As a Non Executive Director of a general insurance business, I keep a close eye on the sector, particularly where it rubs up against artificial intelligence. So this article from the US caught my eye.
The financial services sector has been using AI tools for longer than many other sectors, for example in predicting which credit card transactions are fraud and deciding who to give loans to. The uses can be controversial and leaders certainly need to understand the data and AI models to know what pitfalls to avoid.
I agree with the news piece that tighter regulations are on their way in the US, EU and UK so you’d be a poor leader if you didn’t know what regulations are likely to hit you. And make sure you don’t build a business model on a way of working that could soon be outlawed.
But our own research shows that 59% of Board members don’t know what AI regulations are in the pipeline and only 9% have a system in place to control the use of AI internally or in their supply chain.
So what’s the solution?
Firstly, leaders in financial services need to up their game to be more aware of how AI is being used across the organisation – whether developed in-house, bought in as services, or in the supply chain.
Second they should assess the risks and make sure the controls are in place – even if only at the high level via the risk register to start with.
Finally Boards need to take responsibility for creating the frameworks and guardrails for what their organisations will – and will not – use AI to do. You can’t delegate the many ethical choices to your IT department or data scientist – and it’s not a quick job – but you can start with going through our Questions for Boards. If you find these tricky, get us in to run a Board development session so your Directors are up to speed on the possibilities and pitfalls of AI.
