WELLINGTON, Oct. 15 (Xinhua) -- New Zealand's central bank and financial markets regulator on Thursday outlined supervisory expectations for financial institutions to manage cyber risks associated with frontier artificial intelligence (AI).
The Reserve Bank of New Zealand (RBNZ) and the Financial Markets Authority (FMA) said their expectations focus on three key risks, namely increased cyber threats, evolving governance and oversight challenges, and growing third-party and concentration risks, according to an RBNZ statement.
The expectations build on existing prudential, conduct, cyber and operational resilience obligations, aiming to support resilience of regulated entities and the broader financial system, RBNZ Assistant Governor for Financial Stability Angus McGregor said at an industry roundtable.
Regulators expect financial institutions to maintain cybersecurity strategies and frameworks that adequately address the threats they face, as well as strong foundational cyber controls and security measures, McGregor said.
FMA Executive Director of Response and Enforcement Louise Unger said advances in AI are changing the cyber threat environment, highlighting the importance of strong governance, effective oversight, operational resilience and the management of third-party dependencies as entities adapt to emerging risks.
While AI can bring benefits to financial institutions and their customers, it also changes the risks they face, Unger said, adding that boards and senior management need to understand where AI is being used, the risks involved and who is accountable for managing them.
The regulators will continue engaging with regulated entities to ensure AI-related risks are managed appropriately, McGregor said. ■
