AI adoption will be widespread but slow in risk and compliance: Moody’s

A recent survey by Moody’s has revealed that while 80 per cent of international compliance and risk experts expect widespread adoption of AI in risk and compliance within the next five years, only 5 per cent anticipate the transition happening within the next 12 months. This slow uptake of AI technologies is attributed to practical, cultural, and regulatory challenges.

The survey, titled ‘Navigating the AI landscape,’ found that among professionals who are not currently using or testing AI, there is a lack of understanding about its potential applications in managing risk and compliance. Only a quarter of respondents rated their knowledge as high or very high, and there was no consistent answer about AI in terms of risk management and compliance.

According to Moody’s, experts widely agree that AI offers significant advantages, and new legislation is necessary to regulate its use. The survey highlighted that almost 70 per cent of firms expect AI to have a transformative or major impact on risk and compliance, with early adopters identifying benefits of AI usage in areas such as efficiency gains, enhanced risk identification, fraud detection, cost-saving, and data processing.

In terms of sectors, bank and fintech professionals are more likely to expect a high impact from AI, while asset and wealth managers and insurers perceive a lower impact. 63 per cent of respondents already using or trialing AI are using it for data analysis and interpretation to make sense of their analytical results.

However, there are concerns about over-reliance on AI and lack of transparency in decision-making, with 17 per cent of respondents citing over-reliance on AI as a top concern. Furthermore, AI regulations are poorly understood, but there is almost unanimous agreement on the need for new legislation to regulate AI usage in risk and compliance.

In conclusion, while the potential benefits of AI in risk and compliance are widely recognized, there are significant challenges in terms of practical implementation, cultural acceptance, and regulatory oversight. It is clear that the transition to widespread adoption of AI in risk and compliance will not happen overnight, but there is a growing consensus on the need for new legislation to regulate its use.