The Financial Stability Oversight Council, a team of leading US regulators, has formally classified the use of artificial intelligence (AI) as an “emerging vulnerability” for the financial system. The council warned that AI poses risks including cybersecurity concerns, compliance issues, privacy risks, and potential bias in producing inaccurate results. They also expressed concerns about the use of generative AI models like ChatGPT and the “black box” nature of some AI systems, making it difficult to assess their reliability.
This move comes as AI investment and adoption has boomed, and President Joe Biden signed an executive order instructing federal agencies to safeguard the development of AI. The popularity of generative AI tools like ChatGPT, which use large language models to create text and images, has only increased interest in AI.
Regulators are calling for careful implementation and supervision of AI in financial services to manage these potential risks. The FSOC emphasized the need for vigilance by developers, financial sector firms, and regulators overseeing AI use. The warning about AI is a significant shift, as it marks the first time that AI has been formally classified as a risk to the financial system. Overall, the warning reflects the growing concern about the potential dangers and challenges associated with the increasing use of AI in the financial industry.