澳大利亞《AI治理調(diào)查報(bào)告》

Bewarethegap:

Governance

arrangementsinthefaceofAIinnovation

REPORT798|OCTOBER2024

Aboutthisreport

ASICreviewedhow23AFSlicenseesandcreditlicenseesareusingandplanningtousearti?cialintelligence,howtheyareidentifyingandmitigatingassociatedconsumerrisks,and

theirgovernancearrangements.Thisreportoutlinesthekey?ndingsfromthatreview.

AboutASICregulatorydocuments

InadministeringlegislationASICissuesthefollowingtypesofregulatorydocuments:consultationpapers,regulatoryguides,informationsheetsandreports.

Disclaimer

Thisreportdoesnotconstitutelegaladvice.Weencourageyoutoseekyourownprofessionaladviceto?ndouthowthe

CorporationsAct2001,NationalConsumerCreditProtectionAct2009andotherapplicablelawsapplytoyou,asitisyourresponsibilitytodetermineyourobligations.Examplesin

thisreportarepurelyforillustration;theyarenotexhaustiveandarenotintendedtoimposeorimplyparticularrulesorrequirements.Forprivacyreasons,thenamesofcase-studysubjectshavebeenchanged.

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FOREWORD3

EXECUTIVESUMMARY

4

AIGOVERNANCE:QUESTIONSFORLICENSEES

8

WHYLOOKATAI?

9

FINDINGS:USEOFAI

10

FINDINGS:RISKMANAGEMENTANDGOVERNANCE

18

WHERETOFROMHEREFORLICENSEES?

33

APPENDIX1:REVIEWMETHODOLOGYANDDEFINITIONS

38

APPENDIX2:ACCESSIBLEDATAPOINTS

40

APPENDIX3:KEYTERMS

41

CONTENTS

2

Foreword

Artificialintelligence(AI)istransformingmanyaspectsofourlives,

iEnlioipwictweglaabwitiaaiilmlplisaitn,snedrbicites.

ceauortentialbenefitstobusinessandindividualsareenormous–digitalinnovationsincludingAIareestimatedtocontribute

3m1,5tobiellniniatnoeaues.tiacliilalu’spaePmbeyaq0u3a0e1rerit,temquenonpelecatutreprehentiresenissitaellabo.Itatenihilluptatem

Tofullyrealisethosebenefits,wemustbalanceinnovationandprotection.Theintegrityofourfinancialsystem–andthesafetyoftheconsumerswhointeractwithit–reliesonusfindingtherightbalance.

Forsometime,ASIChasbeenremindinglicenseesthatexistingobligationsapplytotheiruseofAI.ASIChasalsobeenbuildinganunderstandingofhowAIisactuallybeingusedinthesectorsweregulate.

ThisreportisASIC’sfirstexaminationofthewaysAustralian

financialservices(AFS)andcreditlicenseesareimplementingAIwhereitimpactsconsumers.Concerningly,itfindsthatthereisthepotentialforagovernancegap.

Simplyput,somelicenseesareadoptingAImorerapidlythan

theirriskandgovernancearrangementsarebeingupdatedto

reflecttherisksandchallengesofAI.ThereisarealriskthatsuchgapswidenasAIuseacceleratesandthismagnifiesthepotentialforconsumerharm.

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WhiletheapproachtousingAIwhereitimpactsconsumershasmostlybeencautiousforlicensees,itisworryingthatcompetitivepressures

andbusinessneedsmayincentiviseindustrytoadoptmorecomplexandconsumer-facingAIfasterthantheyupdatetheirframeworkstoidentify,mitigateandmonitorthenewrisksandchallengesthisbrings.

AstheracetomaximisethebenefitsofAIintensifies,itiscriticalthat

safeguardsmatchthesophisticationofthetechnologyandhowitis

deployed.AllentitieswhouseAIhavearesponsibilitytodososafelyandethically.

