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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 November 2024 discussion of how generative AI could raise cyber risk. Which of the following best describes a way in which AI increases the threat from malicious actors?

AI lowers the cost and expertise needed to craft convincing phishing emails, deepfake voices and videos, and synthetic identities. This makes social engineering and fraud easier to scale, so malicious use of AI increases cyber risk rather than removing it.

  1. AIt lowers the cost and skill needed to create convincing phishing messages and deepfake impersonationsCorrect
  2. BIt removes the possibility of social engineering because AI filters block all fraudulent messages
  3. CIt makes all legacy systems immune to attack because AI automatically patches them
  4. DIt reduces fraud risk by eliminating the use of synthetic identities

Explanation

Generative AI can produce realistic text, voice and video cheaply, which enhances phishing, impersonation and fraud at scale. The other options claim AI removes or eliminates threats, which is not what the FSB says; AI is seen as amplifying them.

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