The purpose of risk management in financial services is usually defined as to ‘protect and enable’. The ‘protect’ dimension can refer to the franchise value of the business but is mainly about protecting from regulatory intervention. ‘Enable’ has a perspective of value (however defined) and achievement of company objectives.
AI-based solutions, leveraging on vast amounts of data, are already a reality in the world of financial services, and these solutions are only likely to become more prevalent in the next ten years. What are the implications of AI developments for a Board Risk Committee?
The simple ‘protect and enable’ approach suggests a number of points for discussion:
- How would your company evidence that AI systems comply with relevant legislation, e.g. non-discriminatory laws?
- How would the wider data needs of AI system cope with data protection legislation? What about the so-called ‘right of explanation’? What would be the impact of these wider data needs on cyber-security?
- What is the business purpose of introducing an AI system? Does the business seek to enhance operational efficiencies? Does it aim to enhance business performance? How would you ensure that this purpose is achieved?
- What would be the operational impact of the deployment of specific AI tools in the business? Would …read more