OurreviewcomesatapivotaltimeinthedevelopmentofAIregulationinAustralia.WesupporttheAustralianGovernment’sVoluntaryAISafetyStandardandintentiontointroducemandatoryguardrailsensuring

testing,transparencyandaccountabilityforAIinhigh-risksettings.

However,licenseesandthosewhogovernthemshouldnottakeawait-

and-seeapproachtolegislativeandregulatoryreform.Currentlicenseeobligations,consumerprotectionlawsanddirectordutiesaretechnologyneutralandlicenseesneedtoensurethattheiruseofAIdoesnotbreachanyoftheseprovisions.

ASIC’sworktoengagewithandmonitorlicensees’AIusewillcontinue,particularlyasweconsiderhowtheyembedthe

requirementsofanyfutureAI-specificregulatoryobligations.

Icallonindustrytoconsiderthefindings

ofthisreviewandreflectonthequestionsposedtoensurethatinnovationisbalancedwiththeresponsible,safeandethicaluseofthistechnology.

JosephLongo

ASICChair

1DepartmentofIndustry,ScienceandResources,

ListofCriticalTechnologiesintheNationalInterest

:AITechnologies3

Executivesummary

ArtificialintelligencehasthepotentialtotransformtheprovisionoffinancialservicesandcreditinAustralia.Itprovides

opportunitiesformoreefficient,accessibleandtailoredproductsandservices.However,AIcanalsoamplifyexistingrisksto

consumersandintroducenewones.Potentialharmsincludebiasanddiscrimination,provisionoffalseinformation,exploitation

ofconsumervulnerabilitiesandbehaviouralbiases,andtheerosionofconsumertrust.Tohelpshapeourunderstandingofrisktoconsumersandtoinformourregulatoryresponse,wereviewedtheuseofAIby23AFSandcreditlicensees.

Ourreview

Weanalysed624AIusecasesthat23licenseesinthebanking,credit,insuranceandfinancialadvicesectorswereusing,ordeveloping,as

atDecember2023.ThesewereusecasesthatdirectlyorindirectlyimpactedconsumersandincludedgenerativeAIandadvanceddata

analytics(ADA)models.

Aspartofourreview,wealsoaskedlicensees

abouttheirriskmanagementandgovernance

arrangementsforAI,andhowtheyplanned

touseAIinthefuture.Wemetwith12ofthe

licenseesinJune2024todiscusstheirusecasesandgovernancearrangements.

Whatwefound

WeobservedarapidaccelerationinthevolumeofAIusecases.Wealsoobservedashift

towardsmorecomplexandopaquetypesofAIsuchasgenerativeAI.

Butonthewhole,thewaylicenseesusedAI

wasquitecautiousintermsofdecisionmakingandinteractionswithconsumers:AIgenerally

augmentedratherthanreplacedhumandecision

makingandtherewasonlylimiteddirectinteractionbetweenAIandconsumers.

Themajorityoflicenseestoldustheyare

planningtoincreasetheiruseofAI.Given

thefast-movingnatureofAIandcompetitivepressuresinindustry,thereispotentialfor

thewayAIisusedandtheassociatedrisktoconsumerstoshiftquickly.

Weareconcernedthatnotalllicenseesare

wellpositionedtomanagethechallengesof

theirexpandingAIuse.Somelicenseeswere

updatingtheirgovernancearrangementsatthesametimeasincreasingtheiruseofAI.And

inthecaseoftwolicensees,AIgovernancearrangementslaggedAIuse.

Governanceandriskmanagementarrangements

are,bytheirnature,slowtochange.Itis

thereforelikelythatanygapbetweentheuseofAIandgovernancearrangementswillwidenasAIadoptionincreases.Thiscouldleavelicenseesunpreparediftheywanttorespondquicklybutsafelytoinnovationsfromcompetitors.

KEYSTATISTICS

?57%ofallusecaseswerelessthantwoyearsoldorindevelopment.

?61%oflicenseesinthereviewplannedtoincreaseAIuseinthenext12months.

?92%ofgenerativeAIusecasesreportedwerelessthanayearold,orstilltobedeployed.

