A multitude of interconnected risk events—ranging from regulatory changes to geopolitical tensions—can trigger ripple effects across firms. Identifying inter-firm risk relations is thus crucial for applications like portfolio management and investment strategy. Traditionally, such assessments rely on expert judgment and manual analysis, which are, however, subjective, labor-intensive, and difficult to scale. To address this, we propose a systematic method for extracting inter-firm risk relations using Form 10-K filings—authoritative, standardized financial documents—as our data source. Leveraging recent advances in natural language processing, our approach captures implicit and abstract risk connections through unsupervised fine-tuning based on chronological and lexical patterns in the filings. This enables the development of a domain-specific financial encoder with a deeper contextual understanding and introduces a quantitative risk relation score for transparency, interpretable analysis. Extensive experiments demonstrate that our method outperforms strong baselines across multiple evaluation settings.

Firm risk relations are crucial in financial applications, including hedging and portfolio construction. However, the complexity of extracting relevant information from financial reports poses significant challenges in quantifying these relations. To this end, we introduce SURF, a System to Unveil Explainable Risk Relations between Firms. SURF employs a domain-specific encoder and an innovative scoring mechanism to uncover latent risk connections from financial reports. It constructs a network graph to visualize these firm-level risk interactions and incorporates a rationale explainer to elucidate the underlying links. Our evaluation using stock data shows that SURF outperforms baseline methods in effectively capturing firm risk relations. The demo video of the system is publicly available.