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FRM Part II · FRM Exam Part II · Advances in Artificial Intelligence: Implications for Capital Markets Activities

A firm's board is setting AI governance. Which arrangement best reflects good practice for accountability?

Best practice is to give each AI use case a clearly accountable senior owner, maintain an inventory of AI applications, apply risk-based controls and provide board-level oversight. Delegating to vendors, self-certification or waiting for specific rules leaves accountability gaps.

  1. ADelegating all AI oversight to the vendor's engineers
  2. BAssigning clear senior-management ownership of each AI use case, with board-level oversight, an inventory of AI applications and risk-based controlsCorrect
  3. CRelying on individual developers to self-certify their models without review
  4. DPostponing governance until a regulator issues a specific AI rule

Explanation

Good practice requires clear accountability at senior level, board oversight, an inventory of AI use cases and controls scaled to risk. Delegation to vendors, self-certification and waiting for rules leave gaps, since existing supervisory expectations already apply.

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