Banking Regulators Intensify Scrutiny of AI Risks Amid Financial Stability Concerns

Banking regulators are increasing their efforts to contain growing risks associated with artificial intelligence (AI), with some expressing concerns about the potential for cyberattacks on banks and the undermining of global financial stability. This heightened regulatory scrutiny reflects a growing recognition that advanced AI may necessitate significant investments in cyber recovery, closer attention to dependencies on external technology providers, and more formal regulatory guidance in certain jurisdictions. Regulators are reportedly inquiring about banks' vulnerabilities from AI use and their preparedness to act, with some euro zone banks being asked to map AI usage across their businesses and third-party providers to ensure systems can be controlled and restarted.