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

Harlow Credit, a lender, introduces a machine learning model to approve or decline small loans. Regulators complain that applicants declined by the model cannot be told why. Which characteristic of the model is the main source of this governance concern?

The main concern is the model's lack of transparency or explainability. When a machine learning model cannot show why an applicant was declined, the lender cannot justify decisions to customers or regulators, which creates accountability, fairness and compliance problems.

  1. ALack of transparency or explainability of the model's decision logicCorrect
  2. BExcessive processing speed of the model
  3. CHigh cost of the cloud infrastructure it runs on
  4. DUse of structured rather than unstructured data

Explanation

The concern is that decisions cannot be explained to affected individuals, which is the 'black box' problem of opaque algorithms. Speed, cost and data structure do not prevent explanation of outcomes. Governance responses include explainability requirements and documented model logic.

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