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AI now touches many things that organisations do, and AI has the potential to touch every line of insurance, as pointed out by Carlo Ramadoro from Lockton, and it’s creating a headache for the insurance industry.
The AI genie is out of the bag, and it has created a significant and complex risk to manage. AI is making its way across all departments and functions, taking control of processes and embedding into decision-making at a pace far greater than any other technological advancement seen in human history. Here lies the problem for the insurance industry.
Like cyber risk transfer, which the insurance industry and covered organisations have not been able to economically manage, AI’s breadth and depth of corporate integration make AI an equally challenging risk to insure. In the case of cyber insurance, where cyber has been removed from policies and cyber-specific policies have been created. The expectation is for the same to happen for AI, with AI exclusions to be included in policies and the creation of AI-specific products.
As we have seen with Cyber risk Management regulation, and as the article points out. For AI risk management, the most important requirement for companies to manage AI risk is to embed AI governance from the boardroom to the shop floor. Board governance and the adoption of a 3-line-of-defence framework are critical for the board to demonstrate the oversight and assurance of the management of AI risk.
Fortunately, we saw this coming and created programs to govern boards’ management of AI risk through a 3-line framework. Programs we have given to lawyers and programs for insurers, wholesalers, brokers, and their clients.
@Thaddeus Dziekanowski Brian D. McCarthy
@Parava Security Solutions
#artificalinteligence #aigovernance
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