FSB finalises 12 sound practices for AI at financial institutions

The Financial Stability Board has issued 12 practices for financial institutions to govern AI, giving boards a common reference point for risk controls and oversight, it said on 15 October.

The FSB "strongly encourages the board and senior management of financial institutions to reference the sound practices when developing and refining their institution's AI governance, risk management and control frameworks", it said.

The final report, published on 15 October after a June consultation, is intended as a practical toolkit that firms can tailor to their context and risk profile. The FSB is chaired by Andrew Bailey, Governor of the Bank of England, and brings together national authorities from 24 countries and jurisdictions.

The 12 practices fall into two groups. The first covers organisation-wide governance. It stresses the role of the board and senior management in keeping AI adoption in line with the business model, risk appetite and strategy. It also calls for a governance framework with clear roles, for AI risks to be built into risk management with proper documentation of AI use, and for continuous learning.

The second group covers lifecycle risk management. Firms should assess the materiality and risk of use cases when they begin and thereafter. The practices also address technology selection, data governance, explainability and compensating controls, performance evaluation, human oversight, AI-related cyber and ICT risks, and third-party dependencies.

The FSB said firms can integrate the practices into existing frameworks, including those for cyber and third-party risk. The report also includes case studies.

The final version reflects feedback on a consultation published in June. The FSB also published an overview of the responses and said it will update the practices as necessary. Canada's OSFI issued its own statement on the publication.

The practices set no implementation deadline. The FSB said they build on, and are broadly compatible with, existing and continuing work by the FSB and other standard-setting bodies. It will monitor the practices and update them when necessary.

Related coverage: FCA says senior managers are accountable for their firms' AI and EU publishes EN 18286, the first harmonised standard under the AI Act.

Sources

• Financial Stability Board: FSB finalises sound practices for the responsible adoption of AI
• Financial Stability Board: Final report
• OSFI statement on the FSB publication

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