In a letter to the industry, Australian Prudential Regulation Authority (APRA) has called for a significant enhancement in the management and governance of AI-related risks among banks, insurers, and superannuation trustees, highlighting that current practices are lagging behind the rapid evolution of AI technology. APRA noted findings from a supervisory review indicating that the increased use of advanced AI is creating new financial and operational vulnerabilities, with existing information security measures struggling to keep pace. The review also pointed out that while AI adoption is accelerating, governance arrangements have not matured correspondingly, and many boards lack the technical expertise to effectively oversee AI-related risks. APRA emphasized the need for improved resilience against cyber threats, particularly from advanced AI models, and called for entities to enhance their risk management practices in alignment with prudential standards without introducing new requirements at this stage. APRA will continue to engage with various stakeholders to ensure the financial system’s safety and resilience amidst these technological advancements.
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