The Monetary Authority of Singapore (MAS) has released a comprehensive report highlighting best practices for managing AI model risks in financial institutions. As AI adoption accelerates—especially with advancements in Generative AI—responsible governance and risk management are crucial to ensure robust and ethical deployment.
Key Takeaways:
1️⃣ Governance and Oversight:
– Cross-functional AI oversight forums to address evolving risks.
– Clear policies ensuring AI is developed and deployed ethically and transparently.
2️⃣ Risk Management Systems:
– Maintaining AI inventories for central oversight.
– Assessing the risk materiality of AI models to apply appropriate controls.
3️⃣ Development and Deployment:
– Rigorous standards for data management, explainability, and fairness.
– Independent validation and ongoing monitoring to detect model drift or biases.
4️⃣ Generative AI Considerations:
– Early-stage applications focus on internal productivity enhancements.
– Additional controls for hallucinations, unpredictability, and third-party models.
– MAS emphasizes balancing innovation with risk management to harness AI’s potential while mitigating financial, operational, and reputational risks.
Contact us at lawfirm@dalir.co.uk if you would like to discuss best practices for managing AI in your organisation.