Understanding Financial Risk Dynamics: Systematic Literature Review inquiry into Credit, Market, and Operational Risks (A Long-life Lesson From Global Perspective to Indonesia Market Financial Strategy

This research delves into the intricate dynamics of financial risks—specifically credit, market, and operational risks—within the banking, investment, and corporate sectors, with a focus on both global and Indonesian contexts. By examining the key factors contributing to credit risk, the impact of global market volatility on financial stability, and the operational risks associated with the digital transformation of the financial sector, the study seeks to offer a comprehensive analysis that is both theoretically robust and practically relevant. This research employs a qualitative systematic literature review (SLR) to explore credit, market, and operational risks within the banking, investment, and corporate sectors, focusing on global and Indonesian contexts. The SLR process includes formulating research questions, identifying and screening relevant literature from databases like Scopus and Google Scholar, and synthesizing findings into key themes: credit risk dynamics, market volatility, operational risks in the digital age, and integrated risk management. This research provides a comprehensive analysis of financial risk management in the banking, investment, and corporate sectors, with a focus on Indonesia and global perspectives. The study reveals that digitalization has a significant impact on operational risk, enhancing efficiency but also increasing vulnerability to cybersecurity threats and disruptions. This underscores the need for robust risk management frameworks to address technology-driven challenges. The research also highlights the importance of improving risk disclosure transparency, which can positively influence credit risk management. Liquidity risk is identified as having a greater short-term impact on financial stability than credit risk, necessitating proactive liquidity management strategies. Technological innovations in finance are found to correlate with increased risks, including failures and cybersecurity threats, which must be carefully managed. The study examines the risks associated with platform-based financing models and the influence of global market volatility on investment strategies. In Indonesia, the banking sector faces distinct credit risk challenges due to high market concentration and systemic shocks, as well as operational risks from rapid digital transformation. The research emphasizes the necessity for Indonesian financial institutions to implement comprehensive cybersecurity measures, maintain resilient IT infrastructure, and utilize advanced monitoring tools to address these emerging risks. The study also stresses the importance of adopting integrated risk management frameworks that account for the interdependencies between credit, market, and operational risks in a globalized market.


Introduction
In the contemporary financial landscape, risk has evolved into a fundamental aspect of business strategy and operations across various sectors, notably banking, investment, and corporate domains (Aikman et al., 2014).As these sectors become increasingly interconnected and complex, understanding the dynamics of financial risk has grown more challenging yet crucial for ensuring sustainability and growth (Kedarya et al., 2023).Financial risks, broadly categorized into credit, market, and operational risks, represent significant concerns that can disrupt individual firms and the stability of entire economic systems (Arunkumar & Kotreshwar, 2006) (Santomero, 1997).This research aims to delve into the intricate dynamics of these financial risks, offering insights essential for stakeholders in the banking, investment, and corporate sectors to make informed decisions.In the contemporary financial landscape, risk has evolved into a fundamental aspect of business strategy and operations across various sectors, notably banking, investment, and corporate domains .As these sectors become increasingly interconnected and complex, understanding the dynamics of financial risk has grown more challenging yet crucial for ensuring sustainability and growth .Financial risks, broadly categorized into credit, market, and operational risks, represent significant concerns that can disrupt individual firms and the stability of entire economic systems .This research aims to delve into the intricate dynamics of these financial risks, offering insights essential for stakeholders in the banking, investment, and corporate sectors to make informed decisions.
Financial risk management has long been a focal point for scholars and practitioners alike, as evidenced by the extensive body of literature that addresses various facets of this domain .In particular, credit risk has been extensively studied, which refers to the possibility of a loss resulting from a borrower's failure to repay a loan or meet contractual obligations.It remains a critical area of concern due to its potential to cause substantial financial losses, as seen in the 2008 global financial crisis.Market risk, another pivotal category, pertains to the risk of losses in on-and off-balance-sheet positions arising from movements in market prices.The volatility of financial markets, driven by factors such as interest rates, foreign exchange rates, and commodity prices, underlines the importance of understanding market risk dynamics.Meanwhile, operational risk, often considered the least understood among the three, encompasses risks stemming from inadequate or failed internal processes, people, and systems or from external events.Operational risk has gained prominence in the wake of numerous high-profile corporate scandals and failures, which have highlighted the need for robust internal controls and risk management frameworks.Understanding the interplay between these financial risks is crucial for stakeholders in the banking, investment, and corporate sectors.Scholars have made significant strides in conceptualizing and quantifying these risks, but the operational aspects of managing them have received less attention.
Financial risk management has long been a focal point for scholars and practitioners alike, as evidenced by the extensive body of literature that addresses various facets of this domain.In particular, credit risk has been extensively studied, which refers to the possibility of a loss resulting from a borrower's failure to repay a loan or meet contractual obligations.It remains a critical area of concern due to its potential to cause substantial financial losses, as seen in the 2008 global financial crisis.Market risk, another pivotal category, pertains to the risk of losses in on-and off-balance-sheet positions arising from movements in market prices.The volatility of financial markets, driven by factors such as interest rates, foreign exchange rates, and commodity prices, underlines the importance of understanding market risk dynamics.Meanwhile, operational risk, often considered the least understood among the three, encompasses risks stemming from inadequate or failed internal processes, people, and systems or from external events.Operational risk has gained prominence in the wake of numerous high-profile corporate scandals and failures, which have highlighted the need for robust internal controls and risk management frameworks.In Indonesia, these global phenomena resonate with local experiences, though with specific nuances reflective of the country's unique economic and regulatory environment.Indonesia's banking sector, for instance, has navigated a landscape marked by rapid economic growth, regulatory reforms, and the challenges posed by external shocks, such as the Asian financial crisis in 1997 and the global financial crisis in 2008.These events have underscored the importance of understanding and managing financial risks within the Indonesian context.
The Indonesian government and regulatory bodies, such as Bank Indonesia and the Financial Services Authority, have implemented measures to mitigate credit risk, including restructuring policies and regulatory relief during crises.However, the long-term effectiveness of these measures remains a subject of ongoing analysis and debate (Djajadikerta et al., 2019;Prasetyo et al., 2022).Market risk in Indonesia is closely tied to the volatility of global financial markets, commodity prices, and exchange rates.The country's heavy reliance on commodity exports, such as palm oil, coal, and natural gas, makes it particularly vulnerable to fluctuations in global commodity prices (Abidin & Haseeb, 2018;Nugroho et al., 2020).For instance, the sharp decline in oil prices in 2014 significantly impacted Indonesia's fiscal revenues and economic stability, highlighting the critical nature of market risk in the country.Furthermore, the Indonesian rupiah has been subject to considerable volatility, influenced by both domestic and external factors, requiring a keen understanding of these drivers and the ability to respond to sudden shifts in market conditions.Operational risk in Indonesia has become increasingly prominent due to the rapid adoption of digital technologies in the banking and corporate sectors.As more financial transactions move online, the risks associated with cybersecurity, data breaches, and technological failures have grown (Santosa et al., 2020;Widyastuti et al., 2021).Highprofile cyberattacks on Indonesian banks and corporate entities have underscored the vulnerabilities within the system and the need for robust operational risk management frameworks.Moreover, Indonesia's diverse and geographically dispersed population presents additional operational challenges, particularly in ensuring the accessibility and security of banking services across the archipelago.The logistical complexities of operating in such a vast and varied landscape can lead to operational inefficiencies, increasing the risk of errors and failures.
While the extant literature has extensively examined the various facets of financial risk management , some scholars have argued that the operational aspects of managing these risks have received less attention.For instance, credit risk, which refers to the possibility of a loss resulting from a borrower's failure to repay a loan or meet contractual obligations , has been extensively studied, particularly in the wake of the 2008 global financial crisis .Similarly, market risk, which pertains to the risk of losses in on-and off-balance-sheet positions arising from movements in market prices, has been a focal point of research, given the volatility of financial markets driven by factors such as interest rates, foreign exchange rates, and commodity prices .However, operational risk, often considered the least understood among the three, has gained prominence in recent years due to numerous high-profile corporate scandals and failures, which have highlighted the need for robust internal controls and risk management frameworks .Scholars have argued that the interplay between these financial risks and their operational implications deserve further exploration to provide a more comprehensive understanding of risk management in the banking, investment, and corporate sectors.In this context, a growing body of literature has emerged that explores the operational aspects of financial risk management.Scholars have delved into the process design, process management, and human behavior aspects of operational risk, recognizing that effective risk management requires a holistic approach that goes beyond mere statistical modeling .For instance, research has examined the role of internal controls, IT systems, and human resources in mitigating operational risk, as well as the impact of organizational culture and decision-making processes on risk management practices.
Moreover, the increasing interconnectedness and complexity of the financial landscape have introduced new challenges in understanding and managing financial risks.Scholars have emphasized the need for a more integrated approach to risk management, one that takes into account the interdependencies between different risk categories and their potential systemic implications.
This study specifically focuses on the dynamics of financial risks within the banking, investment, and corporate sectors.These sectors, though distinct in their operations, share commonalities in the types of risks they face and the strategies they employ to mitigate them.The banking sector, for instance, is primarily concerned with managing credit risk, given its core business of lending.However, banks are also exposed to significant market and operational risks, as they engage in various trading activities and rely heavily on complex technological infrastructures.Similarly, the investment sector, which includes entities such as hedge funds, asset management firms, and investment banks, faces a unique set of challenges related to market risk, as their profitability is closely tied to market movements.Corporate sectors, encompassing a wide range of industries, must navigate all three types of risks as they seek to optimize their financial performance while maintaining operational efficiency and compliance with regulatory requirements.The phenomenon of financial risk in these sectors is not static but rather dynamic, influenced by both internal and external factors.Economic conditions, regulatory changes, technological advancements, and global events all contribute to the evolving nature of financial risks.For instance, the advent of fintech and digital banking has introduced new forms of operational risk, such as cybersecurity threats, while also altering traditional credit and market risk profiles.The COVID-19 pandemic further exemplified how unforeseen global events can amplify financial risks across all sectors, leading to unprecedented challenges in risk management.As such, understanding the dynamics of financial risks in the current environment requires a holistic approach that considers both traditional risk factors and emerging threats.
A review of relevant research reveals that while significant progress has been made in understanding financial risks, there still needs to be a gap in the literature regarding the interconnectedness of credit, market, and operational risks across different sectors.Most studies tend to focus on these risks in isolation, often within a single sector, without fully exploring how they interact and influence one another.For instance, credit risk models in banking have been extensively developed, yet there is limited research on how credit risk interplays with market and operational risks, especially in the context of cross-sectoral activities.Similarly, studies on market risk often emphasize its impact on investment portfolios, but the implications of market risk on corporate financial stability and operational continuity are less explored.Moreover, operational risk research has traditionally been more qualitative, focusing on case studies of corporate failures, with less emphasis on quantitative analysis that can provide broader insights into risk dynamics.
The purpose of this study is to contribute to the existing literature by providing a thorough examination of the dynamics of credit, market, and operational risks across the banking, investment, and corporate sectors.Employing a quantitative descriptive research approach, this study aims to identify patterns and correlations among these risks, offering insights into their collective impact on financial performance and stability.The research will leverage data from previous studies and industry reports, applying statistical methods to investigate the relationships between various types of financial risks.The findings are anticipated to have significant implications for risk management practices, particularly in terms of developing integrated risk management frameworks capable of addressing the complexities of modern financial environments.
This research endeavors to address the practical challenges encountered by risk managers in the banking, investment, and corporate sectors.In the face of a progressively volatile and interconnected financial landscape, traditional risk management approaches that compartmentalize credit, market, and operational risks may prove inadequate.This study aims to highlight the advantages of a more holistic approach, wherein risks are managed in an integrated manner, accounting for their interdependencies and cumulative impacts.For instance, comprehending how market volatility can exacerbate credit risk within a banking portfolio, or how operational failures can precipitate market losses in an investment firm, can inform the development of more effective risk mitigation strategies.The primary objective of this research is to analyze the dynamics of financial risks-credit, market, and operational-within the banking, investment, and corporate sectors, with a specific focus on the global and Indonesian contexts.The study aims to achieve the following: 1. Identify and analyze the key factors contributing to credit risk in banking, investment, and corporate sectors globally and in Indonesia.This includes examining the role of economic conditions, regulatory frameworks, and borrower characteristics in shaping credit risk.2. Explore the impact of global market volatility on financial stability in Indonesia, particularly focusing on exchange rate fluctuations, commodity prices, and interest rate changes.The research will seek to understand how these factors influence market risk and how financial institutions in Indonesia are managing these challenges.3. Investigate the operational risks associated with the digital transformation of the financial sector in Indonesia, including cybersecurity threats, technological failures, and operational inefficiencies.The study will examine the strategies employed by Indonesian financial institutions to mitigate these risks and the effectiveness of these approaches.
Provide actionable insights and recommendations for improving risk management practices in Indonesia's financial sector.The research will draw on both global best practices and local experiences to offer tailored solutions that can enhance the resilience of Indonesia's financial system.

