Yellen warns about AI risks in finance
US Treasury Secretary Janet Yellen stated that although artificial intelligence offers important opportunities such as making financial services less costly and easier to access, it also brings with it significant risks.
Yellen spoke at the Artificial Intelligence and Financial Stability Conference organized by the Financial Stability Oversight Council (FSOC) with the Brookings Institution.
Pointing out that artificial intelligence is an issue that the Ministry and FSOC member organizations take very seriously, Yellen emphasized that it will become even more important in the coming years.
Pointing out that artificial intelligence offers tremendous opportunities for the financial system, Yellen said:
“The financial services industry has long been taking advantage of these opportunities. For many years, AI’s predictive capabilities have supported forecasting and portfolio management. AI’s ability to detect anomalies has contributed to efforts to combat fraud and illicit financing. Many customer support services have been automated. These and many other uses “In this case, we have seen that when used appropriately, AI can improve efficiency, accuracy and access to financial products.”
Emphasizing that developments in artificial intelligence also create new opportunities to make financial services less costly and easier to access, Yellen said that the use of artificial intelligence by financial institutions brings risks as well as these opportunities.
“Certain vulnerabilities may arise due to the complexity and opacity of AI models, the inadequacy of risk management frameworks that account for AI risks, and the interconnections that arise from many market participants relying on the same data and models,” Yellen said. he said.
In addition, Yellen stated that the concentration among suppliers that develop artificial intelligence models and provide data and cloud services may increase existing third-party service provider risks, and noted that insufficient or inaccurate data may perpetuate or reveal new biases in the financial decision-making process.
“Our work in the field of artificial intelligence should continue”
Referring to the work of the US government and the Treasury in this field, Yellen said that these studies should continue to improve.
Stating that they continue stakeholder participation to improve the understanding of artificial intelligence in financial services, Yellen reminded that today they requested opinions from financial institutions, consumers, advocates, academics and other stakeholders about the uses, opportunities and risks of artificial intelligence in the financial services sector.
Yellen added that the FSOC will continue its efforts to monitor the impact of artificial intelligence on financial stability, facilitate the exchange of information and encourage dialogue among financial regulators.