Journal of Primeasia

Integrative Disciplinary Research | Online ISSN 3064-9870 | Print ISSN 3069-4353
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RESEARCH ARTICLE   (Open Access)

Crisis Prevention and Early-Warning Systems in Financial Risk Management for U.S. Market Stability

Md. Rezaul Haque1*, Mitu Akter2

+ Author Affiliations

Journal of Primeasia 4 (1) 1-8 https://doi.org/10.25163/primeasia.4110489

Submitted: 03 February 2023 Revised: 04 April 2023  Published: 14 April 2023 


Abstract

Background: Financial systems experience rising exposure to systemic shocks because of worldwide economic integration and complicated technological structures and connected institutional networks. The conventional risk management system fails to identify new risks which makes early-warning systems (EWS) vital for detection.

Methods: The research study obtained survey data from 257 professionals who work at banks and investment firms and regulatory agencies and who include risk managers and analysts and compliance officers and regulatory specialists. The study collected data about EWS implementation and AI system deployment and crisis prevention methods and institutional cooperation and system performance evaluations. Descriptive statistics together with Pearson correlation and comparative analyses served to evaluate the connections between adoption patterns and technological utilization and collaboration and perceived system performance.

Results: The survey results showed that 68% of respondents used EWS systems with banks leading the way at 75%. Institutions integrated AI-based predictive analytics at a rate of 45% which resulted in a 25% improvement in early detection capabilities. Organizations used stress testing as their main risk management approach at 72% while scenario analysis and liquidity monitoring and portfolio diversification followed with adoption rates of 65% and 58% and 55% respectively. The study showed that 59% of institutions worked together with other organizations which resulted in a positive link to their EWS effectiveness ratings (r = 0.54, p = 0.01).

Conclusion: The U.S. is best prepared for crisis in financial market stability when combining systems of AI with preventive planning and teamwork.

Keywords: Crisis prevention, Early-Warning Systems, Financial risk management, AI integration, Market Stability

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