GenerativeAImadeup22%ofallusecasesindevelopment.

?Only12licenseeshadpoliciesinplaceforAIthatreferencedfairnessorrelatedconceptssuchasinclusivityandaccessibility.

?Only10licenseeshadpoliciesthatreferenceddisclosureofAIusetoaffectedconsumers.

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Executivesummary

OURFINDINGS

UseofAI

FINDING1:TheextenttowhichlicenseesusedAIvariedsignificantly.SomelicenseeshadbeenusingformsofAIforseveralyearsandothers

wereearlyintheirjourney.Overall,adoptionofAIisacceleratingrapidly(seepage11).

FINDING2:Whilemostcurrentusecasesusedlong-established,well-understoodtechniques,thereisashifttowardsmorecomplexand

opaquetechniques.TheadoptionofgenerativeAI,inparticular,isincreasingexponentially.

Thiscanpresentnewchallengesforriskmanagement(seepage13).

FINDING3:ExistingAIdeploymentstrategiesweremostlycautious,includingforgenerative

AI.AIaugmentedhumandecisionsor

increasedefficiency;generally,AIdidnotmakeautonomousdecisions.Mostusecasesdidnotdirectlyinteractwithconsumers(seepage15).

Riskmanagementandgovernance

FINDING4:NotalllicenseeshadadequatearrangementsinplaceformanagingAIrisks(seepage19).

FINDING5:Somelicenseesassessedrisksthroughthelensofthebusinessratherthantheconsumer.Wefoundsomegapsinhowlicenseesassessedrisks,particularlyriskstoconsumersthatarespecifictotheuseofAI,suchasalgorithmicbias(seepage20).

FINDING6:AIgovernancearrangements

variedwidely.WesawweaknessesthatcreatethepotentialforgapsasAIuseaccelerates

(seepage24).

FINDING7:Thematurityofgovernance

andriskmanagementdidnotalwaysalignwiththenatureandscaleoflicensees’AI

use–insomecases,governanceandrisk

managementlaggedtheadoptionofAI,

creatingthegreatestriskofconsumerharm(seepage29).

FINDING8:ManylicenseesreliedheavilyonthirdpartiesfortheirAImodels,butnotallhadappropriategovernancearrangementsinplacetomanagetheassociatedrisks(seepage31).

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WeobservedarapidaccelerationinthevolumeofAIusecases,andashifttowardsmorecomplexandopaquetypesofAIsuchasgenerativeAI.Butonthewhole,thewaylicenseesusedAIwasquitecautious.WefoundsomegapsinhowlicenseesassessedriskstoconsumersfromAI,andforsomelicensees,governancearrangements

laggedtheirAIuse.Thiscreatesriskofconsumerharm.

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Executivesummary

Wheretofromhereforlicensees?

ASICsupportsinnovationinthefinancialsystemthatisbalancedwithappropriateconsumer

protectionsandmarketintegritysafeguards.

Whilelicensees’deploymentstrategieswere

somewhatcautious,thereisfertilegroundforconsumerharmwhereuseofAIleapsaheadofgovernancearrangementsandcontrols.

Weexpectlicenseestocarefullyconsidertheir

readinesstodeployAIsafelyandresponsibly.

DecisionsthatlicenseesmakenowabouthowtheywillgoverntheirAIusewilldeterminewhethertheyestablishsolidfoundationsonwhichtodelivertheexpectedbenefitsandmanageriskstothemselvesandtheircustomers.

Manylicenseestoldusthattheywereupdatingtheirgovernancearrangementsinrelationto

AI.Thisiswelcome,butthereismoretodo.

AIpresentsnovelchallenges,andlicensees’

governancearrangementsshouldleadtheirAIuseasitincreasesandevolves.

Licenseesshouldconsiderthefindingsofthis

report,andthequestionsonpages35–36,to

helpthemconsidertheirreadinesstodeployAI

safely,responsiblyandincompliancewithexistingobligations.