Research Design and Method
This research adopts a qualitative systematic literature review (SLR) approach to explore the dynamics of financial risks-credit, market, and operational-within the banking, investment, and corporate sectors.The primary objective of this review is to identify, analyze, and synthesize relevant literature that contributes to understanding these financial risks, with a specific focus on the global and Indonesian contexts.The systematic literature review method is particularly suitable for this study as it enables a comprehensive and structured examination of existing research, ensuring that the findings are grounded in a robust and rigorous analysis of the available evidence.
a) The SLR process will involve several key steps: 1. Formulation of Research Questions The research questions will be designed to guide the review process, ensuring that it remains focused and relevant to the study's objectives.These questions will be centered around understanding the key factors contributing to credit risk, market risk, and operational risk in the banking, investment, and corporate sectors globally and in Indonesia.They will also address the interdependencies between these risks and the effectiveness of integrated risk management approaches.

Identification of Relevant Literature
A comprehensive search strategy will be employed to identify relevant literature from various academic databases, including Scopus, Web of Science, and Google Scholar.The search will focus on peer-reviewed journal articles, conference papers, and relevant industry reports published within the last two decades.Keywords and search terms will include "credit risk," "market risk," "operational risk," "financial risk management," "banking sector," "investment sector," "corporate sector," "Indonesia," and "global financial systems." The inclusion and exclusion criteria will be clearly defined to ensure that only high-quality and relevant studies are considered.

Screening and Selection of Studies
The initial search results will be screened based on the relevance of titles and abstracts.Fulltext screening will then be conducted to assess the eligibility of the studies for inclusion in the review.The screening process will be guided by the research questions and the study's objectives, with a focus on selecting studies that provide empirical evidence, theoretical insights, or practical examples related to financial risk management in the banking, investment, and corporate sectors.
b) Data Extraction and Synthesis Data from the selected studies will be extracted using a standardized data extraction form.The extracted data will include information on the study's objectives, methodology, key findings, and relevance to the research questions.The synthesis process will involve categorizing the studies based on the themes identified in the research questions and objectives.The synthesis will be qualitative, focusing on identifying patterns, trends, and gaps in the existing literature.

c) Critical Appraisal
The quality and rigor of the included studies will be critically appraised to ensure that the review's findings are based on reliable and valid evidence.This appraisal will consider the study's research design, methodology, sample size, and the relevance of the findings to the research questions.

d) Reporting and Interpretation
The findings from the systematic literature review will be reported in a structured manner, with each theme discussed in relation to the research questions and objectives.The interpretation of the findings will involve a critical discussion of the implications for risk management practices in the banking, investment, and corporate sectors, with a specific focus on the Indonesian context.Based on the objectives of this study, the systematic literature review will focus on the following key themes:

Credit Risk Dynamics
This theme will explore the factors contributing to credit risk in the banking, investment, and corporate sectors.It will examine how economic conditions, regulatory frameworks, and borrower characteristics shape credit risk globally and in Indonesia.The review will also consider the interconnections between credit risk and other types of financial risks, such as market and operational risks, to understand how these risks compound and influence one another.

