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The Future of Finance: Exploring Risk in AI

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The Future of Finance: Exploring Risk in AI

AI in Risk: The New Frontier of Finance

Broadgate Social officially returned to the Emerald Isle on the 9th of April! Led by our Dublin division, we joined forces with Marsh McLennan to explore the hottest topic on today’s headlines: Artificial intelligence.

With the help of our expert panelists, specialist Risk Recruiters, industry leaders, and of course, our audience, we explored the trends and challenges on today’s (and tomorrow’s) horizon.

Hosted by our very own Kevin Adam-Hein, Country Manager for Broadgate Ireland, our event featured the following insightful speakers:

  • Hossein Javidnia - Assistant Professor in Software Engineering @ Dublin City University

  • James Miles - Software Engineer @ Marsh McLennan

  • Dr Monika Smatralova Sosa - Internal Audit Director @ Barclays Europe

  • Juan Rio Salvador - Chief Risk Officer @ EML

  • Áine Hickey - Senior Principal @ BNY Mellon

What exactly does the future of AI-enabled finance have in store? From robo-advisors to GenAI and bleeding-edge fraud detection systems, disruption is guaranteed.

We discussed what it means to manage Risk in a multifaceted threat landscape. Climate, cyber, operational, supply chain, credit, and liquidity risk are just some of the areas undergoing major paradigm shifts.

Mounting regulatory pressures and shrinking operating margins are forcing firms to seek innovative ways to streamline their infrastructures. AI has made some big promises in this space, but are firms equipped to avoid its pitfalls? While early adopters struggled with the AI use case, the potential remains significant. The prevailing sentiment among today’s finance leaders appears to be one of cautious optimism.  

Data: the Good, the Bad, and the Biased

Are we in the midst of a data crisis? From the good to the bad and the downright biased, our panellists explored the impact of data on the world of finance and machine learning, including data quality, fairness and explainability.

When it comes to enhancing transparency and accountability, Regulators have made waves in recent years. Between Ireland’s SEAR (Senior Executive Accountability Regime) framework and the EU’s incoming AI act, finance leaders are operating at the precipice of change.

Ensuring that these changes are positive involves developing and doubling down on operational resilience and risk mitigation. The EU’s AI act is a prime example. We’re already seeing banks and financial institutions prepare their auditing functions for the increased regulatory scrutiny.

Those who fail to prepare ahead of time risk falling behind not only in terms of compliance but also in the race to build a future-proof financial system.

Generative AI!

It wasn’t too long ago that GenAI first hit the mainstream world, bringing with it a host of opportunities (and uncomfortable questions).

From automated report generation to data entry and personalised customer experiences, GenAI is being used to streamline financial services, but its impact stretches far wider than automation alone.

Whether it’s fuelling innovation in the development of financial products or revolutionising fraud detection, the benefits are impossible to ignore.

A lack of workforce readiness is still the biggest challenge to successful implementation, and companies will have to invest in upskilling to ensure their workforce is defensible.

A Lack of Clarity at the Board Level

In many cases, there's a concerning lack of clarity surrounding AI at the board level within financial institutions. While the potential of AI is undeniable, many boards are still grappling with fundamental questions about its implementation and oversight.

This is often borne out of limited understanding, missing skill sets, governance challenges, and even regulatory complexity. Boards risk slowing down their transformation projects as a result, and it's a vicious circle – if the board isn't clear on what it takes to successfully implement AI, it'll be impossible to meaningfully invest in the right workforce upskilling initiatives, leading to increased employee resistance. A clear and concise message on why and where AI can help is crucial to mitigating risk and fortifying operational resilience, but unfortunately, firms don't typically want to be the first to act.

This combination of factors creates a significant barrier to financial institutions fully realising the potential of AI. By addressing these boardroom blind spots, institutions can unlock the power of AI and gain a competitive edge in the evolving financial landscape.

The Evolving Skill Sets of the Modern Risk Professional

Tech-savvy risk managers are the talk of the talent market. The increasing complexity of today’s tech tools is mirrored by the shifting risk landscape, and protection and enablement professionals will need the experience and know-how to navigate it.

It’s not just the enterprise/operational managers that we’re seeing this change in either –  take credit risk for example, a fast-growing area of risk (largely thanks to inflation, high interest rates, and geopolitical turbulence) that frequently calls out for candidates with coding knowledge in languages like Python and SQL.

Barriers to tech implementation (and how to break them down)

Workforce preparedness (or rather, lack thereof) is still slowing down progress when it comes to tech enablement. Firms are reeling from the global talent shortages, and alternative recruitment and training methodologies will be vital in closing the tech knowledge gap.

The overlap between tech and finance skills is growing, and in many cases, it’s made pinpointing the right candidates much harder than it ever was before. Hiring managers need to be acutely aware of which role-relevant skills are evolving before getting specific with their job ads.

Compliance is another major barrier to implementation, and there’s no shortage of times when it’s gone wrong (law firm Levidow’s ChatGPT scandal being a prime example). That being said, we’re seeing AI used to great effect by companies like Octopus Energy, who use it to handle 44% of customer inquiries (according to Forbes).

The key lies in striking the balance between innovation and responsible use under a complex regulatory environment.

Broadgate Social

If you want to be a part of the biggest conversations in today’s financial services space, Broadgate Social has you covered. Our events are safe, accessible, and inclusive platforms to share ideas, meet amazing people, and uncover career opportunities. Interested? Check out our Social page here: