Source: JD Supra

 
JD Supra highlights the New York Department of Financial Services’ (NYDFS) release of its Artificial Intelligence Risk Management Framework, aimed at financial institutions. The guidance addresses the risks posed by AI applications in banking, insurance, and other financial services, particularly focusing on biases, transparency, and accountability.

The framework outlines key principles for managing AI risks, including regular audits of algorithms, ensuring data quality, and implementing governance structures to oversee AI systems. It also emphasizes the need to mitigate discriminatory outcomes, a growing concern with AI-driven credit scoring and insurance underwriting.

NYDFS’s framework represents a proactive approach to AI oversight, requiring institutions to demonstrate compliance with risk management practices. This move aligns with global trends in regulating AI technologies to foster innovation while safeguarding consumer rights. The framework underscores the importance of balancing technological advancements with ethical considerations and regulatory compliance in the financial sector.