Licensees’obligationsandresourcesforlicensees

Theregulatoryframeworkforfinancialservices

andcreditistechnologyneutral.LicenseesneedtoconsidertheirexistingregulatoryobligationsbeforedeployingAI.Inparticular,licenseesneed

toconsiderthegenerallicenseeobligations,

directors’duties,andconsumerprotection

provisions,includingprohibitionsagainst

unconscionableconductandfalseormisleadingrepresentations(seepage34).

Thereareanumberofresourcesthatlicensees

candrawonastheydeployAI,suchasthe

recentlyissued

VoluntaryAISafetyStandard

.ThisstandardgivespracticalguidancetoallAustralianorganisationsonhowtosafelyuseandinnovatewithAI.

LicenseeswhoinvestthetimenowwillalsobeinabetterpositiontocomplywithanyfutureAI-

specificregulatoryobligations.

Thefutureregulatorylandscape

ThelandscapeofAIregulationinAustraliais

evolving.TheAustralianGovernmentrecently

consultedonhowitproposestodefine‘high-riskAI’,andtheintroductionofmandatoryguardrailstopromotethesafedesign,developmentand

deploymentofhigh-riskAIuse.Theproposed

guardrailsincluderequirementsrelatedtotesting,transparencyandaccountabilityofAI.

ASICsupportstheintroductionofregulatory

measurestomandateguardrailsfortheuseofAIinhigh-risksettings.ThefindingsofthisreviewhaveinformedourcontributiontotheGovernment’s

proposals.

ASIC’sfocus

Weremainfocusedonadvancingdigitalanddataresilienceandsafety,targetingtechnology-enabledmisconductandthepooruseofAI.UnderstandingandrespondingtotheuseofAIacrosstheentitiesweregulateisakeypriorityforASIC.

Wewill:

?continuetomonitorhowourregulated

populationusesAI,andtheadequacyoftheirriskmanagementandgovernanceprocesses

?contributetotheAustralianGovernment’sdevelopmentofAI-specificregulation

?engageandcollaboratewithdomesticandinternationalregulatorcounterparts,and

?wherenecessaryandappropriate,take

enforcementactioniflicensees’useofAIresultsinbreachesoftheirobligations.

AIpresentsnovelchallenges,and

licensees’governancearrangementsshouldleadtheirAIuseasitincreasesandevolves.Licenseesshouldreviewtheirarrangementsinlinewithour

findings.

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Executivesummary

CASESTUDY

BewarethegapbetweenAIuseandgovernance

Onelicenseecited10AIusecasesinscope,butadoptionappearedtofront-runtheirgovernance

andriskmanagementarrangements.The

licenseehadnooverarchingAIstrategysettingouthowandwhythelicenseehaddecidedto

useAIinitsoperations.Thelicenseeproduced

nopoliciessettingoutstandardstoguidethe

design,deploymentandoversightofAI,andhadnotarticulatedthekeyrisksassociatedwithAI

andADAintheirriskmanagementframework

(e.g.alackofexplainabilityforcomplexmodels).Noneofthelicensee’susecaseswereriskrated.

ThelicenseeusedanAImodeltopredict

consumercreditdefaultriskbyproducingariskscore.Thescoreproducedbythemodelwasoneinputintocreditdecisions.Ithadthepotential

toresultinconsumersbeingrefusedcreditorofferedlesscreditthantheyotherwisewouldhavebeen.

Aninternalreporttoaseniorcommitteedatedapproximately10monthsafterdeployment

ofthemodelstatedthatitwasdeveloped

with‘limitedunderstanding’ofthethird-partyplatformused,therewas‘incompletemodel

documentationwithmissingcriticalelements’,

and‘poorgovernanceandalackofamonitoringprocess’.

Thereportfurtherdescribedthemodelasa

‘blackboxwithnoabilitytoexplainthevariablesinthescorecardortheimpacttheyarehavingonanapplicant’sscore’.

