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Cited by 53Risk Management in Financial FirmsDigital Transformation in Financial ServicesBanking stability, regulation, efficiency

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Risk management frameworks for financial institutions in a rapidly changing economic landscape

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Courage Oko-Odion, Omogbeme Angela·2025·International Journal of Science and Research Archive
DOI 10.30574/ijsra.2025.14.1.0155
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Abstract

We have seen significant changes in the global economic environment over recent years, and as the complexity of financial relationships increases, these go hand-in-hand with increased requirements for effective risk management frameworks by financial institutions. In boom/bust economic cycles, economic or political crises, and potential systemic risks in the financial markets, they help institutions navigate through various challenges surrounding market volatility, regulatory changes, and emerging risks. In this article, we will cover the basics of risk management frameworks, provide an overview of all types, and how they are successfully applied in a financial institution, while maintaining the picture of interruption and sustainable growth. The discussion starts by addressing the fundamental elements of risk management, including credit, market, and operational risks, along with newer risks like climate change, cyber, and geopolitical risks. It analyses how these tools, advanced tools like big data analytics and artificial intelligence, are integrated into each aspect of human resources management as a transformative way of predicting and mitigating risk. It also covers the key challenges such as regulatory compliance, technological integration, and organizational resistance. It also explores strategic measures to modernize the risk management framework, focusing on agility, partnerships with FinTechs, and governance improvements. Successful frameworks are exemplified in case studies that demonstrate how institutions can adapt to new realities with compliance and operational efficiency. By looking into future themes, this article predicts the implications of digital transformation, the rise of green finance, and changing regulations, to offer actionable insights to the stakeholders. The article ends with some actionable advice for financial institutions and regulators on how to develop effective, flexible, forward-looking risk management approaches.

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Crossref · 10.30574/ijsra.2025.14.1.0155

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CC-BY · From the PDF
Figure 1 A diagram illustrating the interconnected risks faced by financial institutions, emphasizing their cascading effects
Figure 1 A diagram illustrating the interconnected risks faced by financial institutions, emphasizing their cascading effectsCC-BY · From the PDF
Figure 2 A flowchart depicting the standard risk assessment and mitigation process, highlighting key steps such as identification, evaluation, and action planning
Figure 2 A flowchart depicting the standard risk assessment and mitigation process, highlighting key steps such as identification, evaluation, and action planningCC-BY · From the PDF
Figure 3 A Bar Chart showing trends in credit defaults during economic downturns, highlighting the relationship between macroeconomic conditions and credit risk.
Figure 3 A Bar Chart showing trends in credit defaults during economic downturns, highlighting the relationship between macroeconomic conditions and credit risk.CC-BY · From the PDF
Figure 4 A heatmap highlighting high-risk areas in a portfolio, showcasing risks categorized by likelihood and impact
Figure 4 A heatmap highlighting high-risk areas in a portfolio, showcasing risks categorized by likelihood and impactCC-BY · From the PDF
Figure 5 A pie chart showing the distribution of challenges in risk management implementation, such as data quality, cybersecurity, and infrastructure constraints
Figure 5 A pie chart showing the distribution of challenges in risk management implementation, such as data quality, cybersecurity, and infrastructure constraintsCC-BY · From the PDF
Figure 6 A diagram illustrating the integration of AI and big data in risk prediction [23]
Figure 6 A diagram illustrating the integration of AI and big data in risk prediction [23]CC-BY · From the PDF

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Metadata

Authors
Oko-Odion, C., & Angela, O.
Affiliations
Western Illinois University (US)
Corresponding author
Courage Oko-Odion
Venue
International Journal of Science and Research Archive
Publisher
GSC Online Press
Published
2025-01-30
Volume
14
Issue
1
Pages
1182-1204
ISSN
2582-8185 (ISSN-L)
DOI
10.30574/ijsra.2025.14.1.0155
OpenAlex
W4406802556
Cited by
21
References
0
Citations by year
2026: 10 · 2025: 11
FWCI
54.81
Type
journal article
Language
en
Open access
Licence
cc-by
Locations
International Journal of Science and Research Archive (publishedVersion, cc-by)
Topics
  • Social Sciences › Business, Management and Accounting › Accounting › Risk Management in Financial Firms
  • Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Digital Transformation in Financial Services
  • Social Sciences › Economics, Econometrics and Finance › Finance › Banking stability, regulation, efficiency
Keywords
risk management framework, financial institutions, credit risk, market risk, operational risk, climate risk, cybersecurity risks, geopolitical risk, big data analytics, artificial intelligence, regulatory compliance, fintech partnerships, risk governance, digital transformation, green finance, systemic risk, business cycles

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