Market Risk and Global Volatility
Under this theme, the review will focus on the impact of global market volatility on financial stability, particularly in Indonesia.It will analyze how exchange rate fluctuations, commodity prices, and interest rate changes affect market risk in the banking, investment, and corporate sectors.The theme will also explore the strategies employed by financial institutions to manage market risk, with an emphasis on the unique challenges and opportunities presented by the Indonesian market.

Operational Risk in the Digital Age
This theme will investigate the operational risks associated with the digital transformation of the financial sector.It will examine the challenges posed by cybersecurity threats, technological failures, and operational inefficiencies, particularly in the Indonesian context.The review will analyze how these risks are managed and mitigated by financial institutions and the effectiveness of the strategies employed.The theme will also consider the broader implications of digital transformation for operational risk management in the global and Indonesian financial sectors.

Integrated Risk Management Approaches
This theme will focus on the advantages of integrated risk management approaches that consider the interdependencies between credit, market, and operational risks.The review will analyze the existing literature on integrated risk management frameworks, with a particular emphasis on their application in the banking, investment, and corporate sectors.The theme will also explore the relevance and applicability of these frameworks in the Indonesian context, considering the unique challenges faced by the country's financial sector.

Comparative Analysis of Global and Indonesian Contexts
This theme will provide a comparative analysis of financial risk management practices in the global and Indonesian contexts.The review will identify similarities and differences in how financial risks are managed in these contexts, highlighting best practices and lessons learned.The theme will also consider the implications of global financial trends for the Indonesian financial sector and how these trends can inform local risk management practices.

e) Actionable Insights and Recommendations
The final theme will focus on providing actionable insights and recommendations for improving risk management practices in Indonesia's financial sector.The review will draw on global best practices and local experiences to offer tailored solutions that can enhance the resilience of Indonesia's financial system.The recommendations will be grounded in the findings of the systematic literature review, ensuring that they are evidence-based and relevant to the unique challenges faced by the Indonesian financial sector.

Result and Discussion
The examination of 29 research papers provides a comprehensive view of the evolving landscape of financial risk management, particularly in the context of digitalization, liquidity risk, credit risk, and strategic decision-making in the banking, investment, and corporate sectors.The findings from these studies offer valuable insights into the complex interplay of risks that modern financial institutions face, especially in an increasingly interconnected and technology-driven world.As we delve into the results and discussion, it is essential to recognize that the overarching theme across these studies is the necessity of adopting an integrated approach to risk management.The research consistently highlights the inadequacy of traditional, compartmentalized risk management strategies in addressing the multifaceted nature of contemporary financial risks.Instead, a more holistic approach that considers the interdependencies between various types of risks-such as operational, market, and credit risks-is advocated.The papers collectively underscore the significance of digitalization, which, while offering unprecedented opportunities for innovation and efficiency, also introduces new challenges in the form of cybersecurity threats and operational risks.The dual impact of digitalization necessitates a nuanced approach to risk management, where the benefits of technological advancements are leveraged without compromising the stability and security of financial operations.Liquidity risk emerges as another critical concern, with studies pointing to its significant impact on short-term financial stability.The transmission of liquidity and credit risks through global financial markets highlights the interconnectedness of financial institutions and the need for robust mechanisms to manage these risks effectively.Furthermore, the readability and transparency of risk disclosures are shown to play a crucial role in enhancing the understanding of financial risks, particularly in the investment and corporate sectors.Clear and accessible disclosures are essential for informed decision-making, thereby contributing to better risk management outcomes.Strategic decisions, especially in the context of financing models such as platform-based versus traditional 3PL financing, are also explored in the research.These decisions are shown to have far-reaching implications for pricing strategies and competitive advantage, yet they come with their own set of risks that must be carefully managed.Based on Table 1 in this dataset encapsulates the core outcomes of 29 research papers, each delving into different facets of financial risk management, technological innovation, and other factors influencing the banking, investment, and corporate sectors.Below is a comprehensive explanation of some of the key findings highlighted in this column: 1. Impact of Digitalization on Operational Risk Digitalization has been identified as having a complex impact on operational risk within financial institutions.While digitalization drives efficiency and innovation, it simultaneously increases the vulnerability to cybersecurity threats and operational disruptions.This underscores the critical need for robust risk management frameworks to mitigate the challenges arising from the adoption of new technologies.

Enhancing Readability in Risk Disclosures
Research indicates that improving the readability of risk disclosures positively influences the understanding and management of credit risk.Enhanced clarity and accessibility in disclosures empower stakeholders to make more informed decisions, ultimately leading to better risk management outcomes.

Liquidity Risk and Its Impact on Financial Stability
Liquidity risk is shown to have a more immediate and significant effect on short-term financial stability compared to credit risk.The findings highlight that liquidity risk can trigger substantial market turbulence, particularly during periods of economic instability, necessitating proactive liquidity management strategies.

The Relationship Between Technology and Financial Risk Management
Technological innovation, including the use of financial technology (fintech), exhibits a clear correlation with increased financial risks.While these technologies enhance access and data analytics capabilities, they also introduce new risks related to technological failures and cybersecurity threats.

Strategic Choices in Platform vs. 3PL Financing
Research reveals that platform-based financing models tend to offer lower final retail prices compared to traditional third-party logistics (3PL) financing.However, these platforms also carry unique risks, including technological dependencies and market volatility, which must be carefully managed.

Impact of Corporate Green Bond Issuance Announcements
The announcement of corporate green bond issuances has a positive effect on market perceptions, suggesting that green initiatives can enhance a company's reputation and attractiveness to investors.This study proposes an intelligence service system designed to improve financial risk management through more efficient data collection and analysis processes.

Digital Banking and Its Impact on Risk Management
Digitalized banking operations are identified as key drivers in risk management, enhancing operational efficiency while also introducing new technology-related risk 15.Consistently High Levels of Credit Risk in the Banking Sector The research identifies consistently high levels of credit risk in the banking sector, particularly in challenging economic conditions, necessitating more adaptive risk management approaches.

Link Between Carbon Emissions and Financial Risk
The research finds that higher levels of carbon emissions are associated with increased financial risk, indicating that environmental factors are becoming integral to financial risk assessments.

Emergence of Credit Risk in Rural Banks
Credit risk has begun to surface in rural banks, particularly in areas with limited access to modern financial infrastructure, underscoring the need for context-specific credit risk management strategies.

Digital Inclusive Finance and Credit Risk Reduction
Digital inclusive finance is found to reduce credit risk, particularly by expanding access to financial services in underserved areas.The summary of this paper is that it examines how dig italization affects operational risk through the mediati ng roles of internal control system quality and supply chain network centrality, and how diversification mod erates these mediation effects.
 Digitalization has a negative impact on operational risk. Internal control system quality and supply chain network centrality have opposite mediation effects on the negative relationship between digitalization and operational risk. The positive mediation effect of supply chain network centrality is significantly more substantial than the negative mediation effect of internal control system quality.The paper examines the impact of the readability of ri sk disclosures in corporate bond prospectuses on the c redit risk premium in the Chinese corporate bond mar ket, and finds that increased readability of risk disclos ures leads to higher credit risk premiums, but this effe ct is moderated by factors such as government guarant ees, corporate performance, listing status, financing co nstraints, and financial distress.
 Increasing the readability of the risk factor chapter in bond prospectuses increases the credit risk premium by raising investors' risk perception. The positive impact of readability on credit risk premium is weakened by implicit government guarantees and listing status, but strengthened by better corporate performance, more financing constraints, and higher financial distress. The study extends research on using textual analysis to examine influential factors of credit risk.The paper proposes a joint yield curve model to analy ze the interactions among pricing factors for governm ent and corporate bonds in China, finding that liquidit y and credit risks have rating-dependent and maturitydependent effects on corporate bond pricing, with shor t-term interest rates leading to tightening of liquidity a nd raising credit risk of low-rated corporate bonds, an d government bonds facilitating a "flight to liquidity" and providing a "safe haven" for investors while also s uffering from liquidity and credit risks.
 Liquidity risk has a greater impact on short-term and low-rated corporate bonds, while credit risk has a greater impact on highrated corporate bonds at short and long maturities, and on lowrated corporate bonds at short and medium maturities. The short-term interest rate, liquidity risk, and credit risk are interdependent, with increases in one leading to increases in the others, and credit risk is contagious across different credit ratings. Since 2015, credit risk has become more influential than liquidity risk in driving systematic risk in the Chinese bond market.
The technology and dig ital financial risk mana gement model using int elligent data processing

