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ACCA Strategic Professional · Strategic Business Leader · Machine learning, AI and robotics

Corvane Bank deploys a deep neural network to approve or decline loans. A declined customer asks why, and the bank's staff cannot explain which factors drove the decision. Regulators require decisions affecting customers to be justifiable. Which limitation of the AI is the most significant issue here?

The key limitation is lack of explainability, the black box problem. Staff cannot show which factors produced a loan decision, so the bank cannot justify outcomes to customers or regulators, which weakens accountability and creates compliance and reputational risk.

  1. AScalability of the cloud infrastructure
  2. BLack of transparency or explainability (the black box problem)Correct
  3. CExcessive human oversight slowing the process
  4. DObsolescence of the hardware used to run the model

Explanation

Deep neural networks often cannot show the reasoning behind a specific output. This undermines accountability, customer challenge and regulatory compliance. The other options are not described in the case; the problem is inability to explain decisions, not capacity or hardware.

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