Artificial Intelligence Governance Policy

SKU: 341

Your Price $195.00

This policy offers guidance for directors, officers, and staff in effectively managing cyber risks in the context of artificial intelligence (AI). It addresses critical aspects, such as strategic planning, approval authority, acceptable use, incident response, and vendor management. By utilizing these guidelines, your financial institution can confidently bolster its security measures in the rapidly evolving era of AI adoption. This policy serves as the cornerstone for establishing a robust foundation for AI risk management within your institution.





Y&A’s Solution for Secure AI Adoption and Risk Preparedness in Financial Institutions

AI’s use in finance brings benefits and unique challenges, including data use, security, fairness, and transparency. To safeguard your institution amidst AI’s rapid adoption, early guidance is essential.

AI is a game-changer, offering financial institutions and their vendors opportunities to boost efficiency, drive customer engagement, and streamline operations. Nevertheless, leveraging AI’s power necessitates a proactive stance on governance and risk management. Implementing a clear and comprehensive policy is a fundamental step in safeguarding your institution, employees, and customers. This policy establishes robust risk management requirements for artificial intelligence governance, whether by in-house personnel or external vendors.

The integration of AI intersects with various legal aspects, including employment, privacy, intellectual property, and finance-related laws. Therefore, it is essential for community banks and credit unions to institute AI governance policies that ensure that both employees and management are aware of the regulations governing AI usage in their fields. To simplify the process of addressing AI-related risks, Young & Associates offers this customizable Artificial Intelligence Governance Policy that you can tailor to meet the specific needs of your financial institution.

Proactive Measures: Essential for AI Risk Management

In the ever-evolving landscape of AI integration within the financial sector, opportunities and unique policy challenges arise. These challenges, particularly concerning personal data, security, fairness, and transparency, demand early attention to safeguard your financial institution in an era of rapid AI adoption.

Financial services are inherently data-intensive, where customer records and market analysis drive decisions. With the increasing adoption of AI, data becomes even more central to informed choices. This data-centric approach accentuates the need for robust data protection and privacy measures. Safeguarding personal data is a non-negotiable priority, as it underpins customer trust—the cornerstone of financial services.

Moreover, the introduction of AI algorithms brings the potential for unintended biases in decision-making. This issue transcends ethical concerns; it carries legal and regulatory implications. To align with emerging standards and regulatory guidelines, financial institutions must ensure their AI models are fair, transparent, and compliant.

The path to effective AI integration in finance begins with the early establishment of the right guidelines. Proactive risk management is the keystone of this journey, ensuring the security of your institution, the trust of your customers, and the integrity of your reputation. It empowers financial institutions to harness the transformative power of AI while navigating potential risks with confidence and preparedness.

Key Features and Benefits of Y&A’s AI Governance Policy

Y&A’s AI Governance Policy is your key to navigating the dynamic world of AI in finance. Its features and benefits include:

  • AI Approval Process: Ensure a systematic procedure for establishing an oversight committee and evaluating and approving AI usage within your institution and your vendors’ operations.
  • Vendor Management: Set out the criteria for evaluation and ongoing monitoring of vendor AI usage and security to provide risk protection during vendor engagements.
  • Employee Acceptable Use: Lay out guidelines for employee training, ethical considerations, and appropriate use of AI tools in approved use cases.
  • Incident Response: Ensure AI-related incidents or breaches are well-defined within the institution’s Incident Response Plan.

Safeguard your community bank or credit union with our Artificial Intelligence Governance Policy, a guiding document that empowers you to harness the transformative power of AI responsibly, securely, and ethically. Stay innovative while preserving the trust of your valued customers. Contact us to learn more. 

Regulatory bodies are increasingly addressing the risks tied to the deployment of AI systems in the financial sector. Their initiatives encompass concerns related to consumer security, privacy, discrimination, and specific regulations for high-risk AI systems.

National and international regulators are in the early stages of developing approaches to manage these risks. Financial regulators have taken various steps in response to AI advancements, including:

  • Gathering data on the use of AI by financial institutions.
  • Creating regulatory sandboxes and innovation hubs to encourage innovation in finance.
  • Developing specific regulations for high-risk AI systems in finance.
  • Using AI technologies for regulatory oversight and supervision (SupTech).

In the United States, federal agencies, including the Federal Reserve Board and the Consumer Financial Protection Bureau (CFPB), are actively seeking input on AI use in financial services. They have published a Request for Information (RFI) to understand how AI systems are used, governed, and controlled by financial institutions and to address challenges in implementing and managing AI safely.

While there is no specific federal legislation focused solely on AI, federal regulators like the US Federal Trade Commission (FTC) are taking action. The FTC emphasizes that AI tools must be transparent, explainable, fair, empirically sound, and accountable to avoid violating consumer protection laws. The FTC’s enforcement actions extend to AI systems that perpetuate racial bias, marking them as unfair or deceptive business practices.

The CFPB is also fostering financial innovation through its Compliance Assistance Sandbox. This initiative allows companies to experiment with innovative products and services, sharing data with the CFPB for a defined period. This approach promotes innovation while ensuring consumer safeguards.

Should AI Be Banned in Financial Institutions?

Connect with a consultant

Contact us to learn more about our consulting services and how we can add value to your financial institution