A Comprehensive Study on Generative AI Risks in the Financial Sector: Challenges and Solutions

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Danish Kapoor , Anmol Bhatia

Abstract

Generative AI systems have revolutionized content creation but also pose ethical, societal, and security risks. This paper examines these risks and proposes mitigation strategies. A comprehensive AI risk assessment study was conducted in the finance sector in which questionnaires were administered to 50 key stakeholders, including executives, risk managers, data scientists, and compliance officers. The analysis revealed significant concerns, including biased decision-making, security vulnerabilities, and challenges in regulatory compliance. Emphasis was placed on the need for rigorous testing and monitoring to mitigate bias, robust security measures against cyber threats, and proactive engagement with regulators. The study underscores the multifaceted nature of AI risks in finance and highlights the importance of a holistic approach to risk management. The findings suggest prioritizing fairness, transparency, and accountability in AI deployment, implementing robust security measures, staying abreast of evolving regulations, and enhancing risk governance structures. This study provides valuable insights for financial institutions to navigate the complexities of AI risks and ensure responsible and ethical AI deployment

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