An Jing Optik (Stuttgart) 7 2022
The paper by An Jing (2022) explores the relationship between financial technology and digital financial ris k management, using Internet finance as an example a nd combining intelligent data processing methods to a nalyze this relationship.
 There is a certain correlation between financial technology and digital financial risk management. Financial technology has information technology risks that are transitive, complex, concealed, and sudden. Financial technology can serve the "long tail" population due to its inclusiveness, but it is more prone to personal credit problems because the financial market is still immature and the characteristics of financial technology are not fully understood.The paper examines the strategic choice of lending mo del (3PL financing or platform financing) for a capital -constrained e-tailer in the presence of operational risk , and analyzes the impact of this choice on the operati onal and financing decisions of the supply chain mem bers.
 The final retail price is lower under platform financing (PF) when the e-tailer's operational risk is high, and lower under 3PL financing (LF) when the operational risk is low. The 3PL firm earns more profit under PF than LF when the etailer's operational risk is low, contrary to conventional wisdom.The paper presents a data-driven approach to financial risk management and analysis using machine learning techniques like KNN, logistic regression, and XGBoo st, with the goal of predicting loan defaults and their li kelihood on large-scale datasets.
 The proposed models of KNN, LR, and XG Boost were able to predict loan defaults and their likelihood with good performance.The paper proposes an intelligence service system for green financial risk management and empirically inve stigates its applicability across different regions in Chi na, finding differences in the emphasis and effectivene ss of various aspects of intelligence service.
 The study proposes an intelligence service system for green financial risk management, consisting of five key aspects: intelligence demand, intelligence collection, intelligence processing, intelligence application, and intelligence tracking. The study finds that there are differences in the effectiveness of intelligence service in green financial risk management across different regions in China, with the eastern region paying more attention to intelligence demand, application, and tracking, while the western region has deficiencies in intelligence collection and processing. The study proposes that establishing an intelligence center, sharing intelligence resources, improving digital technology, and updating intelligence cases can enhance the effectiveness of intelligence service in the risk management of green finance.The paper examines the impact of digital inclusive fin ance on the credit risk of commercial banks, finding th at digital inclusive finance reduces credit risk, with a g reater mitigating effect on national banks than regiona l banks, and that the higher the profitability of banks, t he more beneficial digital inclusive finance is in reduc ing credit risk.The paper also finds that economic pol icy uncertainty increases the credit risk of commercial banks, with a greater impact on regional banks.
 Digital inclusive finance reduces credit risk of commercial banks, and has a greater mitigating effect on credit risk of national banks than regional banks. Economic policy uncertainty increases the credit risk of commercial banks, with a more significant impact on regional commercial banks compared to national commercial banks. The higher the profitability of banks, the more beneficial digital inclusive finance is to reduce the credit risk of commercial banks.

An improved sparrow s earch
Liangliang Ho u, Gongbing B i, Qianqian Gu o --- The paper proposes an improved Sparrow Search Algo rithm (ISSA) to optimize the hyperparameters of the L ightGBM algorithm, which is then used to predict the credit risk of small and medium-sized enterprises (SM Es) in supply chain finance (SCF) with high accuracy.
 The ISSA-LightGBM approach outperforms other machine learning models in predicting the credit risk of SMEs in supply chain finance, achieving the highest AUC of 0.9716. The ISSA algorithm, which combines fractional calculus concepts and Cauchy-Gaussian mutation, is superior to the original SSA algorithm in terms of convergence speed and global search capability. The features of SMEs provide the highest explanatory power (43.26%) in predicting the credit risk of SMEs, compared to features of core enterprises, supply chain, and industry.

Bart Baesens, Kristien Smed ts
The British Acc ounting Review 2 2023 The paper provides various recommendations to boost the performance of credit risk models, covering the k ey steps in the credit risk modeling process and addres  Simple techniques like logistic regression and decision trees are often competitive with more complex methods like ensemble and deep learning for credit risk modelling on structured data.The paper examines the interconnectedness and causal ity of credit risk in the global financial industry across three regions (Asia, North America, and Europe) duri ng crisis periods using wavelet coherence analysis.
 Credit risks in the financial industries across Asia, North America, and Europe are highly interconnected, and removing the influence of one region weakens the connection between the other two regions. During crisis periods, the interactions among the credit risks of the financial industries in the three regions become more significant. The credit risks in Asia and North America have a significant long-term relationship, independent of the European region, due to the long-standing impact of the U.S. on the Asian economy.
Corporate The summary of this paper is that it examines the relat ionship between corporate credit risk and bond yield s preads, finding that there is a positive relationship bet ween the two, and that market liquidity mediates this r elationship, with heterogeneity observed across compa ny size and time periods.
 There is a significant positive relationship between corporate credit risk and bond yield spreads, with market liquidity playing a mediating role. The relationship between corporate credit risk and bond yield spreads exhibits heterogeneity across different enterprise sizes and time periods, with a more pronounced effect in large enterprises and the post-2018 period. The relationship between market liquidity and bond yield spreads is not simply negative but is influenced by multiple factors that balance each other.
Modelling economic po licy issues Dissecting th e impact of the three E, S, G pillars on credit ris k Guoying Deng , Shibo Ma, Ji ngzhou Yan, C an Shuai, Han ying Liu --- The paper examines the impact of Environmental, Soc ial, and Governance (ESG) scores on the credit risk of Chinese A-share listed companies, finding that impro vements in ESG scores significantly reduce credit risk , particularly among green companies and those with h igh transparency.
 Firms can reduce their credit risk by enhancing their environmental, social, and governance (E, S, G) pillar scores, as well as their overall ESG score, but the effectiveness diminishes over longer time horizons. Firms with a high degree of managerial myopia have significant potential to lower their credit risk by improving their E, S, G, and ESG scores. Companies with better quality of information disclosure can more effectively decrease their credit risk by enhancing their ESG performance, largely due to increased transparency. Capital market openness leads to a notable rise in the credit risk of commercial banks, mainly due to the substantial enhancement in liquidity  The impact of capital market openness is more pronounced on banks with greater market strength and a higher level of digital transformation, resulting in a more substantial positive effect on their credit risk.

Analysis of Financial Risk Dynamics Based on VOS Viewer Clustering (2022-2024)
The visualization provided by the VOS Viewer offers invaluable insights into the scholarly discourse on financial risk management, particularly within the banking, investment, and corporate sectors.The data, meticulously gathered from Scopus-indexed research papers between 2022 and 2024, has been systematically clustered into three distinct thematic areas, each shedding light on different facets of financial risk and its intricate management (Sharf et al., 2014); (Flood et al., 2016); (Neveu, 2016); (Syed & Bawazir, 2021).

 Cluster 1: Banking Sector and Technological Innovation
Cluster 1 revolves around the core elements of the banking sector, encompassing terms such as "bank," "capital buffer," "commercial bank," "digitalization," "economy," "loan," "operational risk," and "technological innovation."This cluster underscores the ongoing transformation in the banking sector, driven by the relentless tide of digitalization and technological innovation (Mitra, 2009) (Bisias et al., 2012).The focus on "capital buffer" and "operational risk" suggests a heightened awareness within the industry of the need to strengthen financial resilience amidst the disruptive forces of technological progress.The research in this cluster highlights the dual impact of digitalization on the banking sector.On one hand, technological innovation has the potential to enhance efficiency, reduce costs, and improve customer experience.However, on the other hand, it also introduces new operational risks, particularly in the areas of cybersecurity and data protection (Pakhchanyan, 2016).The studies emphasize the paramount importance of maintaining robust capital buffers as a safeguard against potential operational failures that could arise from the digitalization of the banking landscape.Additionally, the focus on loans and the economy underscores the traditional role of banks in credit risk management, while acknowledging the evolving challenges posed by an increasingly digital economy.

