Banks told to expand risk management to cover AI

Banks told to expand risk management to cover AI is profiled by BTW Media because published evidence links it to internet infrastructure, governance, operational dependencies, or market visibility.

• An executive order issued by President Joe Biden in 2023 led to a report interviewing 42 bank executives, revealing growing concerns among US banks regarding cybersecurity threats, particularly stemming from advancements in AI and the rise of deep fakes.
• The report emphasizes the need for banks to update risk management frameworks to address AI-related threats.

A report from the US Treasury has called on banks to bolster their risk management frameworks to avoid being overwhelmed by AI-powered fraudsters and cybercriminals.

Cybersecurity concerns are raising

The report, which was the result of an executive order issued by Joe Biden in 2023, interviewed 42 bank executives about their cybersecurity concerns. The report found that the development of AI and the emergence of so-called deep fakes are an increasing concern for US banks.

“The financial services sector is increasingly subject to costly cybersecurity threats and cyber-enabled frauds,” states the report. “As access to advanced tools becomes more widespread, it is likely that, at least initially, cyber threat actors utilising emerging AI tools will have the advantage by outpacing and outnumbering their targets.”

The report comes amid a staggering increase in the number of consumer complaints. The FBI’s Crime Complaint Centre received 880,000 calls from victims of cybercrime in 2023, a 22% increase from the previous year.

Also read: Microsoft to train Philippine women in AI, cybersecurity

Ways to enhance cybersecurity

In addition to urging banks to update their risk management frameworks to accommodate AI, the report calls for greater cooperation and sharing of more data between banks.

The report also calls for regulators to be more “dynamic” in their rule-making. This would not only improve defences against fraudsters, but also help facilitate the rapid deployment of AI tools that adhere to more robust risk management standards.

“Such a balanced regulatory environment is crucial for empowering institutions to harness AI’s full potential in combating sophisticated threats, without being hindered by overly restrictive oversight,” states the report.