Indicators of a financial liberalized and globalized economic system's impending collapse include frequent swings and financial crises. This results from the expert study and institutional introspection following previous catastrophes. It is possible to minimize the danger of financial system failure in critical periods by using indicators and results. They can be overcome. Minuscule failure chances and rapid recovery are the goals. Financial architects must have efficient and robust security and risk management systems to limit risk exposure. In the event of firm failure or bankruptcy, maximize stakeholder value. In South Asia, there are many countries. To create a good investment climate, retain public confidence in the business and financial sectors, and promote sustainable growth, developing healthy insolvency and risk management systems is essential. India, which opened its markets in 1991, now faces the enormous challenge of liberalization and, in the future, modernization of its legal system. Several parts of the legal and financial systems of Bangladesh, Nepal, and Pakistan have been reformed. Sri Lanka has recently embarked on a road of globalization and system reforms. There have been many bank changes and insolvency reforms in the region over the last decade. Many financial sector changes are being implemented to create an efficient, well-diversified, and competitive financial system. Banks are also trying to develop acceptable and comprehensive models for risk management, which will be integrated into their working systems. The insolvency risk for 73 Indian banks using Z-Index and the probabilistic prediction of their book value bankruptcy for three years has been analyzed from 2017 to 2020. The need of the hour is an efficient risk management system that includes risk identification, measurement and control, writes Ravi Agrawal. He says it is vital to handle these risks in a pre-emptive, proficient and cohesive manner to maintain sound financial health, banks can assess future losses and prepare for them.