 Cluster 2: Market Risks and Global Uncertainties
Cluster 2 is centered on market-related risks, including terms such as "bond market," "bond market uncertainty," "change," "dominant contributor," "equity tail risk," "stock market uncertainty," "global credit risk," and "market risk."This cluster reflects the significant attention paid to market volatility and its implications for financial stability.The literature within this cluster points to the persistent uncertainties in global financial markets, particularly in the bond and equity markets.Researchers have identified "market risk" as a dominant contributor to financial instability, exacerbated by factors such as geopolitical tensions, changes in monetary policies, and economic slowdowns.The "stock market uncertainty" and "bond market uncertainty" terms suggest that these markets are particularly vulnerable to sudden shifts in investor sentiment and economic conditions.The inclusion of "global credit risk" further highlights the interconnectedness of credit risk and market risk, with the potential for global credit events to trigger widespread market disruptions.The research emphasizes the need for financial institutions to develop more sophisticated risk management strategies that account for the increasing unpredictability of global markets.This includes a focus on "equity tail risk," where extreme market movements can have disproportionate impacts on financial portfolios, requiring advanced modeling techniques to predict and mitigate such risks. Cluster 3: Financial Risk Management and Strategic Policy Response Cluster 3 is characterized by terms related to broader financial stability and risk management strategies, including "financial risk management," "financial stability," "global financial crisis," "loss," "policymaker," and "strategy."This cluster reflects the ongoing efforts to learn from past financial crises and develop comprehensive strategies to enhance financial resilience.The research in this cluster builds on lessons from the "global financial crisis" and emphasizes the importance of strategic policymaking in mitigating systemic risks.The term "policymaker" suggests that government and regulatory bodies play a crucial role in shaping the financial risk landscape, particularly through the implementation of policies that promote financial stability."Financial risk management" and "strategy" are central themes in this cluster, indicating a focus on the development of integrated risk management frameworks that address the interdependencies between different types of risks.The inclusion of "loss" highlights the importance of minimizing financial losses through proactive risk management and strategic planning.The literature suggests that financial institutions must adopt a holistic approach to risk management, considering not only the immediate risks but also the long-term implications of their strategies on financial stability.

Navigating Global Market Uncertainties: Emerging Strategies for Financial Risk Management
The global financial landscape has experienced persistent uncertainties, particularly in the bond and equity markets.The literature indicates that "market risk" has emerged as a dominant contributor to financial instability, exacerbated by factors such as geopolitical tensions, changes in monetary policies, and economic slowdowns (Kaçar et al., 2020).The "stock market uncertainty" and "bond market uncertainty" terms suggest that these markets are particularly vulnerable to sudden shifts in investor sentiment and economic conditions (Cheney, 2003).The interconnectedness of credit risk and market risk is further highlighted by the inclusion of "global credit risk," suggesting that global credit events can trigger widespread market disruptions (Board of Governors of the Federal Reserve System, 2000).
Financial institutions are faced with the challenge of developing more sophisticated risk management strategies that can account for the increasing unpredictability of global markets.The focus on "equity tail risk" underscores the need for advanced modeling techniques to predict and mitigate the disproportionate impacts of extreme market movements on financial portfolios (Board of Governors of the Federal Reserve System, 2000).In response to these complex and evolving risks, the research emphasizes the importance of broader financial stability and risk management strategies.The terms "financial risk management," "financial stability," "global financial crisis," "loss," "policymaker," and "strategy" reflect the ongoing efforts to learn from past financial crises and develop effective policy responses (Drost & Sikken, 2015).Researchers and policymakers alike are grappling with the challenges posed by the interplay of market and credit risks, as well as the need to enhance the resilience of the financial system against a wide range of "non-traditional" (Drost & Sikken, 2015) risk sources, such as geopolitical factors and the outbreak of pandemics.As the global financial landscape continues to evolve, the development of comprehensive and adaptive risk management strategies will be crucial in navigating the uncertainties and ensuring the long-term stability of the financial system.

Credit Risk Dynamics in the Global and Indonesian Markets
The Indonesian financial market has experienced significant growth and development in recent years, driven by a robust economy, a growing middle class, and an increasing demand for financial services.However, the country's banking system continues to face challenges, particularly in terms of credit risk dynamics.One of the key factors contributing to credit risk in the Indonesian banking sector is the high market concentration.The banking industry in Indonesia is dominated by a few large players, which can lead to increased risk-taking behavior and a higher likelihood of systemic shocks.This concentration is further exacerbated by the presence of Systemically Important Financial Institutions, which contribute to more than 80% of the total risk in the banking system.Moreover, the Indonesian banking system is characterized by high net interest margins and a relatively low degree of financial depth, as measured by the ratio of credit to gross domestic product.These conditions suggest that access to bank credit remains a challenge for many segments of the Indonesian economy (Razak et al., 2020).The slowdown in banking credit growth in recent years, from 10.5% in 2016 to 7.9% in the same year, has been attributed to a combination of factors, including the weakening of corporate demand and a more cautious lending approach by banks due to the increase in Non-Performing Loans (Rachmawati, 2022).The increased caution in lending has also been driven by the need to maintain adequate capital adequacy ratios, as the growth in assets Risk Weighted has caused an increase in the capital required by Indonesian banks.
The ASEAN banking sector has been extensively studied as it seeks to balance the opportunities and challenges brought about by financial innovation and the pursuit of sustainable economic growth (Khan et al., 2021).One of the critical factors influencing credit risk in this region is financial innovation, which, while capable of driving economic progress, also introduces new complexities that must be carefully managed (Khan et al., 2021).In Indonesia, the banking system has faced specific challenges, including high net interest margins and relatively low financial depth, which highlight the need for a deeper understanding of the linkages between banking practices and economic growth (Razak et al., 2020).The VOS Viewer analysis further emphasizes the interrelated nature of these challenges.For example, the impact of digitalization on operational risk is a key area of concern.As digitalization drives efficiency and innovation within financial institutions, it also introduces new vulnerabilities, particularly related to cybersecurity and operational disruptions.These insights align with the findings from the 29 research papers, which suggest that while technological advancements, such as fintech, can enhance financial services and drive growth, they also create new risks that need to be mitigated through robust risk management frameworks.Regulatory responses to the rapid expansion of foreign capital in emerging markets like Indonesia have also played a significant role in shaping the dynamics of credit risk (Tritto et al., 2020).The Indonesian government has been focused on striking a balance between mitigating risks and fostering financial innovation, with an overarching aim of promoting financial inclusion and sustainable development (Tritto et al., 2020).The VOS Viewer results support this, showing that strategic regulatory interventions are crucial for maintaining financial stability, particularly as new financial technologies reshape the market.
The ongoing development of the fintech industry in Indonesia presents both opportunities and challenges for credit risk management (Davis et al., 2017).On the one hand, fintech offers opportunities for innovation, competition, and enhanced access to financial services, especially in underserved regions.On the other hand, it introduces new risks related to technological dependencies, market volatility, and the potential for cybersecurity breaches.Regulators are thus tasked with the complex challenge of encouraging innovation and competition while simultaneously protecting the financial system and consumers from excessive risk (Davis et al., 2017).Moreover, the findings from the VOS Viewer analysis highlight the importance of integrated risk management approaches.For example, the relationship between liquidity risk and financial stability is critical, especially in the context of global market volatility and economic uncertainty.The interconnectedness of market, credit, and operational risks, as illustrated in the VOS Viewer clusters, underscores the need for a holistic approach to risk management that considers the cumulative and interdependent nature of these risks.The research also emphasizes the significance of transparency in risk disclosures.Enhanced readability and accessibility of risk information can positively influence stakeholder understanding and decision-making, leading to more effective management of credit risks.This is particularly relevant in investment and corporate sectors where the complexity of financial instruments can obscure the true nature of risks.Indonesia can effectively balance the various financial risks while fostering innovation and growth by adopting a comprehensive and integrated approach.Strengthening regulatory frameworks is essential, particularly through the adoption of adaptive regulation that evolves alongside technological advancements.This approach allows for the creation of flexible regulations that accommodate innovation in the financial sector, such as fintech, while maintaining rigorous standards to manage the associated risks.Implementing a risk-based supervision approach will enable regulators to focus more resources on higher-risk areas within financial institutions, allowing for the early identification of emerging risks and prompt corrective actions.Promoting financial innovation must be done with appropriate safeguards.One effective strategy is the expansion of regulatory sandboxes, which allow fintech companies to test new products and services in a controlled environment under close regulatory supervision.This approach fosters innovation while ensuring that risks are identified and mitigated before broader market implementation.Encouraging collaboration between fintech startups and traditional banks can leverage the strengths of both sectors, with fintech driving innovation and inclusivity, and traditional banks providing stability and established risk management practices.
Enhancing risk management practices is another crucial aspect of balancing risks.Financial institutions should adopt integrated risk management frameworks that consider the interdependencies between credit, market, and operational risks.Such frameworks will enable institutions to better anticipate and respond to the cascading effects of different types of risks.Utilizing advanced technologies, such as artificial intelligence and big data analytics, can further enhance the ability of financial institutions to monitor and manage risks in real-time, providing deeper insights into risk patterns and improving decision-making.Improving financial literacy and transparency is also key to managing risks effectively.Financial institutions should prioritize the readability and transparency of risk disclosures, ensuring that clear and accessible information is available to investors, customers, and other stakeholders.This helps them understand the risks involved, enabling more informed decision-making.Nationwide financial literacy campaigns could be launched by the Indonesian government and financial institutions to educate the public about financial risks, the benefits and dangers of digital financial services, and how to manage their financial health effectively.Given the increasing reliance on digital financial services, Indonesia needs to develop a robust cybersecurity infrastructure.A national cybersecurity strategy should be implemented, focusing on protecting financial data, preventing cyberattacks, and ensuring the resilience of financial systems.Collaboration with international cybersecurity experts and organizations can help Indonesia stay ahead of emerging cyber threats by sharing knowledge and best practices.Ensuring financial inclusion is another critical aspect of balancing risks.Expanding access to digital financial services is essential for driving economic inclusion, reducing poverty, and stimulating growth.However, this must be done with safeguards in place to protect vulnerable consumers.Regulatory policies should be inclusive, ensuring that they do not inadvertently stifle financial inclusion, and should consider the unique challenges faced by small businesses and rural populations in accessing financial services.
Monitoring global economic trends is vital for proactive risk management.Indonesia should strengthen its capacity to monitor global economic trends and their potential impacts on domestic financial stability.This includes keeping a close watch on global liquidity conditions, exchange rate movements, and commodity prices that could influence credit and market risks in Indonesia.Developing and maintaining comprehensive crisis preparedness and response plans is also crucial for managing external shocks, including having contingency measures in place to address liquidity shortages, market volatility, or credit crunches.Public-private partnerships are a valuable tool for balancing risks.The government should actively engage with private sector stakeholders, including banks, fintech companies, and other financial institutions, in the development of policies and regulations.Such collaboration ensures that policies are practical, effective, and aligned with industry needs while managing risks appropriately.Additionally, public-private partnerships can be used to develop shared infrastructure, such as payment systems and cybersecurity networks, which enhance the overall resilience of the financial sector.By adopting these strategies, Indonesia can effectively balance the risks associated with financial innovation and growth.This approach requires a careful mix of regulation, innovation, education, and collaboration to ensure that the financial sector remains stable and inclusive, even as it embraces new technologies and practices.With these measures in place, Indonesia can continue to drive economic development while safeguarding its financial system against emerging risks.

