The use of Artificial Intelligence in the ‘Three Lines of Defence’ Risk Management Model

Abstract

I expect 100% of card issuers and other firms in the sector to run varying degrees of machine learning to assist them in profiling individual consumer behaviour, subsequently identifying and combatting fraudulent transactions.

Years ago this technology was perceived as space-age but now it is common place. What was deemed practically impossible is made possible by Machine Learning and as a result millions of dollars of fraud is detected and countered every day. With dramatic improvements in the world of Machine Learning and Artificial Intelligence how else can this technology be deployed to improve the risk management of firms deploying the Three Lines of Defence risk management model and why is it even needed?

This short paper looks at one possible area where AI cannot only transform the visibility of critical risk management data but also target those very risks and actively and ‘automatically’ reduce them. Your employees probably, currently, represent one of the most opaque areas of the 3 Lines of Defence and AI is increasingly being used to combat this.