Search arXivSearch

arXiv · 2512.19935

Conditional Adversarial Fragility in Financial Machine Learning under Macroeconomic Stress

Abstract

Machine learning models used in financial decision systems operate in nonstationary economic environments, yet adversarial robustness is typically evaluated under static assumptions. This work introduces Conditional Adversarial Fragility, a regime dependent phenomenon in which adversarial vulnerability is systematically amplified during periods of macroeconomic stress. We propose a regime aware evaluation framework for time indexed tabular financial classification tasks that conditions robustness assessment on external indicators of economic stress. Using volatility based regime segmentation as a proxy for macroeconomic conditions, we evaluate model behavior across calm and stress periods while holding model architecture, attack methodology, and evaluation protocols constant. Baseline predictive performance remains comparable across regimes, indicating that economic stress alone does not induce inherent performance degradation. Under adversarial perturbations, however, models operating during stress regimes exhibit substantially greater degradation across predictive accuracy, operational decision thresholds, and risk sensitive outcomes. We further demonstrate that this amplification propagates to increased false negative rates, elevating the risk of missed high risk cases during adverse conditions. To complement numerical robustness metrics, we introduce an interpretive governance layer based on semantic auditing of model explanations using large language models. Together, these results demonstrate that adversarial robustness in financial machine learning is a regime dependent property and motivate stress aware approaches to model risk assessment in high stakes financial deployments.

Explore related subjects

Keep this discovery

Explore connections, maps & timelines

BibTeXRIS

Samruddhi Baviskar. 2025-12-22. Conditional Adversarial Fragility in Financial Machine Learning under Macroeconomic Stress. https://arxiv.org/abs/2512.19935

Cite the original work for its findings. Save a collection to share your selection of sources.

KEEP EXPLORING

Related papers

Online Regularized Statistical Learning in Reproducing Kernel Hilbert Space With Non-Stationary Data

We study recursive regularized learning algorithms in the reproducing kernel Hilbert space (RKHS) with non-stationary online data streams. We introduce the concept of a random Tikhonov regularization path and decompose the tracking error of the algorithm's output for the regularization path into random difference equations in RKHS. We show that the tracking error vanishes in mean square and almost surely if the regularization path is slowly time-varying. Then, leveraging the monotonicity of inverse operators and the spectral decomposition of compact operators, and introducing the RKHS persistence of excitation condition, we develop a dominated convergence method to prove the mean square and almost sure consistency between the regularization path and the unknown function to be learned. Especially, for independent and non-identically distributed data streams, the mean square and almost sure consistency between the algorithm's output and the unknown function is achieved if the input data's marginal probability measures are slowly time-varying and the average measure over each fixed-length time period is uniformly above a strictly positive finite Borel measure.

cs.LG

Reflective Policy Optimization

On-policy reinforcement learning methods, like Trust Region Policy Optimization (TRPO) and Proximal Policy Optimization (PPO), often demand extensive data per update, leading to sample inefficiency. This paper introduces Reflective Policy Optimization (RPO), a novel on-policy extension that amalgamates past and future state-action information for policy optimization. This approach empowers the agent for introspection, allowing modifications to its actions within the current state. Theoretical analysis confirms that policy performance is monotonically improved and contracts the solution space, consequently expediting the convergence procedure. Empirical results demonstrate RPO's feasibility and efficacy in two reinforcement learning benchmarks, culminating in superior sample efficiency. The source code of this work is available at https://github.com/Edgargan/RPO.

cs.LG

Transductive Off-policy Proximal Policy Optimization

Proximal Policy Optimization (PPO) is a popular model-free reinforcement learning algorithm, esteemed for its simplicity and efficacy. However, due to its inherent on-policy nature, its proficiency in harnessing data from disparate policies is constrained. This paper introduces a novel off-policy extension to the original PPO method, christened Transductive Off-policy PPO (ToPPO). Herein, we provide theoretical justification for incorporating off-policy data in PPO training and prudent guidelines for its safe application. Our contribution includes a novel formulation of the policy improvement lower bound for prospective policies derived from off-policy data, accompanied by a computationally efficient mechanism to optimize this bound, underpinned by assurances of monotonic improvement. Comprehensive experimental results across six representative tasks underscore ToPPO's promising performance.

cs.LG