Market Risk and Global Volatility and The Impact for Indonesia Financial Market
In the dynamic landscape of financial markets, the interplay between market risk and global volatility has become a critical area of study, capturing the attention of scholars, policymakers, and investors alike.The complex web of interconnected financial systems, coupled with the increasing frequency and intensity of economic shocks, has underscored the need for a deeper understanding of the complex relationships that drive market risk and global volatility.(Gómez-Pineda, 2020) (Li, 2021) (Andersen et al., 2013).Recent research has shed light on the multifaceted nature of these phenomena, highlighting the significance of various factors, including global uncertainty, risk aversion, and the spillover effects across different economies.Studies have shown that global uncertainty and risk aversion are the primary drivers of volatility in financial markets, with the developed markets often serving as the main risk transmitters and the emerging markets as the main risk receivers.(Li, 2021) The COVID-19 pandemic has further amplified these dynamics, with the 2020 stock market crash demonstrating the extent to which downside risk can spill over from the stock markets of risk transmitters into the global financial system.The unique characteristics of the pandemic, such as its impact on economic activities and the resulting government interventions, have also contributed to the heightened volatility observed across various industries.(Baek et al., 2020).Furthermore, the examination of risk spillovers during the COVID-19 crisis has revealed insights into the mechanisms through which an exogenous shock can propagate from one market to another.Understanding these pathways is crucial for policymakers and financial regulators in developing effective strategies to mitigate the adverse consequences of global volatility and market risk.The Indonesian financial market has faced significant challenges in recent years, with the country's economy being heavily influenced by global market volatility and market risk (Paranita & Agustinus, 2020) (Sia et al., 2023) (James & Karoglou, 2010) (Albertus, 2021).The 1998 financial crisis and the 2008 global financial meltdown had a severe impact on the Indonesian financial sector, with many large firms being hit hard and some even collapsing (Savitri et al., 2020).(Paranita & Agustinus, 2020) (James & Karoglou, 2010).The stock market in Indonesia has been particularly volatile, with the stock prices of firms in the financial sector experiencing significant drops during times of economic turmoil (Savitri et al., 2020).This volatility is likely due to the country's high level of financial liberalization, which has made the Indonesian stock market more susceptible and vulnerable to external shocks and global market fluctuations (James & Karoglou, 2010).The openness of the financial system has exposed the domestic market to international market forces, amplifying the impact of global economic downturns and crises on the Indonesian stock prices .
The COVID-19 pandemic has further exacerbated these challenges, with the pandemic leading to a significant increase in market volatility in Indonesia (Wiguna et al., 2021) (Paranita & Agustinus, 2020).The current global economic slowdown triggered by the pandemic has had a major impact on Indonesia's economic growth, as the country's heavy reliance on exports and tourism has made it vulnerable to the drop in worldwide demand .Moreover, the increase in COVID-19 cases within Indonesia has led to a negative impact on the stock market, with investors growing more cautious and share prices declining.To address these challenges, the Indonesian government and financial institutions must take a proactive approach to managing market risk and global volatility.One potential strategy is to implement enterprise risk-based management frameworks, which can help firms better identify, assess, and mitigate their exposure to market risks (Paranita & Agustinus, 2020).This involves developing comprehensive risk management policies, enhancing internal controls, and strengthening risk monitoring and reporting processes.Additionally, improving financial literacy and risk awareness among investors can help to mitigate the negative impact of market volatility on the stock market .By educating investors on the nature of market risks, investment strategies, and risk management techniques, they can make more informed decisions and better withstand periods of market turmoil.Furthermore, the government could consider measures to stabilize the financial market, such as introducing tax incentives or other policies to encourage long-term investment and reduce speculative trading.By addressing the underlying structural issues that contribute to market volatility, Indonesia can build a more resilient and stable financial system that is better equipped to withstand future global economic shocks.

Credit Risk Factors in Banking, Investment, and Corporate Sectors: Global and Indonesian Perspectives
The banking industry plays a crucial role in financing national economies, with bank lending still dominating private sector financing in many countries (Putri & Setiawan, 2021).Indonesia is no exception, where the domestic credit to private sector by banks ratio has shown a significant upward trend from 2010 to 2016 (Putri & Setiawan, 2021).However, the banking sector in Indonesia has faced various challenges, including the impact of the 1997 Asian financial crisis that resulted in many banks experiencing bad loans (Sukmadewi, 2020).This crisis had a severe impact on the country's economy, causing a downturn and affecting companies, particularly in the banking sector (Firdaus & Qumaira, 2020).The high net interest margins and low financial depth in Indonesia's banking system compared to other ASEAN-5 countries also suggest that financial intermediation remains a challenge (Razak et al., 2020).
Understanding the key factors contributing to credit risk in the banking, investment, and corporate sectors, both globally and within the Indonesian context, is crucial for policymakers and industry stakeholders to address these challenges and foster a more resilient financial system.

