Quantum technology: a financial risk assessment

Sonia Bhati, Riya Thareja, Seema Sharma

Isaiah Hull, Or Sattath, Eleni Diamanti +1 more

R CHAITHRAKALA

Quantum computing has the potential to significantly transform financial risk measurement in India. It can improve the accuracy of models and accelerate complex calculations, leading to enhanced risk assessments and decision-making for financial institutions. This technology allows for real-time analysis of large datasets, which supports more proactive risk management strategies. Additionally, quantum computing can optimize portfolio management and improve algorithmic trading. Its unique features may also provide advancements in cryptography, thereby protecting financial data. As India adopts this technology, it is essential to create a strong framework for integrating quantum solutions into current financial systems.

Shen Xiaowang

Quantum technologies are rapidly moving from laboratory research toward industrialization, commercialization, and capital formation, while introducing new sources of financial risk associated with technological uncertainty, cybersecurity and post-quantum cryptography (PQC) migration, regulatory change, supply-chain resilience, and investment timing. In 2024, the U.S. National Institute of Standards and Technology (NIST) finalized and published three foundational PQC standards, FIPS 203, FIPS 204, and FIPS 205. In 2025, the Bank for International Settlements (BIS) advanced Project Leap to test quantum-safe cryptography in financial infrastructure, while the OECD published its A Quantum Technologies Policy Primer. In 2026, the Hong Kong Monetary Authority (HKMA) introduced the first Quantum Preparedness Index (QPI), with an initial sector-level score of 2.3 out of 10, indicating that quantum preparedness in the banking sector remains at an early stage. These developments highlight a growing need to integrate technological, cybersecurity, institutional, and financial-risk perspectives within a coherent decision architecture. This paper develops a Prim-Lex Quantum Finance framework based on Prim-Lex Theory (Economic Climatology), integrating five Prim-Fires, eight-dimensional coherence, and Nine-Nexus guidance. The Five Prim-Fires comprise Technological-Capability Prim-Fire, Security-Resilience Prim-Fire, Institutional-Governance Prim-Fire, Industrial-Commercial Prim-Fire, and Earth-System Intelligence-Coherence Prim-Fire. The Prim-Lex Eight-Dimensional Quantum Finance State Space (PL-8D-QF) characterizes quantum-technology investment projects across eight dimensions: Technological Capability; Security and Quantum Readiness; Policy and Regulatory Alignment; Technology Maturity and Lifecycle; Ex-ante Financial Viability; Supply-Chain and Systemic Resilience; Temporal Synchronization and Transition Readiness; and Information Quality and Transparency. Building on this state space, the paper introduces the Quantum Investment Coherence Index (QICI), which combines a weighted geometric aggregation of eight-dimensional state strengths with a Kuramoto-based coherence measure derived from dynamic phase information extracted using the Hilbert transform. The central testable proposition is that multidimensional coherence contains incremental predictive information about financial risk beyond the information contained in dimension strengths alone. The framework further specifies a quantitative transmission mechanism from QICI to Probability of Default (PD), Expected Loss (EL), risk-adjusted returns, and financing costs or credit spreads, while distinguishing the Quantum Sovereignty Index (QSI) for national strategic assessment from QICI for project- and investment-level decision-making. The paper formulates 12 testable hypotheses and develops an empirical validation design incorporating panel data, predictive modeling, data-driven critical phase-threshold identification, block bootstrap procedures, out-of-sample validation, and falsification or placebo tests. The critical phase threshold is not imposed ex ante as a universal constant, such as , but is identified from predictive performance in the data; is retained only as a falsifiable theoretical benchmark. The framework then links QICI to risk pricing, investment timing, capital allocation, risk mitigation, and exit decisions, thereby establishing a decision chain from quantum-technology state assessment to financial-risk pricing and capital allocation. The paper seeks to extend the assessment of quantum technologies from technological evaluation to financial evaluation and from compliance-oriented assessment to risk-sensitive allocation optimization. It provides a quantifiable, testable, programmable, and auditable analytical framework for quantum-technology investment, institutional quantum preparedness, post-quantum cryptography migration, and emerging quantum-climate-finance research.

Abdullah Al Mamoon

Quantum finance represents an emerging frontier at the intersection of quantum computing and financial technology, offering new approaches to solving complex financial problems that classical computational methods cannot. This chapter examines how quantum computing principles, including superposition and entanglement, can enhance financial modelling, optimisation, and risk analysis. It discusses the application of quantum algorithms to key financial activities, including portfolio optimisation, derivative pricing, fraud detection, and credit risk assessment. The chapter also explores the role of quantum machine learning in improving predictive analytics and decision-making in high-dimensional financial datasets. In addition, the potential of quantum cryptography to strengthen cybersecurity within financial systems is analysed. While the technological capabilities of quantum computing present significant opportunities for innovation and efficiency in financial markets, the chapter highlights important constraints, including hardware limitations, algorithmic maturity, regulatory uncertainty, and the shortage of specialised expertise. The discussion concludes that quantum finance is likely to become a critical component of next-generation financial infrastructure as technological capabilities mature.

Neelotpal Dey, Mr Akash Kumar, Mr Sanjay