WHAT EXECUTIVES NEED TO KNOW ABOUT RESPONSIBLE USE OF AI/ML
R&C: What kinds of questions are chief risk officers (CROs) and other senior managers asking about responsible artificial intelligence and machine learning (AI/ML)?
Roberts: The use of artificial intelligence (AI) and machine learning (ML) is pervasive in all aspects of our society. One only needs to reach for a smartphone to benefit from its application in dynamic and predictive accuracy automation. In financial services (FS), benefits beyond accuracy include its ability to make sense of the digital data deluge. Yet, in quantitative financial risk management, the uptake of AI/ML is considerably slower. AI/ML introduce or exacerbate model risks, such as a lack of transparency in model development, inability to explain outcomes and potential conduct issues, chief risk officers (CROs) are rightly asking questions about its efficacy to solve complex risk management problems that are subject to regulatory scrutiny. The key questions for senior risk managers are: can AI/ML deliver tangible benefits in risk management and if so, how do I and my organisation effectively apply AI/ML in a compliant and responsible way, by ensuring that the risks are either avoided, mitigated or managed?
Apr-Jun 2023 Issue
SAS