Master's thesis „Early warning system as a risk management instrument on the example of the Croatian Commercial bank“ is substantially conceptualized into five sections. After the introduction, the concept and significance of crisis in general are explained, after which the theoretical view of the financial crisis is divided from the concept that predicts the onset of the banking crisis. The third chapter deals with early warning systems, depicting their development through hictorical periods, emphasizes the criterion classification of the early warning system and explains their functioning through five key phases. The fourth part presents the application of the early warning system as an instrument of risk management based on the example of a Croatian Commercial Bank through the process of their implementation, and lists the types of early warning signals that differ depending on their relevance. In the last, fifth chapter, will summarize the concluding considerations of the whole theoretical concept imbued in the paper. Master's thesis „Early warning system as a risk management instrument on the example of the Croatian Commercial bank“ investigates the role and applicability of early warning indicators in contemporary business conditions. The aim of the paper is to identify issues arising from the consequences of emerging market discontinuities and at the same time, emphasize the importance and purpose of the early warning system as an instrument to deal with the crisis and successfully prevent it. It will also be explained that the application of the early warning system as a risk management instrument must be a constant process in order to become a strategic tool for achieving business efficiency. It will be argued that the application of an early warning system in business signifies a willingness to embrace change and the potential seizing of opportunities for strategic and operational reorientation of business. At the same time, the aim is to recognize that risk does not necessarily represent a threat to the observed system but, on the contrary, may become its greatest opportunity for establishing a competitive advantage. The role of the early warning system in identifying potentially more risky client groups and preventing the occurrence of crisis scenarios will be demonstrated in the example of the Croatian Commercial Bank. It is clear that in today's turbulent business environment, early warning systems are a prerequisite for success and sustainability. One should be aware of how well planned and implemented response to environmental threats can be the strength of enterprise sustainability and potential for a „jump“ in business development. Accordingly, it is crucial for companies to develop awareness of the role and strenght of early warning indicators and to implement their mechanisms into a culture of their own action.