Theoretical and Natural Science
- The Open Access Proceedings Series for Conferences
Theoretical and Natural Science
Vol. 38, 06 June 2024
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Leveraging probability and statistical algorithms for enhanced financial risk management
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Abstract
This paper explores the foundations and applications of quantitative analysis in financial risk management. It examines the pivotal role of probability theory, statistical inference, and advanced algorithms in identifying, quantifying, and mitigating financial risks. Key concepts such as the Normal, Poisson, and Binomial distributions are discussed in the context of risk analysis, alongside statistical inference methods like hypothesis testing and confidence intervals. Furthermore, the paper investigates the application of portfolio optimization models, credit risk evaluation techniques, and market risk assessment methodologies in practical risk management scenarios. Additionally, it addresses the challenges posed by model risk, data quality, and regulatory compliance, emphasizing the need for rigorous validation, robust data governance, and ethical considerations in risk management practices. By integrating sophisticated quantitative techniques with real-world applications, financial institutions can enhance their ability to navigate the complexities of modern financial markets and achieve more effective risk management strategies.
Keywords
Financial Risk Management, Probability Theory, Statistical Inference, Quantitative Analysis, Portfolio Optimization
References
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2. Ihyak, Muhammad, Segaf Segaf, and Eko Suprayitno. “Risk management in Islamic financial institutions (literature review).” Enrichment: Journal of Management 13.2 (2023): 1560-1567.
3. Wahyuni, Sandiani Sri, et al. “Mapping Research Topics on Risk Management in Sharia and Conventional Financial Institutions: VOSviewer Bibliometric Study and Literature Review.” (2023).
4. Nugrahanti, Trinandari Prasetyo. “Analyzing the evolution of auditing and financial insurance: tracking developments, identifying research frontiers, and charting the future of accountability and risk management.” West Science Accounting and Finance 1.02 (2023): 59-68.
5. El Khatib, Mounir, Humaid Al Shehhi, and Mohammed Al Nuaimi. “How Big Data and Big Data Analytics Mediate Organizational Risk Management.” Journal of Financial Risk Management 12.1 (2023): 1-14.
6. Arslon o’g’li, Yuldashev Sanjarbek. “The Solution of Economic Tasks with the Help of Probability Theory.” Texas Journal of Engineering and Technology 26 (2023): 26-29.
7. Ross, Sheldon M., and Erol A. Peköz. A second course in probability. Cambridge University Press, 2023.
Data Availability
The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.
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- Volume Title
- Proceedings of the 2nd International Conference on Mathematical Physics and Computational Simulation
- ISBN (Print)
- 978-1-83558-461-3
- ISBN (Online)
- 978-1-83558-462-0
- Published Date
- 06 June 2024
- Series
- Theoretical and Natural Science
- ISSN (Print)
- 2753-8818
- ISSN (Online)
- 2753-8826
- DOI
- 10.54254/2753-8818/38/20240553
- Copyright
- 06 June 2024
- Open Access
- This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited