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FRM Part II · FRM Exam Part II · The Financial Stability Implications of Artificial Intelligence

According to the FSB's November 2024 assessment of the financial stability implications of AI, which of the following best describes how financial institutions have mainly used AI so far?

Financial institutions have mainly used AI to improve internal operational efficiency, compliance, risk management and support tasks. Higher-stakes uses such as customer-facing decisions and trading are expanding more slowly, so fully autonomous decision-making is not the main current use.

  1. AMainly to automate all credit and trading decisions with no human oversight
  2. BMainly to improve internal operational efficiency, regulatory compliance and back-office tasks, with customer-facing and trading uses growing more slowlyCorrect
  3. CMainly to replace central bank monetary policy models
  4. DMainly to underwrite insurance contracts without any data from customers

Explanation

The FSB notes that adoption has been concentrated in internal operations, compliance, risk management and support functions, where errors are easier to contain. Fully autonomous decision-making in credit or trading is not the dominant use, so option A overstates adoption.

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