Financial Markets: A New Paradigm
BT  - Proceedings of the Global Innovation and Technology Summit “AAROHAN 3.0”_Engineering track (GITS-EAS 2025)
PB  - Atlantis Press
SP  - 41
EP  - 54
SN  - 2352-5401
UR  - https://doi.org/10.2991/978-94-6239-644-9_4
DO  - 10.2991/978-94-6239-644-9_4
ID  - Vadhar2026
ER  -