Janet Yellen Warns AI Could Pose ‘Significant Risks’ to Financial System

Published on June 7, 2024

While artificial intelligence could present new opportunities and deliver vast riches to the financial system, the technology could pose “significant risks,” says Treasury Secretary Janet Yellen. At an event co-hosted by the Brookings Institution and the Financial Stability Oversight Council, Ms. Yellen outlined various vulnerabilities AI offers to the financial sector. Some of these threats involve “insufficient or faulty data,” the concentration of vendors providing cloud and data services, “inadequate” risk management practices, and the overall intricacies of AI models. At the same time, Ms. Yellen identified that AI, from image recognition to generative AI, could help investors better manage their portfolios and support forecasting models....

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