Dubai, UAE: Specialist analytics consultancy 4most has unveiled eight transformative trends set to impact credit risk management for regional financial institutions in 2026.

From AI‑driven innovation to sustainability integration, these developments will shape strategies across the banking sector, demanding agility, foresight, and robust governance.

The 8 trends to look out for, driven by published or pending regulations, international standards and internal priorities / strategic objectives are:

  1. AI revolution in credit risk – Artificial Intelligence will increasingly power credit risk processes, from predictive modelling to AI model risk management, enabling faster, smarter decisions while safeguarding compliance and governance.
  2. The rise of Chief Data & Analytics Officers – Financial institutions will appoint senior data leaders to spearhead analytics strategies, ensuring alignment with evolving data regulations and reinforcing governance frameworks.
  3. UAE banks take tentative steps towards the adoption of internal ratings‑based (IRB) approach – Interest in IRB models will accelerate if, as expected, the Central Bank UAE publishes its IRB regulation in 2025. As a results banks will seek tailored risk assessments over standardised approaches, enhancing capital efficiency and competitive positioning.
  4. Transparency & agility in economic forecasting – Institutions must elevate transparency and rapidly recalibrate macroeconomic scenarios to navigate volatile markets and geopolitical shifts, ensuring resilience and adaptability.
  5. ESG integration & net zero commitments – Climate risk will move from cautious observation to embedded practice, with institutions integrating ESG factors into credit assessments and advancing Net Zero strategies in line with global sustainability priorities.
  6. Treasury system modernisation – Both large and mid‑tier institutions will upgrade treasury systems to optimise investment management and liquidity amid dynamic economic conditions.
  7. Evolving model risk management with GenAI – The rise of Generative AI and public LLMs will demand advanced model risk frameworks to manage complexity, bias, and regulatory scrutiny effectively.
  8. Automation of regulatory reporting – New regulatory data requirements will accelerate automation in reporting, reducing manual effort while improving accuracy, compliance, and operational efficiency.

“The pace of change in credit risk management is accelerating, driven by technology, regulation, and sustainability imperatives. Institutions that embrace AI, data‑driven governance, and robust risk frameworks will not only meet compliance demands but also secure a competitive edge in a rapidly evolving market. Although each of the eight trends is essential, banks should approach them in a structured and sequenced manner,” commented Aakash Gupta, Client Partner at 4most.

He added: Trying to act on all of them at once can dilute focus, stretch investments and resources, and ultimately weaken outcomes. By prioritising initiatives that align with their strategic objectives and data maturity, banks can manage change more effectively and deliver meaningful impact. The key is not only recognising these trends, but executing them with clarity, focus and disciplined governance.”