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FRM Part II · FRM Exam Part II · The Financial Stability Implications of Artificial Intelligence

A bank's risk committee reviews the FSB's discussion of how generative AI could increase cyber threats to financial institutions. Which of the following is the most direct way generative AI strengthens attackers' capabilities?

Generative AI mainly helps attackers by cheaply producing realistic phishing messages, cloned voices and deepfakes at scale, lowering the skill and cost required for social engineering and fraud. It does not remove the need for vulnerabilities, break all encryption, or make detection impossible.

  1. AIt lowers the cost and skill needed to produce convincing phishing messages and deepfake impersonations at scaleCorrect
  2. BIt eliminates the need for attackers to find any vulnerabilities in target systems
  3. CIt makes all encrypted data immediately readable to any user
  4. DIt guarantees that financial institutions cannot detect fraudulent transactions

Explanation

Generative AI can produce realistic text, voice and video cheaply, which scales social engineering, phishing and fraud. The other options are exaggerations: it does not remove vulnerabilities as a requirement, break all encryption, or make detection impossible.

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