Leveraging Big Data for Financial Risk Forecasting: Tools and Strategies for Mitigation
Introduction Financial risk assessment is a cornerstone of decision-making in the financial sector, enabling institutions to anticipate, manage, and mitigate potential losses. With the exponential growth of data in recent years, Big Data analytics has emerged as a transformative tool for analyzing vast datasets to forecast financial risks with greater accuracy. This chapter explores how Big Data technologies, combined with advanced analytical techniques, can enhance financial risk assessment, providing insights into methodologies, applications, challenges, and future trends. Understanding Financial Risks Financial risks encompass a broad spectrum of uncertainties that can impact an organization’s financial health. These include: Market Risk : Fluctuations in asset prices due to changes in interest rates, exchange rates, or market volatility. Credit Risk : The risk of borrowers defaulting on loans or other credit obligations. Operational Risk : Losses arising from internal proc...