US Concerned About AI Risk to the Financial System
The Facts
US federal regulators issued a warning on Thursday, the first of its kind, about the potential harm artificial intelligence (AI) could have on the financial system. The Financial Stability Oversight Council formally characterized AI as an "emerging vulnerability."
Treasury Secretary Janet Yellen signaled that American oversight agencies would prioritize AI and the threats the technology may pose in 2024. In October, President Joe Biden issued an executive order establishing privacy and security rules for AI.
The Spin
Narrative A
Artificial intelligence in financial services needs to be carefully implemented and supervised. It's wise for US regulatory agencies to have issued a warning and identified AI as a potential vulnerability. The financial system may suffer greatly if the application of advanced models is left unchecked — be it from bad actors or the obtuse complexities of the systems themselves. Consumers could pay a huge price.
Narrative B
AI technology has made tremendous improvements to the financial sector and has become essential in the battle against financial crime and fraud. It's an effective method for risk assessments that can assist banks in predicting loan defaults and stop insurers from overpaying claims. Overall, the benefits of AI in the financial sector greatly outweigh the risks.
