Financial Stability Board issues guidance on responsible AI adoption

The Financial Stability Board (FSB) has released its final report, ‘Sound Practices for Responsible Adoption of Artificial Intelligence (AI)’, aimed at helping financial institutions manage the risks associated with increasing AI integration.

The guidance is intended for a wide range of entities, including banks, insurers, asset managers, and payment providers. It encourages boards and senior management to use these principles to refine their AI governance and risk management frameworks. While not a legally binding international standard, the FSB urges leadership to align AI use with their institution’s business model, risk appetite, and overall strategy.

The report outlines 12 ‘sound practices’ categorized into two main areas. The first four focus on organization-wide governance, including clear roles, organizational adaptability, and the incorporation of AI risk into existing management frameworks. The remaining eight practices address the AI lifecycle, covering aspects such as platform selection, data governance, materiality assessments, and transparency.