LOWER EUC RISK WITH AUTOMATED CONTROLS

What is Generative AI?

Generative AI, a transformative technology, gained widespread attention with the launch of ChatGPT and GPT-4 in late 2022 and early 2023, respectively. While experts have been fascinated by this technology for years, its consumer-facing applications have now captured the public's imagination.

What is Shadow AI

Shadow AI is the use of AI within an organization without the knowledge of or oversight from the IT or Compliance Department. Within Shadow AI, there are two categories of concern that can be particularly relevant:

Topics: shadowartificialintelligence

What is fraud detection and why is risk mitigation important?

The prevalence of fraudulent activities presents a major problem to firms across the financial sector. In fact, according to a report from the Association of Certified Fraud Examiners (ACFE), the typical organization loses 5% of revenue to fraud each year. In addition to the risk of identity theft, phishing scams, and other types of consumer fraud, firms should also be on the look-out for occupational fraud, which is a type of financial crime that occurs when an employee, manager, or third party misuses an organization's resources for personal gain.

Understanding SS1/23

Supervisory Statement 1/23 is a regulation by the PRA on Model Risk Management (MRM) for banks within the U.K. going into effect May 17th, 2024. While the SS1/23 statement covers the full range of how to govern all models within a firm and defines what a model is quite broadly, it also explicitly calls out AI as a sub-principle of the regulation on the Bank of England’s website.

Topics: model risk management

What is it?

Shadow AI refers to the use of AI Applications or Models being used within an organization without the explicit consent or knowledge of a firm’s IT organization. There are normally two categories of concerns when it comes to Shadow AI:

Topics: managing risks of shadow ai, shadow ai, ai

Financial institutions are rapidly adopting AI within their inventory of complex models. We believe, along with most internal auditors and risk managers, that it is imperative to identify and manage the new business and regulatory challenges that accompany the use of AI.

At its core, AI models are simply another form of an End User Computing (EUC) Application.

Topics: mitigate ai risk, automated ai, risk assessment, mitigation

The recent Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence marks a significant step towards regulating and harnessing the power of AI.

Understanding the Executive Order: The executive order outlines a comprehensive framework for the responsible development and deployment of AI, emphasizing the importance of addressing potential risks associated with its use. From privacy concerns to algorithmic biases, the order aims to create a safer and more transparent environment for AI applications across various industries.

Topics: ai, secure and trustworthy development and use of artificial intelligence

Author: Adrian Maconick, Director of UK Sales and Marketing

The Prudential Regulatory Authority (PRA) has issued a new supervisory statement (SS) – “Model risk management principles for banks” in May 2023. It sets out the PRA’s expectations for banks model risk management (MRM) and is effective from 17 May 2024. Banks will need to move quicky to have revised MRM processes in place by then.

The SS applies to all regulated UK-incorporated banks, building societies, and PRA-designated investment firms.

Topics: pra issues, model risk management, ss1/23. principles for banks

Errors of accounting are comparable to weeds in a garden—easy to overlook but potentially disastrous if left unattended. The majority of accounting tasks are completed through spreadsheets, and it's startling to know that 90% of spreadsheets with over 150 rows contain errors of accounting. Even seasoned professionals can only spot around 54% of these errors on average. These errors can originate from data entry, flawed formulas, spreadsheet logic, or even incorrect links to other data sources.

Topics: errors of accounting, why errors of accounting happen, prevent errors of accounting

The London Interbank Offered Rate – commonly known as LIBOR – will expire by December 31, 2021. The move is the result of major manipulation scandals and reduced trading based on the rate, which is linked to everything from credit cards to leveraged loans. Libor is deeply embedded in financial markets. Some $200 trillion of derivatives are tied to the U.S. dollar benchmark alone and most major global banks will spend more than $100 million this year preparing for the switch.

Topics: cimcon, libor, index conversion, cimcon software, got libor?