Points of View
Timely and focused, offering our analysts’ unique perspectives on risk technology and our research.
Meaning is everything: the problem of defining ethics for AI algorithms
Developing AI algorithms without strict definitions could create ethical problems for financial firms. To avoid mishandling their algorithms and potentially harming certain customer groups, firms must ensure their AI tools are no broader than the…
Bad sources? The risks of alternative data
New ways to capture and package previously inaccessible data have given financial institutions (FIs) a diverse set of methods with which to assess the creditworthiness of corporate and retail customers. Despite the appeal, however, deploying this data…
What price privacy as the value of transaction data soars?
Thanks to a booming payments market, the amount of transaction data is growing – as is its value. But regulation around it is patchy at best, and as more transaction data is used to feed models and analysis, more transparency and clarification around its…
Mitigating price risk in Asia’s flourishing LNG markets
The speed at which the liquified natural gas (LNG) market is maturing has created inconsistencies in how LNG is priced – not least in Asia, where growth is fastest. The obvious but untested solution – an Asian pricing hub – will take time to develop, but…
Reinsurers’ IFRS 17 struggles are a reminder that one size does not fit all
The IASB issued IFRS 17 in a bid to standardize insurance contract accounting, but reinsurance firms, because of their particular idiosyncrasies, will struggle to comply. Unless the IASB makes significant modifications to the standard, reinsurers…
All in a name: why ‘private blockchains’ weaken the blockchain case
Many projects labeled ‘private blockchains’ are merely database hygiene or ‘permissioned DLT’ solutions given a more marketing-friendly moniker. But increasing misuse of the term ‘private blockchain’ could create confusion in the market and undermine a…
The risk of clean air
Impending regulation affecting shipping fuel will reduce atmospheric pollution but send shockwaves through the shipping and oil industries. Market players have several strategic options, but uncertainty clouds their choices. To what extent is the…
If you’re not at the table, you’re on the menu: the case for bug bounties
As fear around cyberattacks grows, so-called ‘bug bounties’ offer firms an opportunity to buy information on security vulnerabilities in their systems before they become public or fall into the hands of bad actors. In future, these transactions will be…
For growing FinTechs, risk technology will be a must to appease tougher regulators
In striving for growth, many FinTech firms enter different markets with solutions that use the same underlying technology. As highlighted by recent AML-related issues, however, this technology is seldom regulation-friendly. To withstand deeper inbound…
Breaking the glass box: achieving ‘explainability’ that actually explains
Tied to the growing popularity of machine learning (ML) tools is the need to explain their underlying rationale. But buzzwords, like ‘glass box’, are steering the explainability conversation off course. Meanwhile, without proper investment in the tech…
The IFRS lull: firms must end box-ticking and start hand-shaking
A relative lull in transformative IFRS-related system implementations means that financial firms can relax a little. But not too much: now is the time to work strategically with other players to create real value from IFRS compliance.
Why more is not always better in the world of credit
Advanced analytics and AI promise revolutions everywhere, but real-world constraints abound. This is notably true in the world of credit scoring, which needs to be understandable, is often slow to give out real-world results, and can be muddied by the…
The Rhode to ruin? Why stock-drop lawsuits threaten cyber security
A lawsuit against Google’s parent Alphabet threatens broader data security. Regulators should provide clarity on breach disclosure timelines; financial services institutions and suppliers should welcome it.
Regulators need a robust taxonomy of tools before tackling AI
Regulating AI is a challenge that must and will be faced. Central to effective regulation will be a robust, accurate taxonomy of the multiplicity of available AI techniques.