The recent SIFMA Fintech Conference featured government officials, security experts and bank executives who advocated the use and potential of artificial intelligence for cybersecurity applications, and the industry should now embrace and facilitate its development, writes Charlie Mitchell. Initiatives such as SIFMA's proposal for the creation of a sandbox to encourage experimentation and unification of regulations regarding AI should be encouraged, he writes.
Operational risk continues to be an area of concern for banks. "Losses from these operational risk episodes can be catastrophic, not just in a strictly monetary sense, but in terms of the impact on the bank's overall business and reputation, sometimes threatening its very existence," according to this brief from Bain & Co.
Investment banks are using technology for front office functions to augment tasks of traders and other staffers, rather than replacing humans. Banks see this approach as a way to cut costs while serving a more diverse client base.
Financial firms are struggling to explain how risk models using artificial intelligence and deep learning actually work to meet regulators' demands for greater transparency. An issue is reduction of the chance of error to improve the accuracy and interpretability of predictions.
The Bank of England and the UK Financial Conduct Authority have told financial firms they must implement systems that can recover quickly from cyberattacks and other challenges, such as computer failures and power outages. The procedure could shape policies adopted by international standards setters.
SIFMA is organizing an event together with the AICPA to promote awareness of the recently released System and Organization Controls (SOC) Attestation Solutions for cybersecurity. These solutions, which SIFMA worked with the AICPA to develop, offer firms a new and efficient tool to handle vendor cyberrisk management. This event will help securities firms and the third-party suppliers they work with understand the SOC attestation process for cybersecurity, the value it can provide and how firms should prepare to use it and integrate it into their third-party risk-management programs. Presentations will include an introduction to the new SOC Attestation offerings, presentations by audit firms on how to prepare for and obtain a these attestations and industry views on its value for risk management.
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