Rogue AI poses serious risks to the financial world: RUTH SUNDERLAND

The headlines sound like something out of a scary sci-fi movie. Many of us would be baffled and unsure whether we should be terrified or not by the news that ‘AI broke out of its sandbox and breached Hugging Face’.What happened is that OpenAI, the company behind ChatGPT, was testing models in a ‘sandbox’ that is supposed to be a secure environment.Not secure enough, as it turns out.The AI – instructed to score as highly as it could in a security exam – discovered a ‘zero-day flaw’, a hitherto unknown vulnerability, and used it to break out of its digital prison and get online.From there, it worked out it could use data on a platform called Hugging Face for its exam, so it broke in and took it.Basically, this was an AI version of rifling through a teacher’s drawer at lunchtime to peek at tomorrow’s test papers, only infinitely more worrying. OpenAI revealed one of its bots had gone rogue - and it poses a serious risk to us allApart from demonstrating we need to master a whole new vocabulary, it highlights the perils of AI going rogue.This is a serious risk in the financial sphere, as Bank of England Governor Andrew Bailey has repeatedly pointed out. He has warned about the risks to the financial system from AI tools that learn to lie, cheat and cover up their activities.AI rogue-traders at hedge funds and investment banks could do far more harm than even the most prolific human swindler. Not that AI in itself is malicious: it does not possess human motivation or moral intent.When the OpenAI models escaped from their digital captivity, they were not on a crime caper – they had merely calculated the most logical way of fulfilling their task.Banks are investing billions of pounds in AI across their functions.Bosses such as Standard Chartered’s Bill Winters love the idea because it means they can get rid of ‘lower-value human capital’, chief-executive-speak for flesh-and-blood staff who have inconvenient requirements such as salaries, sleep, holidays and healthcare.Banks are moving on rapidly from AI ‘assistants’, which never seem able to actually assist customers with queries, to agentic trading tools for retail investors.The Bank of England is concerned autonomous AI agents could cause a run on assets, which would be bigger and quicker than old-style bank runs when people queued to withdraw their savings.One unlikely but rather gratifying fact is that the UK’s AI Security Institute is seen as a world leader in its field – a pioneering government organisation dedicated to testing advanced AI models in the public interest.Let’s hope it’s a good omen that the body was established at a summit at Bletchley Park, a place that embodies the hope human intelligence can prevail over the forces of destruction.Brief reliefAndy Burnham cannot take too much succour from the lower-than-expected inflation numbers as he tries to relieve the cost-of-living crisis.The fall, due largely to lower petrol prices, is probably enough for the Bank of England to keep interest rates on hold next week, but the respite is likely to be temporary. Hostilities in the Middle East are escalating, sending up the price of oil and gas, and households are yet to feel the effect of this month’s 13pc rise in the energy price cap.Scrapping VAT on electricity bills and a £2 cap on bus fares will not move the dial.When inflation climbs, it will pinch Chancellor John Healey’s fiscal headroom and push up borrowing costs.He says the Government needs to do more to help households. He also needs to find a way to pay for that help.They never learnThe dry world of underwriting and Dickensian clauses in insurance contracts is an unlikely backdrop for romance.Indeed, the historic Lloyd’s of London market found no conclusive evidence of a romance between former chief John Neal and the former chief corporate affairs officer. It did decide, however, that the relationship was close enough to create perceptions of a conflict of interest.Like Caesar’s wife, CEOs are in a position of exceptional trust and should be above even an appearance of impropriety.Perhaps especially so when, like Neal, they had already lost a bonus at a previous employer due to an undisclosed affair.DIY INVESTING PLATFORMSAJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you