Financial Risk Management in the Digital Era: A Systematic Review of Risk Transformation, Governance, and Mitigation Strategies
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Abstract
Digital transformation has reshaped the structure, processes, and business models of the financial sector while simultaneously introducing increasingly complex, rapidly evolving, and interconnected risks. This study aims to identify changes in the characteristics of financial risks resulting from digitalization, analyze the role of technology as both a source of risk and a risk-mitigation instrument, and formulate relevant risk management strategies for organizations. This study employs a qualitative-descriptive approach using a systematic literature review method. The literature analyzed consists of reputable peer-reviewed journal articles published between 2015 and 2025. The identification and selection of the literature followed the PRISMA 2020 guidelines, while the data were examined through descriptive and thematic analyses. The findings indicate that digitalization does not eliminate traditional financial risks; instead, it transforms their sources, speed, scale, and patterns of propagation. Credit, market, liquidity, and operational risks have become increasingly interconnected with model, cyber, data, compliance, reputational, third-party, and systemic risks. These changes occur through four principal mechanisms: acceleration, interconnectedness, datafication, and digital concentration. Technologies such as artificial intelligence, machine learning, cloud computing, blockchain, and regulatory technology can enhance efficiency, predictive accuracy, and early risk-detection capabilities. However, their implementation may also generate algorithmic bias, data breaches, system failures, and dependence on technology providers. This study concludes that financial risk management in the digital era requires an integrated approach involving the strengthening of Enterprise Risk Management, data governance, model validation, cyber resilience, third-party oversight, and risk culture. Aligning digital innovation with effective risk governance is essential for maintaining financial stability, stakeholder trust, and organizational sustainability.
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