Global Perspective on Credit Risk Factors
At a global level, several key factors have been identified as contributors to credit risk in the banking, investment, and corporate sectors.One important factor is market concentration in the banking industry, which has been found to have a positive effect on bank risk-taking (Putri & Setiawan, 2021).This suggests that higher levels of market concentration can lead to increased risk-taking behaviors by banks, potentially exacerbating credit risk.Another factor is the role of corporate governance, particularly the strategic and monitoring functions of the board of commissioners.Studies have shown that the board of commissioners can serve as a strategic resource for banks, addressing agency dynamics and enhancing sustainable competitive advantages.

Credit Risk Factors in Indonesia
Within the Indonesian context, the banking sector faces unique challenges that contribute to credit risk.The size of the Indonesian banking sector relative to the country's real economy is relatively small, with the credit provided by banks as a percentage of GDP remaining low (Hartawan et al., 2020).This suggests that access to finance, especially for small and mediumsized enterprises, remains a significant challenge.The Islamic banking sector in Indonesia also plays an important role in the country's financial system.Research has shown that the factors determining the capital adequacy ratio in Islamic banks are not limited to regulatory requirements, but also include bank-specific variables (Fauziah et al., 2020).Ensuring optimal capital structure and addressing capital adequacy are crucial for mitigating credit risk in the Islamic banking sector.Additionally, the demographic dividend that Indonesia is expected to reap until 2030 could become an engine of long-run economic growth (Razak et al., 2020), but this growth must be supported by a robust and resilient financial system that can effectively manage credit risk.

The Impact of Global Market Volatility on Financial Stability in Indonesia
Indonesia, as an emerging market economy, has been significantly impacted by the volatility of global financial markets.This section to explore the influence of exchange rate fluctuations, commodity prices, and interest rate changes on market risk and how financial institutions in Indonesia are managing these challenges.The Indonesian economy has experienced significant volatility in recent years, particularly during major global economic events such as the 1998 financial crisis and the 2008 global financial meltdown (Savitri et al., 2020).During these periods, the financial sector was harshly hit, with stock prices in the sector dropping significantly (Savitri et al., 2020).The low financial literacy index during the COVID-19 pandemic could lead to lower investor sentiment towards the market, as very few Indonesians have knowledge and confidence in financial management.

Exchange Rate Fluctuations and Financial Stability
One of the key factors impacting financial stability in Indonesia is exchange rate volatility.The Indonesian rupiah has historically been subject to significant fluctuations, which can have a substantial impact on the balance sheets of financial institutions and the overall stability of the financial system.found that there is a significant correlation between the rupiah exchange rate, net foreign assets, money supply, and interest rates, with the highest response in the exchange rate coming from money supply shocks.These exchange rate movements can affect the asset quality of banks, as they may lead to currency mismatches between assets and liabilities, and increase the risk of default.To manage exchange rate risks, Indonesian banks have implemented various strategies, such as currency hedging and diversifying their asset portfolios (Murtala et al., 2019).Bank Indonesia has also played a crucial role in stabilizing the exchange rate through its intervention in the foreign exchange market, as part of its broader efforts to maintain monetary and financial stability (Nurmansyah & Thamrin, 2022).

Commodity Prices and Financial Stability
Indonesia's economy is heavily reliant on commodity exports, particularly in the natural resources sector.Fluctuations in global commodity prices can have a significant impact on the country's trade balance, government revenues, and the overall macroeconomic environment.
Commodity price volatility can also affect the asset quality of banks with significant exposure to commodity-related industries, leading to increased credit risk and potential financial instability.Financial institutions in Indonesia have sought to manage commodity price risks through diversification of their loan portfolios, enhanced credit risk management, and the development of commodity-linked financial instruments (Kasri et al., 2022).The government and central bank have also implemented policies to mitigate the impact of commodity price swings, such as through the implementation of a countercyclical fiscal policy and the use of exchange rate management tools.

Interest Rate Changes and Financial Stability
Interest rate changes can also have a significant impact on financial stability in Indonesia.found that while inflation has an insignificant effect on the rupiah exchange rate, the money supply and balance of payments play a crucial role.Interest rate hikes can lead to higher borrowing costs for businesses and households, potentially increasing the risk of default and impacting the asset quality of financial institutions.To maintain financial stability, the Indonesian government and central bank have implemented a range of measures, including lowering interest rates, injecting liquidity into the financial system, and implementing macroprudential policies to ensure the resilience of the banking sector (Nurmansyah & Thamrin, 2022).Financial institutions, in turn, have sought to manage interest rate risks through the use of hedging instruments and by diversifying their asset portfolios.
The impact of global market volatility on financial stability in Indonesia is a complex and multifaceted issue, with exchange rate fluctuations, commodity prices, and interest rate changes all playing a significant role.Financial institutions and policymakers in Indonesia have implemented various strategies to manage these risks and maintain the stability of the financial system, but the challenges posed by global market volatility remain a constant concern.

Operational Risks in the Digital Transformation of the Indonesian Financial Sector
The rapid digital transformation of the Indonesian financial sector has brought about significant advancements, such as increased accessibility, efficiency, and innovation in financial services (Diniyya et al., 2021).However, this digital transformation has also introduced a range of operational risks that financial institutions must proactively address .One of the primary concerns is the growing threat of cybersecurity breaches, which can have severe consequences for both financial institutions and their customers, including data theft, financial losses, and reputational damage (Zahiroh, 2020).Additionally, technological failures, such as system outages and software glitches, as well as operational inefficiencies, like processing delays and data inconsistencies, can disrupt the smooth functioning of financial services, leading to significant losses and undermining customer trust and confidence (Widharto et al., 2020).
The COVID-19 pandemic has significantly accelerated the adoption of digital technologies in the Indonesian financial sector, with a surge in online transactions and the widespread use of mobile banking applications (Zahiroh, 2020).This rapid digital transformation has, however, also heightened the exposure of financial institutions to a range of cybersecurity risks, such as data breaches, hacking attempts, and ransomware attacks.To effectively mitigate these emerging threats, financial institutions in Indonesia must prioritize the implementation of robust cybersecurity measures, including advanced data encryption, robust access controls, comprehensive incident response plans, and regular security audits and testing.Implementing these proactive strategies will be crucial in safeguarding customer data, maintaining operational continuity, and preserving the trust and confidence of the Indonesian financial sector during this pivotal digital transformation.
Moreover, the digital transformation of the Indonesian financial sector has also led to the emergence of technological failures and operational inefficiencies that can negatively impact the performance and reliability of financial services.Technological failures, such as system outages, software glitches, and data processing errors, can disrupt the seamless flow of financial transactions, leading to delays, service interruptions, and customer dissatisfaction.(Thalib & Meinarni, 2021); (Zahiroh, 2020).Technological failures, such as system outages, software glitches, and hardware malfunctions, can also disrupt the operational efficiency of financial institutions.These failures can lead to service interruptions, data loss, and financial losses, undermining the trust and confidence of customers.As financial institutions in Indonesia undergo digital transformation, they must ensure the reliability and resilience of their IT infrastructure by implementing robust redundancy measures, regular system maintenance and updates, and comprehensive disaster recovery plans.This will help minimize the risk of technological failures and ensure the continuous and reliable delivery of financial services to customers.Furthermore, financial institutions should invest in advanced monitoring and analytics tools to proactively identify and address potential issues before they escalate, further enhancing the overall resilience and operational efficiency of their digital systems.
Operational inefficiencies, such as processing delays, data inconsistencies, and manual errors, can also arise during the digital transformation of the Indonesian financial sector.These inefficiencies can lead to customer dissatisfaction, compliance issues, and financial losses for financial institutions.To address these challenges, financial institutions must focus on streamlining their operational processes, automating repetitive tasks, and leveraging data analytics to identify and address areas of inefficiency.The implementation of advanced technologies, such as robotic process automation and artificial intelligence, can help financial institutions optimize their operations, reduce errors, and improve overall operational efficiency.To effectively mitigate the operational risks associated with the digital transformation of the Indonesian financial sector, financial institutions must adopt a comprehensive and proactive approach.This includes: Furthermore, the digital transformation of the financial sector in Indonesia has introduced operational inefficiencies, such as processing delays, data inconsistencies, and manual workarounds.These inefficiencies can reduce the overall productivity and profitability of financial institutions, as well as frustrate customers who expect seamless and efficient service.To address these challenges, financial institutions in Indonesia must invest in process automation, data analytics, and operational streamlining to enhance their operational efficiency and responsiveness.This includes leveraging robotic process automation to automate repetitive tasks, implementing advanced data analytics tools to identify and address areas of inefficiency, and streamlining operational workflows to eliminate manual handoffs and bottlenecks.By adopting a comprehensive approach to improving operational efficiency, financial institutions can enhance their competitiveness, deliver superior customer experiences, and ensure the long-term sustainability of their digital transformation initiatives.

