Artificial Intelligence and Systemic Risk

Artificial intelligence (AI) is rapidly changing how the financial system is operated, taking over core functions because of cost savings and operational efficiencies. AI will assist both risk managers and microprudential authorities. It meanwhile has the potential to destabilise the financial system, creating new tail risks and amplifying existing ones due to procyclicality, endogenous complexity, optimisation against the system and the need to trust the AI engine.

References

SP-16