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

Which AI supply chain layer is typically cited alongside foundation models as a source of concentration risk because only a handful of firms supply it globally?

Specialised hardware, such as advanced GPUs, and cloud computing infrastructure are the layers usually cited. Only a few firms supply them globally, so financial institutions that depend on AI inherit concentration risk from these upstream providers as well as from model vendors.

  1. ASpecialised hardware such as advanced GPUs and cloud computing infrastructureCorrect
  2. BRetail customer interface design
  3. CPaper-based record archiving
  4. DLocal branch staffing

Explanation

The FSB notes that AI relies on specialised hardware, cloud services and data providers, each dominated by few suppliers. The other options are not AI supply chain layers with global concentration.

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