<p>Artificial Intelligence can enhance in solving complex decision-making process and that is the reason why it acts as a catalyst for transformation in every industry. It allows tedious and time-consuming tasks to be completed efficiently and effectively and provide in depth information.</p> <p>The influence of high-speed computing and artificial intelligence offer new potential tools to risk managers. The financial services organization are striving continuously to improve their compliance and risk management processes, hence many of them are putting artificial intelligence to work to gear up these processes.</p> <p>Machine learning - a form of AI where computer algorithms are improving by time through their experience of using data and it is a critical input to risk management practices across industries.</p> <p>AI can be used to monitor and analyse behaviour and activities in real time. These systems are easily adapted to changing risk environment, they can enhance the organizations monitoring capabilities in areas such as regulatory compliance and corporate governance.</p> <p>While AI is still in its development stage, it can already be used to mitigate risk in some areas. For example, Machine learning can support more informed knowledge about an individual or organization defaulting on a loan or a payment and hence can be used to build a variable revenue forecasting model.</p> <p>For many years’ machines have detected credit card fraud. This system of banks is used on a large scale to prevent such fraud and block such suspicious transactions. Financial institutions also use automated systems to monitor and track the behavioural information such as email traffic, office building check- in and check- out times and even telephone calls.</p> <p><strong>Despite these benefits, AI is also a source of significant new risks that must be managed.</strong></p> <p><strong>Algorithmic error</strong>: Machine learning identify the data pattern and uses them for predicting rules regulations and decisions. If those patterns contain some bias, the algorithms are likely to produce an outcome that will not be compatible with the existing requirement.</p> <p><strong>Over evaluating the capabilities of AI</strong>- Since AI systems do not understand the task they perform, it is a probability that they can alter the outcome if input is given wrong or of poor quality.</p> <p><strong>Programming Errors</strong>- As errors exist algorithms may not perform as expected and may deliver misleading results.</p> <p><strong>Hazardous to Reputation</strong>- AI handle large amount of sensitive data and make critical decisions about an organization or an individual. If the data entered into is biased or error- prone it can bring reputational risks to the organization that owns it. </p> <p>Hence, we can conclude form the above that artificial intelligence provides opportunities when applies carefully and threats when applied in an incorrect manner.</p>
ARTIFICIAL INTELLIGENCE: THREAT OR OPPORTUNITY??
Financial Management consultancy