<![CDATA[This study aims to analyze the effect of carbon risk on firm financial risk and examine the moderating role of Artificial Intelligence Innovation. The research focuses on carbon-intensive companies listed on the Indonesia Stock Exchange (IDX) using a quantitative research approach. Secondary data drawn from financial statements, annual reports, and sustainability reports over the period 2018-2024 (407 observations) . The data were analyzed using panel data regression and Moderation Regression Analysis (MRA). The research findings indicate that carbon risk has a positive and significant effect on firm financial risk driven by higher compliance costs, regulatory pressure, and reputational risks faced by companies with high carbon emissions. Additionally, AI innovations weakens this link by improving efficiency, risk analysis, and decision-making. The implications of this study indicate that firms should make greater use of Artificial Intelligence in their risk management strategies to strengthen financial resilience and promote sustainability. The novelty of this study lies in its analysis of the moderating effect of Artificial Intelligence on the relationship between carbon risk and firm financial risk, particularly in developing countries such as Indonesia.]]>
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