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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 affect cyber risk. Which of the following best describes a way AI could increase cyber-related vulnerabilities in the financial system?

Generative AI can help attackers scale and personalise phishing, deepfakes and social-engineering attacks, lowering the cost and skill needed for fraud and intrusion. This raises cyber vulnerabilities. It does not remove capital needs, make data public, or restrict attacks to one institution.

  1. AIt lets attackers scale up and personalise phishing and social-engineering campaigns, including through deepfakesCorrect
  2. BIt removes the need for financial institutions to hold any operational risk capital
  3. CIt makes all customer data public, so confidentiality breaches no longer matter
  4. DIt guarantees that attackers can only target a single institution at a time

Explanation

The FSB notes that generative AI can enhance malicious actors' capabilities, for example by producing convincing phishing messages, deepfakes and synthetic identities at scale. The other options are not consequences of AI: capital requirements do not vanish, data is not made public, and attacks are not confined to one firm.

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