Analyzing Credit Risk Management in the Digital Age: Challenges and Solutions

This review examines the evolution of credit risk management in the digital age, highlighting the transformative impact of emerging technologies such as big data, artificial intelligence (AI), machine learning (ML), and blockchain. Traditional credit risk management methods, which primarily relied on credit scores and financial statements, are being enhanced by these digital tools, enabling more accurate and real-time assessments of creditworthiness. This paper explores the key challenges faced in digital credit risk management, including data privacy and security concerns, algorithmic bias, and regulatory gaps. Furthermore, it provides insights into the strengths and weaknesses of both traditional and digital approaches, with a focus on how different industries are adopting digital technologies to manage credit risk. Finally, the paper discusses the future landscape of credit risk management, emphasizing the need for robust governance and regulatory frameworks to ensure the ethical and fair use of digital tools in the credit industry.