The Financial Stability Board (FSB), the international body that monitors and makes recommendations about the global financial system, has published a consultation report outlining sound practices for the responsible adoption of artificial intelligence (AI) across financial institutions.
The report puts forward 12 sound practices designed to guide financial institutions in deploying AI responsibly, with a focus on risks specific to AI that carry implications for financial stability. The practices span three broad areas: organisation-wide AI governance, covering practices one to four; the management and mitigation of AI risks across development and deployment lifecycles, covering practices five to ten; and the handling of AI-related cyber, information and communications technology, and third-party risks, addressed in practices eleven and twelve.
The FSB has made clear that the practices are not intended to constitute an international standard, nor to prescribe a particular approach to AI adoption or steer institutions towards any specific technology. Equally, the practices have not been developed to directly tackle risks arising from frontier AI models, though the FSB acknowledges that some practices would nonetheless assist institutions in responding to those emerging challenges.
The FSB is encouraging boards and senior management at financial institutions to draw on the toolkit when assessing business strategy, technology adoption, and risk management in an increasingly AI-driven environment. The practices are also intended to promote coordination, cooperation and information-sharing between financial institutions and supervisors, both within individual jurisdictions and across borders.
FSB Standing Committee on Supervisory and Regulatory Cooperation chair and Federal Reserve System of the United States of America Board of Governors vice chair for supervision Michelle Bowman said, 'This report establishes clear safeguards for financial institutions to adopt, innovate, and use AI responsibly. The report reflects significant collaboration among FSB members on an accelerated timeframe to keep pace with the rapid changes from advancements in AI. I look forward to receiving public feedback on this report, so that a final report can be issued later this year as a US G20 deliverable.'
FSB SRC Workstream on Artificial Intelligence lead and Monetary Authority of Singapore deputy managing director Ho Hern Shin said, 'The recent developments in frontier AI models highlight the dynamic nature of this technology and the rapid pace at which its capability evolves. The FSB's sound practices are designed to help financial institutions navigate their AI adoption responsibly in a rapidly changing technology landscape.'