LO 9.1.7.E

Learning Objective: Describe challenges posed by the lack of interpretability or auditability in artificial intelligence and machine learning applications in the financial industry.

Review

• Challenges posed by the lack of interpretability or auditability

• AI and ML model applications trained in a period of low volatility may not suggest optimal measures during a persistent economic downturn.
• Many AI and ML model applications are difficult to interpret or impossible to interpret. As a result, it is difficult to predict their "behavior" during a systemic shock.