Althoughthelicensee’sreportstatedthat‘themodelhasbeenstable’,itnotedthatitsabilitytomonitorthemodelwaslimited.Thereportproposed‘torevisethe[model],toensureit

isexplainable,documented,andhasarobustgovernanceprocessinplace’.Thelicensee

continuedtousethemodelforseveralmonthsbeforereplacingitwithasimplermodel,to

ensurescoringoutcomesandthemodelwereexplainable.

DespitetheissuesidentifiedwiththeaboveAI

model,thelicenseereportedhavingplansto

expandtheiruseofAI.Theyalsonotedthat

iftheydidnotengagewiththesecapabilities,

theywouldbe‘leftbehind’bycompetitors.Thelicenseereferredtoongoingworktoupdatetheirgovernanceandriskmanagementframeworks.

However,thisexampleexemplifiestherisk

inproceedingtoadoptAIwithoutadequate

foundationsinplace,andtheriskthatgaps

betweenusecasesandgovernancewillremainorwideninthefaceofcompetitivepressures.

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AIgovernance:Questionsforlicensees

OVERSIGHT

1

9

TAKINGSTOCK

WhereisAI

currentlybeingusedinyour

business?

ALIGNMENT

Areyourgovernance

arrangementsleadingorlaggingyouruseofAI?

6

WhathumanoversightdoesyourAIuserequire,andhowwillyoumonitorit?

3

FAIRNESS

Howwillyouprovideservicesefficiently,

honestlyandfairlywhenusingAI?

THIRDPARTIES

10

Howdoyoumanagethe

challengesofusingmodelsdevelopedbythirdparties?

7

2

11

POLICIES

Haveyoutranslated

REGULATORYREFORM

STRATEGY

WhatisyourstrategyforAI,nowandin

thefuture?

AreyouengagingwiththeregulatoryreformproposalsonAI?

4

ACCOUNTABILITY

Whoisaccountable

forAIuseand

yourAIstrategyintoclearexpectations

forstaff?

5

8

RISKS

Howwillyouidentifyand

RESOURCES

DoyouhavethetechnologicalandhumanresourcestomanageAI?

outcomesinyourbusiness?

manageriskstoconsumersandregulatoryrisksfromAI?

Formoredetails,seepages35–36

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WhylookatAI?

TheuseofAIinfinancialservicesandcreditcreatesthepotentialforsignificantbenefitstoconsumers,suchasmoreefficient,

accessibleandtailoredproductsandservices.

ButAIcanamplifyexistingrisksandcreatenewriskstoconsumers.

Thepotentialriskstoconsumers

Unfairorunintendeddiscriminationdueto

biasedtrainingdataoralgorithmdesign:

BiasedAIoutputscouldhavedisproportionate,negativeimpactsonvulnerableindividuals

orgroups,includingfinancialexclusion(forexample,beingdeniedaccesstocreditorinsurance,orpayingahigherprice).

Incorrectinformationprovidedtoconsumersaboutproductsorservices:AImodelscan

provideinformationoradvicethatappears

correct,butcontainsfactualerrorsorfallacies.Thisexposesconsumerstotheriskofharm

fromrelyinguponsuchmisleadingorfalseinformation.

Manipulationofconsumersentimentor

exploitationofbehaviouralbiases:AIcanallowforfasteriterationofmarketingandadvertisingmaterial,andbespokemicro-targeting.AIcan

playoncustomers’feelingsandrestrictormanipulatetheirchoices.

Breachesofdataprivacyandsecurity:AI

modelsmaycontainorreproduceconfidentialorsensitiveinformationwithoutthepriorandinformedconsentofimpactedindividuals.AImodelscanalsobevulnerabletocyberattacksanddataleaks.

Anerosionofconsumertrustandconfidenceduetoalackof:

?explainability–AImodelsmayuse

techniquesthataretoocomplextobe

understoodandexplainedbyhumansandbetrainedondatathatistoovastandcomplexforhumanstoprocess,resultingina‘black

box’,wheredecisionsmaynotbetraceable.

