Featured Product

    David Hardoon of MAS Examines Fintech as Solution for Risk Management

    May 15, 2019

    During the opening address at the Asia-Pacific Risk Management Council Q2 Meeting, Dr. David Hardoon, the Chief Data Officer of MAS, remarked on whether fintech and digital innovations could provide an ultimate solution for risk management. He also briefly elaborated on the three key risks—cyber-security, data privacy and protection, and unfair discrimination while using artificial intelligence—and the work being done at MAS to address these risks. He highlighted that MAS has employed greater use of data analytics for risk detection, has partnered with the industry to develop a set of principles to encourage responsible use of technologies, and has developed an Augmented Intelligence tool that automates the computation of key metrics for trade analysis.

    Mr. Hardoon highlighted that cyber risk remains a key risk that MAS and financial institutions in Singapore are closely monitoring. Given the highly interconnected financial system, borderless nature, and increasing complexity of cyber-attacks, it takes a concerted effort and close collaboration among stakeholders in the ecosystem to manage the risks and maintain cyber resilience. Apart from the planned issuance of a new MAS Notice on cyber hygiene requirements, MAS has recently consulted on proposed revisions to the Technology Risk Management Guidelines and Business Continuity Management Guidelines, which will serve to help financial institutions better manage cyber risk. Besides these regulatory efforts, MAS has also been taking a collaborative approach by partnering the industry to conduct cyber exercises, share cyber threat intelligence, and establish industry standards and guidance to promote cyber resilience.

    Regarding the risk of unfair discrimination, he added that increasing use of artificial intelligence) has given rise to the risk of “black boxes” in decision-making. Financial institutions are struggling to validate artificial-intelligence-based models that use continuous learning and adaptation as distinct from fixed parameters and historical back-testing. Regulators have started to detect cases where artificial-intelligence-based decision-making has led to systematic exclusion of certain demographics. When an artificial intelligence tool finds an empirical basis for discriminating by a combination of variables such as gender, ethnicity, religion, and nationality, say for a loan or insurance decision, the concern is how much of that empiricism is grounded in reality and how much of it is due to unobserved biases in society that the artificial intelligence is learning from. He suggested that encouraging safe, fair, and trustworthy innovation also means that ethical and responsible use of technology by every ecosystem player is key.

    In the area of artificial intelligence and data analytics, MAS has partnered with the industry to develop a set of principles to encourage responsible use of these technologies. These are known as the Fairness, Ethics, Accountability and Transparency (FEAT) principles. As financial institutions increasingly adopt technology to support business strategies and in risk management, the FEAT principles are intended to provide guidance on internal governance around data management and use of these technologies. Earlier this year, the InfoComm Media Development Authority (IMDA) also released Singapore’s Model Artificial Intelligence Governance Framework. This Model Framework is the first in Asia to provide detailed and readily implementable guidance to private-sector organizations to address key ethical and governance issues when deploying artificial intelligence solutions. This is another set of best practices that can be considered. 

    Finally, while discussing whether digital innovations have the potential to provide an ultimate solution for risk management, he described the work of MAS in the areas of artificial intelligence, data analytics, and risk detection. In the area of artificial intelligence and data analytics, the use of these technologies can assist in risk monitoring and management in various areas, such as anti-money laundering, fraud detection, internal compliance, and business or market risks. MAS has employed greater use of data analytics for risk detection and targeting, using suspicious transaction reports and other data sets. This has enabled MAS to identify suspicious fund flow networks more effectively and focus supervisory attention on networks of higher risk accounts, entities, or activities. MAS also developed Project Apollo, an Augmented Intelligence tool that automates the computation of key metrics for trade analysis and predicts the likelihood that an expert will opine that market manipulation has occurred. The use of this technology helps improve detection of market abuse. These are just a few examples of technology that the industry can also adopt to unlock insights—whether to sharpen the surveillance of risks or to transform the way work is done, opined Mr. Hardoon.


    Keywords: Asia Pacific, Singapore, Banking, Securities, Regtech, Fintech, Artificial Intelligence, FEAT Principles, AI Governance Framework, MAS

    Related Articles

    OSFI Finalizes on Climate Risk Guideline, Issues Other Updates

    The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.

    March 12, 2023 WebPage Regulatory News

    BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending

    BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.

    March 03, 2023 WebPage Regulatory News

    HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks

    The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.

    March 02, 2023 WebPage Regulatory News

    BCBS Report Examines Impact of Basel III Framework for Banks

    The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.

    February 28, 2023 WebPage Regulatory News

    PRA Consults on Prudential Rules for "Simpler-Regime" Firms

    Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.

    February 28, 2023 WebPage Regulatory News

    DNB Publishes Multiple Reporting Updates for Banks

    DNB, the central bank of Netherlands, updated the list of additional reporting requests and published additional data quality checks and XBRL-Formula linkbase documents for the first quarter of 2023.

    February 28, 2023 WebPage Regulatory News

    NBB Sets Out Climate Risk Expectations, Issues Reporting Updates

    The National Bank of Belgium (NBB) published a communication on climate-related and environmental risks, issued an update on XBRL reporting

    February 24, 2023 WebPage Regulatory News

    EBA Updates Address Securitization Standards and DGS Guidelines

    The European Banking Authority (EBA) published the final draft of the regulatory technical standards that set out conditions for assessment of homogeneity of the underlying exposures in simple, transparent, and standardized (STS) securitizations.

    February 21, 2023 WebPage Regulatory News

    FSB Publishes Letter to G20, Sets Out Work Priorities for 2023

    The Financial Stability Board (FSB) published a letter intended for the G20 Finance Ministers and Central Bank Governors, highlighting the work that FSB will take forward under the Indian G20 Presidency in 2023

    February 20, 2023 WebPage Regulatory News

    ISSB Standards May Become Effective from January 2024

    The International Organization of Securities Commissions (IOSCO) welcomed the confirmation statement by the International Sustainability Standards Board (ISSB) setting out its progress in the development of its first sustainability-related corporate disclosure standards.

    February 17, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8792