Adapting Model Risk Management for Generative AI
What’s in this whitepaper from Google Cloud and the Alliance for Innovative Regulation:
This comprehensive paper from Google Cloud and the Alliance for Innovative Regulation examines how financial institutions can adapt existing model risk management frameworks for the generative AI era. With generative AI estimated to add up to $340 billion annually to the banking sector, the technology promises significant benefits but requires careful risk management.
Key insights:
Traditional model risk management principles remain relevant and can be adapted for generative AI, avoiding the need for entirely new regulatory frameworks.
A collaborative approach between financial institutions, regulators and technology providers is essential for responsible AI adoption.
Clear governance frameworks that define roles, responsibilities and accountability are critical for effective oversight.
The report provides specific guidance on model governance, validation, development practices and third-party risk management to help financial institutions realize the benefits of generative AI while maintaining high standards of compliance and accountability.