?transparency–ConsumersmaynotbeinformedwhenAIhasbeenusedtomakedecisionsthatimpactthem,orwhentheyareinteractingwithAIandAIgeneratedinformation,and

?contestability–Consumersmaynotbe

providedwithaprocessandthenecessary

informationtocontesttheoutcomeofa

decisionfacilitatedbyAI.Contestabilityis

furtherunderminedifconsumersareunawareoftheuseofAI.

MANAGINGRISKSFROMAI

RisksareveryspecifictoeachAIusecase.Forexample,theycanarisefromthedatainput,

fromthetechniqueormodelused,aswell

asfromthepurpose,context,andlevelof

automationofthemodels.RiskscanalsoarisethroughouttheAIlifecycleandcanchangeovertime.

BecauseAIoperatesatscale,usingvast

amountsofdata,riskscanbeamplified,andhavethepotentialtocauseharmatscale.

ThismeansthatAIcreatesnewchallengesfor

licenseesinmanagingriskstoconsumersfromAI.WhilethisreviewdidnottesttheoutcomesfromindividualAIusecases,wehavemade

observationsonwhetherlicenseesarepreparedtomanagetheriskofharmsfromtheuseofAI.

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FINDINGS:

UseofAI

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FINDING1

TheextentofAIusevariedsignificantlybutoveralladoptionisaccelerating

Whatwedid

Wecollecteddatafrom23licenseesonthe

numberofAIusecasesinuseorindevelopment(asatDecember2023)whereAIinteractedwithorimpactedconsumers.

Whatwefound

?AllbuttwolicenseesreportedatleastoneAIusecasethatdirectlyorindirectlyimpactedconsumers.

?Thenumberofusecaseseachlicensee

reportedvariedsignificantly–seeFigure1.

Figure1:Usecasesreportedbylicensees

Numberoflicensees

12

10

8

6

4

2

0

Fewerthan66–2526–100Morethan100

Numberofusecasesreported

Note:SeeTable2forthedatashowninthisfigure(accessibleversion).

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Numberofusecases

FINDING1(continued)

TheextentofAIusevariedsignificantlybutoveralladoptionisaccelerating

Whatwedid

?AIadoptionisincreasingrapidly:57%ofallusecasesreported

werelessthantwoyearsoldorindevelopment.Ofthe624usecasesreportedtous,20%werestillindevelopmentandhadnotyetbeendeployed.

?TheadoptionofgenerativeAIis,unsurprisingly,averyrecent

development:92%ofgenerative

AIusecasesweredeployedin

2022or2023,orindevelopmentasatDecember2023.

?Wecanexpectthepaceof

changetocontinue:61%of

licenseesinthereviewtoldustheyplannedtoincreasetheiruseofAIinthenext12months.TheremainderwereplanningtomaintaintheircurrentAIuse.

Wereviewedatotalof624usecases(seeAppendix1)andmappedthemtotheyeartheyweredeployed.

Whatwefound

Figure2:NumberofAIusecasesbydeploymentyear

150

120

90

60

30

0

GenerativeAI

Non-generativeAI

ChatGPTreleased(30Nov2022)

2000

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

Dev

Note1:SeeTable3forthedatashowninthisfigure(accessibleversion)

Note2:Dev=Advisedtobeindevelopment

bythelicenseeasatDec2023–seeAppendix1formoreinformation.Thedevelopmentdatesof12usecaseswerenotprovidedordidnot

haveacleardateandarenotreflectedinthisgraph.Thisgraphincludesusecasesreportedas‘inproduction’or‘indevelopment’asatDec2023.Itdoesnotincludeusecasesbuiltand

decommissionedbeforethedatacollection,orusecaseswherethemodeltechniquewasnotspecified.

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FINDING2

Mostcurrentusecasesappliedlong-established,well-understoodtechniques.Buttherewasashifttowardsmorecomplexandopaquetechniques,includinggenerativeAI

Whatwedid

Weassessedthecomplexityofmodeltechniquesusedineachofthe624usecases.Complex

andopaquetechniquescanposeadditional

challengesforoversight.Challengesinclude

understandingandexplaininghowAIobtainsits

results,determiningwhetherresultsarereliableandaccurate,andknowingwhetheroutputsareunfairlybiasedordiscriminatory.

