Source: Stephenson Harwood

Stephenson Harwood analyzes the recent consultation paper released by the Monetary Authority of Singapore (MAS) concerning AI risk management for financial institutions. The insight piece breaks down MAS's proposed framework, which focuses on governance, risk assessment, and the monitoring of AI model performance within the banking and insurance sectors. The consultation addresses the specific challenges posed by Generative AI (GenAI), proposing stricter controls on data quality and the explainability of decisions made by automated systems.

The article highlights the regulator's emphasis on "Human-in-the-loop" mechanisms for critical financial decisions to mitigate systemic risks. It also discusses the proposed requirements for third-party vendor management, ensuring that financial institutions remain liable for AI tools procured from external tech providers. This consultation signals Singapore's intent to align its financial ecosystem with global best practices for responsible AI while fostering fintech innovation.