Financial Risk Relation Identification through Dual-view Adaptation
Wei-Ning Chiu, Yu-Hsiang Wang, Andy Hsiao, Yu-Shiang Huang, Chuan-Ju Wang
Abstract
A multitude of interconnected risk eventsranging from regulatory changes to geopolitical tensions-can trigger ripple effects across firms. Identifying inter-firm risk relations is thus crucial for applications like portfolio management and investment strategy. Traditionally, such assessments rely on expert judgment and manual analysis, which are, however, subjective, labor-intensive, and difficult to scale. To address this, we propose a systematic method for extracting inter-firm risk relations using Form 10-K filings-authoritative, standardized financial documents-as our data source. Leveraging recent advances in natural language processing, our approach captures implicit and abstract risk connections through unsupervised fine-tuning based on chronological and lexical patterns in the filings. This enables the development of a domain-specific financial encoder with a deeper contextual understanding and introduces a quantitative risk relation score for transparency, interpretable analysis. Extensive experiments demonstrate that our method outperforms strong baselines across multiple evaluation settings.
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