The Role Of AI-Powered Risk Assessment In Trade Finance: Opportunities And Challenges

Abstract The dynamic nature of international trade finance necessitates innovative risk assessment approaches that transcend traditional models' limitations. This article explores the transformative role of artificial intelligence (AI) and blockchain technologies in addressing critical challenges such as fraud detection, credit risk, and country risk in trade finance. By leveraging AI’s capabilities in predictive analytics, anomaly detection, and machine learning, trade finance institutions can achieve greater accuracy, efficiency, and adaptability in risk management processes. Additionally, blockchain technology enhances transaction security through immutable records and smart contracts, mitigating risks associated with documentation errors and double financing. The article evaluates how AI and blockchain can be implemented within the regulatory frameworks of UCP600 and URDG758, ensuring alignment with global trade standards. Furthermore, it highlights the opportunities and challenges of these technologies, emphasizing the need for stronger data protection measures, regulatory compliance, and ethical considerations. This study concludes by proposing future directions for research and practice, including real-time risk assessment models and automated compliance monitoring, to drive innovation in the trade finance sector