America’s new banking risk regulation overlooks AI and shifts the burden of defence
AI Summary
America's new banking risk regulation shifts from prescriptive rules on designing and validating quantitative systems to requiring banks to defend their own choices, transferring the burden of proof rather than relaxing oversight. The updated framework notably omits guidance on AI systems, leaving a significant gap as financial institutions increasingly rely on machine learning and artificial intelligence in their operations.
From the source
The old model risk rulebook told banks in America how to design, validate and monitor the quantitative systems they rely on. The new one asks them to defend what they chose. This isn’t relaxation, argues Vikram Singh, it’s burden transfer. And by failing to i…
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