Financial Institutions of Emerging Economies: Contribution to Risk Assessment

Conventional risk assessment frameworks usually define risk as a function of vulnerabilities and threats, but they frequently lack a single quantitative model that incorporates the unique features of each element. In order to close this gap, this paper creates a flexible, open, and theoretically sound risk assessment formula that is still reliable even in the absence of complete vulnerability data. This is particularly important for financial institutions operating in emerging markets, where regulators rarely provide centralized vulnerability assessments and where Basel-type frameworks are only partially implemented. The contribution of the paper is a practically verified Bayesian network model that integrates threat likelihoods, vulnerability likelihoods, and their impacts within a probabilistic structure. Using 500 stratified Monte Carlo scenarios calibrated to real fintech and banking institutions operating under EU and national supervision, we demonstrate that excluding vulnerability impact from the model does not significantly reduce the predictive performance. These findings advance the theory of risk assessment, simplify practical implementation, and enhance the scalability of risk modeling for both traditional banks and fintech institutions in emerging economies.

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Publication Details

Journal
Risks
Published
2025-09-01
DOI
https://doi.org/10.3390/risks13090167
Primary Topic
Market Dynamics and Volatility
Type
article
Field-Weighted Citation Impact
0.00

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article

Financial Institutions of Emerging Economies: Contribution to Risk Assessment

Almas M. Kalimoldayev, Sergejs Popovs, Oļegs Černiševs, Yelena Popova
Risks
Market Dynamics and Volatility
article

Financial Institutions of Emerging Economies: Contribution to Risk Assessment

Almas M. Kalimoldayev, Sergejs Popovs, Oļegs Černiševs, Yelena Popova
article en

Abstract

Conventional risk assessment frameworks usually define risk as a function of vulnerabilities and threats, but they frequently lack a single quantitative model that incorporates the unique features of each element. In order to close this gap, this paper creates a flexible, open, and theoretically sound risk assessment formula that is still reliable even in the absence of complete vulnerability data. This is particularly important for financial institutions operating in emerging markets, where regulators rarely provide centralized vulnerability assessments and where Basel-type frameworks are only partially implemented. The contribution of the paper is a practically verified Bayesian network model that integrates threat likelihoods, vulnerability likelihoods, and their impacts within a probabilistic structure. Using 500 stratified Monte Carlo scenarios calibrated to real fintech and banking institutions operating under EU and national supervision, we demonstrate that excluding vulnerability impact from the model does not significantly reduce the predictive performance. These findings advance the theory of risk assessment, simplify practical implementation, and enhance the scalability of risk modeling for both traditional banks and fintech institutions in emerging economies.

RisksVol. 13(9)
National Research University Higher School of Economics (RU), Al-Farabi Kazakh National University (KZ), Daugavpils University (LV), Transport and Telecommunication Institute (LV), Kazakh Eye Research Institute (KZ)
European Regional Development Fund, State Education Development Agency Republic of Latvia
Openalex Percentile: Top 69%
Market Dynamics and Volatility
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Financial Institutions of Emerging Economies: Contribution to Risk Assessment — Almas M. Kalimoldayev, Sergejs Popovs, et al. · Risks (2025) | TGRS Research Map | TGRS