Managing AI models is reshaping three lines of defence, say banks

Banks are rethinking their traditional risk management frameworks as they integrate AI models into their operations, with model managers now seeking a more prominent role during the development phase. The first line of defense is expected to take the lead in AI model testing, shifting responsibilities and fostering greater collaboration across all lines of defense. This shift underscores the growing importance of data-driven decision-making and the need for rigorous testing to mitigate risks associated with AI. As financial institutions navigate this evolving landscape, the emphasis on robust risk management practices becomes increasingly crucial.