Prudential Surveillance, Artificial Intelligence and Financial Risk: An Overview of Enhancing Resilience to Crises

Since the onslaught of the 2008 Subprime crisis there were much skeptics about the effectiveness of monetary policy in coping with the ensuing financial instability and risk of of eruption of financial crises. Since then the Basel agreements have shown enthusiasm in mitigating financial risk. But the Basel framework is specific to the credit sector while much of financial instability comes from excessive volatility of stock markets. An attempt of engineering prudential instruments framed through the help of Artificial Intelligence and Neural Networks is presented.Further discussions revolve around the role of the Balanced Scorecard of corporations in sharpening prudential surveillance the role of Financial risk tails.Additionally upgrading is shown to be a must for the Basel framework in many respects discussed in this interesting scholarly analysis of prudential surveillance in general and financial risk in particular.