# Explainable Risk Classification in Financial Reports

arXiv: https://arxiv.org/abs/2405.01881 · HTML: https://mlsanity.com/paper/2405.01881/

## Key facts

- Cited by 1 papers in the map (data through 14 Oct 2026).
- Builds on 9 of its 50 references that are in the map.
- First posted on arXiv 3 May 2024.

## Builds on (most cited first, 9 of 9)

- [Attention Is All You Need](https://mlsanity.com/paper/1706.03762/) (2017)
- [BERT: Pre-training of Deep Bidirectional Transformers for Language Understanding](https://mlsanity.com/paper/1810.04805/) (2018)
- [A Unified Approach to Interpreting Model Predictions](https://mlsanity.com/paper/1705.07874/) (2017)
- ["Why Should I Trust You?": Explaining the Predictions of Any Classifier](https://mlsanity.com/paper/1602.04938/) (2016)
- [Empirical Evaluation of Gated Recurrent Neural Networks on Sequence Modeling](https://mlsanity.com/paper/1412.3555/) (2014)
- [Attention is not not Explanation](https://mlsanity.com/paper/1908.04626/) (2019)
- [A Survey on Explainable Artificial Intelligence (XAI): Towards Medical XAI](https://mlsanity.com/paper/1907.07374/) (2019)
- [Volatility Prediction using Financial Disclosures Sentiments with Word Embedding-based IR Models](https://mlsanity.com/paper/1702.01978/) (2017)
- [SHAP values for Explaining CNN-based Text Classification Models](https://mlsanity.com/paper/2008.11825/) (2020)

## Built on by (most cited first, 1 of 1)

- [Interpretable LLMs for Credit Risk: A Systematic Review and Taxonomy](https://mlsanity.com/paper/2506.04290/) (2025)

## Abstract (arXiv)

Every publicly traded company in the US is required to file an annual 10-K financial report, which contains a wealth of information about the company. In this paper, we propose an explainable deep-learning model, called FinBERT-XRC, that takes a 10-K report as input, and automatically assesses the post-event return volatility risk of its associated company. In contrast to previous systems, our proposed model simultaneously offers explanations of its classification decision at three different levels: the word, sentence, and corpus levels. By doing so, our model provides a comprehensive interpretation of its prediction to end users. This is particularly important in financial domains, where the transparency and accountability of algorithmic predictions play a vital role in their application to decision-making processes. Aside from its novel interpretability, our model surpasses the state of the art in predictive accuracy in experiments on a large real-world dataset of 10-K reports spanning six years.