Published on Nov 3rd, 2024 |

AI Oversight is Lacking for Firms - Maxwell Baker Insights

Vigilant Insights

Introduction

A recent survey that will be released in November reveals that although a majority of Financial Service Firms are considering the use of Artificial Intelligence (“AI”), only 12% of the respondents have implemented risk assessments. Additionally, 92% of respondents have not implemented oversight procedures for vendors related to AI use.

These preliminary results were recently released in an Ignites article, with Vigilant Director, Maxwell Baker, Esq., providing commentary on the piece.

Maxwell Baker Insights

Maxwell Baker Insights

It is concerning to see such a low percentage of respondents preparing for the compliance challenges AI creates.

Maxwell sees an imminent need for compliance officers to create and implement policies that will clearly guide employees as to the acceptable use of artificial intelligence. These policies and procedures should address the cybersecurity, vendor accountability, and ethical challenges of AI.

They need to be “living and breathing”; AI technology is evolving in such a way that compliance officers will need to be continuously reevaluating their policies and procedures. Maxwell suggests focusing first on keeping confidential, personally identifiable information protected from generative AI platforms.

Vigilant's Conclusion

Vigilant’s Conclusion

Compliance with Emerging Financial Technologies, such as AI, will continue to be a major exam priority for the SEC in 2025.

For Firms use AI, it is important to address the use of AI in their compliance policies and procedures.

Partner with us to help reduce your regulatory risk, allowing you to focus on your business goals while we weather this regulatory storm together.

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