Risks linked to AI, cybercrimes have intensified, OSFI says
Canada’s top banking regulator says the risks linked to artificial intelligence as well as cybercrimes, third-party service providers and the complex methods used by financial criminals to launder money and commit fraud have intensified.
So much so that the Office of the Superintendent of Financial Institutions (OSFI) on Wednesday updated its Annual Risk Outlook, saying risks related to AI and operational resilience are among the top threats the financial system now faces.
OSFI said rapid developments in generative AI have led to an increased adoption of AI tools in finance, and while there are benefits, it can also amplify issues such as cybersecurity and third-party risks, money laundering activities, potential bias and discrimination in decision-making and data privacy concerns.
“The dominance and global reach of some third-party service providers creates concentration risk that could cause a third-party incident to affect multiple institutions at once as well as exposure to incidents outside of Canada,” OSFI said about how Canadian institutions are highly reliant on a “complex network” of third parties.
It said the absence of “robust regulatory frameworks” in many third-party industries could make institutions vulnerable to risks such as data breaches and cyberattacks.
“Cyber incidents continue to accelerate across all industries, affecting Canadian institutions and their third-party networks,” OSFI said.
To address these risks, OSFI said it will start assessing how prepared institutions are to manage risks related to third parties, technology and the cyberworld, and analyzing how strong their recovery plans are.
It will also assess the impact of AI adoption and strengthen guidelines to reduce AI-related risks, as
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