“You don’t quite know what the model is thinking”
Banks are tightening up their governance and control processes in response to the proliferation of artificial intelligence-based trading models.
“The angle where we’re coming from right now is basically redefining some of our governance standards around the use of these models. [We’re] being very precise about what brings your outcomes [and] what triggers, what thresholds are going to be monitored,” said Manan Rawal, head of US model risk management at HSBC. “We have these conversations on day