FRM Part II · FRM Exam Part II · The Financial Stability Implications of Artificial Intelligence
A systemic risk team designs an AI monitoring dashboard. Which set of indicators would best capture the vulnerabilities the FSB highlights as most relevant to financial stability?
The best dashboard tracks provider concentration, widespread use of common models in trading and credit, and AI-related incidents such as cyber events and model errors. These map directly to the FSB's identified vulnerabilities, whereas headcount, patents, profit gains or chatbot counts say little about systemic risk transmission.
- AShare of institutions using each major AI provider, degree of use of common models in trading and credit decisions, and AI-related incidents including cyber and model errorsCorrect
- BAverage headcount of AI teams, number of AI patents filed, and marketing spend on AI products
- COnly the aggregate profit increase attributed to AI by banks in annual reports
- DTotal number of chatbots deployed in retail customer service
Explanation
The FSB links financial stability risks to third-party concentration, market correlations from common models, cyber risk, and model risk and data quality. Indicators on provider shares, common model use and incidents map to these channels. Headcount, patents, profits and chatbot counts do not measure transmission channels of systemic risk.
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