Conclusions
The comprehensive analysis of the financial sector, particularly in Indonesia, highlights the intricate interplay between digitalization, market volatility, credit risk, and operational challenges.As financial institutions continue to embrace technological advancements, they simultaneously expose themselves to new vulnerabilities, especially in the areas of cybersecurity and operational disruptions.This underscores the critical need for robust and adaptive risk management frameworks that can mitigate the challenges arising from these transformations.The findings suggest that enhancing the readability and transparency of risk disclosures is vital for empowering stakeholders to make more informed decisions, ultimately leading to improved credit risk management.
The impact of global market volatility on financial stability in Indonesia is particularly significant, given the country's exposure to fluctuations in exchange rates, commodity prices, and interest rates.The interconnectedness of market, credit, and operational risks, as highlighted in both the VOS Viewer analysis and the summarized research, emphasizes the need for a holistic approach to risk management.This approach must consider the cumulative and interdependent nature of these risks, especially in an increasingly uncertain global economic environment.Theoretically, this analysis contributes to the growing body of literature on financial risk management by underscoring the importance of integrated frameworks that address the complexities of modern financial systems.The findings reinforce the need for a multi-faceted approach that combines technological innovation with traditional risk management practices, thereby ensuring resilience against emerging threats.The insights derived from the research also suggest that financial institutions must not only focus on immediate risks but also consider the long-term implications of their strategies on financial stability.
From a managerial perspective, the implications for policymakers are clear.There is a pressing need to strengthen regulatory frameworks that can adapt to the rapid pace of technological change while maintaining rigorous standards to manage associated risks.Policymakers should consider expanding regulatory sandboxes to allow fintech innovations to be tested in controlled environments, ensuring that potential risks are identified and mitigated before broader implementation.Additionally, the importance of collaboration between fintech companies and traditional banks cannot be overstated, as it allows for the leveraging of strengths from both sectors to drive innovation while maintaining stability.
Moreover, policymakers must focus on improving financial literacy and transparency, particularly in the context of risk disclosures.By enhancing the clarity and accessibility of financial information, stakeholders can make more informed decisions, thereby contributing to overall financial stability.Ensuring that the public is well-informed about the risks and benefits of digital financial services is crucial, especially in a rapidly digitizing economy like Indonesia's.Operational risks associated with the digital transformation of the financial sector must be proactively managed through the implementation of advanced cybersecurity measures and the development of resilient IT infrastructures.Financial institutions should invest in process automation, data analytics, and operational streamlining to enhance efficiency and minimize the risk of technological failures.Indonesia's financial sector stands at a critical juncture where the balance between fostering innovation and managing risks is more important than ever.By adopting a comprehensive and integrated approach to risk management, supported by adaptive regulations and enhanced financial literacy, Indonesia can effectively navigate the challenges of digitalization, market volatility, and credit risk, ensuring long-term financial stability and sustainable economic growth.

Limitations And Future Research Agenda
Despite the comprehensive insights provided by this analysis into the dynamics of financial risk within the banking and financial sectors, particularly in Indonesia, there are notable limitations that must be acknowledged.First, the analysis heavily relies on existing data and findings from prior studies and VOS Viewer analysis, which, although thorough, may not fully capture the most recent developments in the global and Indonesian financial sectors, especially given the rapid pace of technological and regulatory changes.Additionally, the theoretical approach employed in this study focuses on integrating various risk factors, such as credit, market, and operational risks.However, it may not adequately address the specific nuances of local contexts, particularly regarding cultural and economic differences that could influence the implementation of risk management strategies in Indonesia.Furthermore, this study does not extensively explore the impact of unforeseen external factors, such as pandemics or climate change, which could have profound implications for financial stability and necessitate more adaptive and innovative risk management approaches.
Given these limitations, several avenues for future research are proposed to deepen the understanding and broaden the scope of studies related to financial risk in the banking and financial sectors.Future research should focus on long-term analyses of the impact of digitalization and fintech adoption on operational risk and financial stability.As technological adoption continues to evolve, it is crucial to understand how these digital transformations influence risk over time, particularly risks associated with cybersecurity and the reliability of technological infrastructure.Further empirical studies are needed to evaluate the effectiveness of various regulatory policies implemented in Indonesia and other ASEAN countries in balancing financial innovation with risk management.Such studies could include comparative case studies to assess different regulatory approaches and their impact on financial stability and inclusion.Exploring the effects of climate change on financial risk, particularly in relation to credit and market risks, is another critical area for future research.Climate change and environmental policies are increasingly influencing financial stability, and it is essential for financial institutions to integrate these risks into their risk management strategies.Given Indonesia's cultural diversity, further research should examine how cultural differences impact risk perception and the implementation of risk management strategies.This would aid in developing more contextualized and locally appropriate approaches to risk management.
The COVID-19 pandemic has exposed the vulnerability of global financial systems to unexpected crises, highlighting the need for future research to focus on the impact of pandemics and other potential global crises on financial stability.Such research should aim to develop more resilient risk management strategies that can effectively address similar crises in the future.Finally, with the advancements in technology, future research should also explore the development and application of more sophisticated risk prediction tools based on artificial intelligence (AI) and big data analytics.These tools could provide deeper insights into risk patterns and enhance the decision-making capabilities of financial institutions, enabling them to respond more effectively to market changes.By addressing these areas, future research can make significant contributions to the development of more adaptive, innovative, and contextually relevant financial risk management frameworks that are capable of responding to the ever-evolving dynamics of the global and local financial sectors.
7. Market Risks and Uncertainties in U.S. Stock and Bond Markets Market risks associated with uncertainties in U.S. stock and bond markets significantly influence global investment strategies.The findings underscore the need for sophisticated market risk management approaches to navigate unexpected volatility.8. Analytical Pricing Models in Islamic Finance This research proposes an analytical pricing model applicable to Islamic finance, incorporating mechanisms to assess the impact of risks on Shariah-compliant financial structures.9. Spillover Effects from Oil Market Shocks The spillover effects from oil market shocks to financial markets demonstrate a strong interconnection between commodity markets and global financial systems, highlighting the need for a holistic approach to risk management.10.The Role of Technological Innovation in Credit Risk Management Technological innovation, measured by the adoption rate of new technologies, significantly impacts credit risk management.While technology aids in better data management, it also introduces risks associated with technological dependence.11.Board Size and Its Impact on Risk Management Larger board sizes, frequent board meetings, and increased engagement are associated with more effective risk management within corporations, suggesting that strong corporate governance can mitigate operational and financial risks.12. Predictive Models for Credit Risk Using AI Predictive models such as KNN, LR, and XG Boost show promising results in detecting credit risks, highlighting the potential of artificial intelligence (AI) in enhancing the accuracy of credit risk management.13.Intelligence Service Systems in Financial Risk Management

Table 1 . Relevant Research
The investor's wealth proportion measure of the proposed model ranged from 0.02 to 0.09, and the optimal consumption stability did not exceed 5% of the total investment wealth. The simulation results of the proposed model obtained better results of large-scale data-driven financial risks over the stateof-the-art methods.
Government ownership and funding diversification were positively associated with better credit risk management. The role of capital buffer and ownership depended on the type of credit risk proxy used (LLR_NPL vs NPL_Net).
 The URP-CNN model exhibits the best discriminative performance compared to other traditional machine learning  Credit risk began to surface in rural banks between 16-23 quarters.