Yellen warns of 'significant' AI risks to the financial system

Treasury Secretary Janet Yellen warned Thursday that artificial intelligence (AI) could pose “significant risks” to the financial system.

The “complexity and opaqueness” of AI models, “inadequate” risk management frameworks and “interconnections” that arise from using the same data and models can create vulnerabilities, Yellen said at a conference on AI and financial stability.

Risks could also come from concentration among the vendors that develop models and provide data and cloud services, as well as from “insufficient or flawed data,” she added.

“The enormous opportunities and significant risks associated with the use of AI by financial firms have placed this issue at the top of the agendas of the Treasury Department and the Financial Stability Oversight Council,” Yellen said at the event co-hosted by the council and the Brookings Institution.

As part of her remarks, the Treasury Secretary announced plans to launch a formal public request for information on the “current applications, opportunities and risks of AI in the financial sector.”

The Treasury Department's Federal Insurance Office also plans to hold a roundtable on the use of AI in the insurance industry, she said.

Like Yellen, Securities and Exchange Commission Chairman Gary Gensler has similarly warned about the risks that centralized AI could pose to the financial system.

During a fireside chat earlier this year, Gensler said he thinks there will likely only be a handful of major commodity models and data aggregators, creating a “monoculture” in which hundreds or thousands of financial actors depend on the same data or model.

“Diversity of models and diversity of data sources; otherwise you end up with a pretty vulnerable system,” Gensler said at the time.

Related Posts

  • Business
  • June 15, 2024
  • 4 views
  • 7 minutes Read
We lower our price target for Salesforce after disappointing guidance

Salesforce shares fell more than 16% on Wednesday after reporting mixed earnings and revised lower expectations. The cloud software company is a high-quality stock in a rough environment – ​​at…

  • Business
  • June 15, 2024
  • 3 views
  • 2 minutes Read
Former SpaceX employees are suing after they were fired after complaining of sexual harassment

Vote on Elon Musk's $56 billion pay package Tesla will vote on Elon Musk's $56 billion pay package after massive layoffs 02:38 Eight former employees have sued SpaceX and its…

Leave a Reply

Your email address will not be published. Required fields are marked *

You Missed

Princess Kate makes her first public appearance during cancer treatment: NPR

  • June 15, 2024
Princess Kate makes her first public appearance during cancer treatment: NPR

Researchers find unique adaptations of fungi associated with bee bread

  • June 15, 2024
Researchers find unique adaptations of fungi associated with bee bread

Scores, results, highlights, standings of Euro 2024: Spain demolish Croatia; Italy vs. Albania close day 2

  • June 15, 2024
Scores, results, highlights, standings of Euro 2024: Spain demolish Croatia;  Italy vs.  Albania close day 2

How the group behind the Supreme Court abortion drug case is expanding its fight worldwide

  • June 15, 2024
How the group behind the Supreme Court abortion drug case is expanding its fight worldwide

The best portable Bluetooth speakers of 2024, tested and reviewed

  • June 15, 2024
The best portable Bluetooth speakers of 2024, tested and reviewed

The lines for CNN's June 27 presidential debate

  • June 15, 2024
The lines for CNN's June 27 presidential debate

Chocolate that utilizes the full potential of the cocoa fruit

  • June 15, 2024
Chocolate that utilizes the full potential of the cocoa fruit

We lower our price target for Salesforce after disappointing guidance

  • June 15, 2024
We lower our price target for Salesforce after disappointing guidance

Apple is joining the race to find an AI icon that makes sense

  • June 15, 2024
Apple is joining the race to find an AI icon that makes sense

Hidden costs of homeownership average $18,000 per year

  • June 15, 2024
Hidden costs of homeownership average $18,000 per year

I canceled a group trip. Do I still have to pay for the hotel?

  • June 15, 2024
I canceled a group trip.  Do I still have to pay for the hotel?