Examining the Relationship Between Financial Risk Assessment Models and Accounting Conservatism Principles

Posted: Apr 14, 2017

• Alexander Thompson
• Amelia Jackson
• Amelia Martin

Abstract

The contemporary financial landscape is characterized by an increasing reliance on sophisticated risk assessment models that employ advanced computational techniques, artificial intelligence, and big data analytics. Simultaneously, accounting conservatism remains a foundational principle in financial reporting, emphasizing prudence and caution in asset recognition and liability measurement. This research examines the intricate relationship between these two domains, addressing a significant gap in the literature regarding how modern quantitative risk assessment approaches interact with traditional accounting conservatism principles. The tension between forward-looking risk models and historically grounded conservative accounting creates both challenges and opportunities for financial reporting quality, corporate governance, and implications.