While AI offers the promise of reducing costs, improving efficiency, identifying more complex relationships and improving performance and accuracy, it can also introduce certain risks, including safety-and-soundness risks like cyber and model risks, the FSOC said in its annual report released on Thursday.
Supporting responsible innovation in this area can allow the financial system to reap benefits like increased efficiency, but there are also existing principles and rules for risk management that should be applied, Yellen said.
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