FRM Part II · FRM Exam Part II · Advances in Artificial Intelligence: Implications for Capital Markets Activities
A bank's risk committee is assessing AI-related vulnerabilities. Which of the following would be the strongest example of an AI-related channel through which a cyber or operational event could become systemic rather than firm-specific?
The strongest example is a widely shared AI model being compromised, for instance through data poisoning, so flawed outputs reach many institutions at once. The common dependency turns a firm-level operational event into a sector-wide one, which is the hallmark of systemic risk.
- AA generative AI model used by many firms is compromised through data poisoning, causing flawed outputs to enter risk and trading processes across the sector at the same timeCorrect
- BOne bank's chatbot gives a customer an incorrect branch opening time
- CA single firm's AI model is retrained on a quarterly schedule using updated data
- DA bank replaces an AI tool with a rules-based tool for one internal reporting task
Explanation
Systemic potential arises when a shared component is compromised and the effect spreads across many institutions simultaneously. The other options are isolated, low-impact or risk-reducing events confined to one firm.
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