Whatwefound

?Themajorityofcurrentusecasesreliedon

well-knownandestablishedmachine-learningtechniquesthatproducedexplainableand

interpretableresults.

?Weobservedanincreaseintheuseofmore

complexandopaquetechniques(suchasneuralnetworksusedindeeplearningandgenerativeAI),whichareusedfortheprocessingand

analysisoflargevolumesofimages,audio

andtextdata–seeFigure3.Togethertheserepresent32%oftheusecaseswesawunderdevelopment.

?TheuseofgenerativeAIissettoincrease

exponentially.WhilegenerativeAImadeuponly5%ofusecasesthatwereinuse,itmadeup22%ofthoseindevelopment.

Figure3:Modeltechniquesbystatus

Supervisedlearning:Classification

Supervisedlearning:Regression

Deeplearning

Unsupervisedlearning

GenerativeAI

Miscellaneous

Notspecified

Current(n=488)

Indevelopment(n=124)

WhilegenerativeAImadeuponly5%ofusecasesthatwereinuse,itmadeup22%ofthoseindevelopment

0%10%20%30%40%Note:SeeTable4forthedatashowninthisfigure(accessibleversion)

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FINDING2(continued)

Mostcurrentusecasesappliedlong-established,well-understoodtechniques.Buttherewasashifttowardsmorecomplexandopaquetechniques,includinggenerativeAI

Howdifferentmodeltechniqueswereused

Supervisedlearning:Classificationmodelsweremostlyusedtopredictifaconsumerwaslikely

totakeoutafinancialproductusingexplainablemodelssuchaslogisticregression.

Supervisedlearning:Regressionmodelswereprimarilyusedtoderiveprices,ratesorforecastfuturetimeseries.

Deeplearningmodelsweremostlyusedfor

naturallanguageprocessingandopticalcharacterrecognition,primarilywhenscanninganalogue

formdatatospeeduploan,insurance,orotherform-heavybusinessprocesses.

Unsupervisedlearningmodelsweremostlyusedfordetectingstrangeoranomalouspatternsin

areassuchasinternalauditandfrauddetection.

GenerativeAImodelswereusedtogeneratefirstdraftsofmaterials,orresponsestocustomersincarefullyconstrainedcircumstances–seepage15formoreinformation.

Miscellaneousmodelsweremostlynon-predictivemodels,suchassearchengineoptimisationorpatternmatching.

‘Notspecified’modelsweremodelswhere

licenseesdidnotdisclosethemodeltechnique.Insomecases,theseweremodelsbuiltby

thirdparties,andlicenseesdidnothavethisinformation.

WHATISGENERATIVEAI?

GenerativeAIisatypeofAIthatfocusesoncreatingorgeneratingnovelcontentsuchasimages,text,music,video,designsor

recommendations.

UnliketraditionalAItechniquesthatproduce

outputthatisprogrammedorcopiedfrom

existingdata,generativeAItechniquesare

designedtogenerateoutputbasedonpatterns,structuresandexampleslearnedfromlargedatasetsduringthetrainingprocess.

GenerativeAImodelshavecertain

characteristicsthatmakethemparticularlypronetorisksofharm.Forexample,they:

?tendtouselargeamountsofdataforthe

trainingofthemodel.Thepresenceof

incompletedataintrainingsetsmeanthatmodelshavethepotentialtoprovidebiasedorinappropriateresults

?cangenerateoutputsthatarefalseorinaccurate

?canusecomplextechniquesthatarenot

easilyinterpretableorexplainable,and?canbesubjecttonovelcyberattacks.

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FINDING3

ThewayAIwasusedwasmostlycautious

Whatwedid

WelookedatwhatlicenseeswereusingAI

for,theroleAIplayedindecision