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CMA Intermediate · Operations Management and Strategic Management · Digital Strategy

A Bengaluru bank deploys a generative AI assistant to draft customer replies. Management wants to retain the efficiency gain while controlling the main strategic risk that the model may produce confident but factually incorrect statements. Which response is most appropriate?

The bank should add human review and ground the assistant's outputs in verified bank data. The risk is hallucination, where the model gives confident but incorrect answers. Governance and oversight control this risk, whereas removing checks, stopping monitoring or merely using a larger model does not.

  1. AIntroduce human review and grounding of outputs in verified bank data before sending to customersCorrect
  2. BSwitch off all monitoring because the model improves automatically
  3. CPublish the replies without checks to maximise speed
  4. DReplace the assistant with a larger model and remove governance

Explanation

The risk described is hallucination, where a model gives plausible but wrong output. It is controlled by grounding answers in verified data and keeping human oversight and governance. Removing checks or monitoring increases the risk, and a bigger model alone does not remove it.

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