Aligning AI Governance With Bank Goals

As banks explore the potential of generative AI, establishing a robust governance framework is essential to balance innovation with risk management. In a recent RMA Journal article, AI expert Dushyant Sengar, presenter of RMA’s popular “Look Before You Leap” webcast, shares strategies to help banks integrate AI responsibly within enterprise-wide governance. Here are his top recommendations: 

• Create cross-functional AI governance committees. Forming committees with stakeholders from risk, compliance, IT, legal, and business units helps prevent governance silos and ensures AI initiatives align with strategic objectives. Citibank’s “AI Risk Framework,” for example, promotes innovation within regulatory boundaries. 

• Establish AI centers of excellence (CoE). Centralizing AI expertise through a CoE standardizes model development, testing, and deployment. This approach provides consistency and oversight, supporting responsible innovation across departments. 

• Develop AI policies aligned with governance standards. AI policies should reflect established governance principles, covering data usage and model validation. Aligning AI policies with frameworks like the OCC’s model risk guidance promotes rigorous validation. 

• Adopt a tiered, risk-based approach. By categorizing AI models by risk level, banks can apply stricter oversight to high-impact areas, like credit scoring, while using a lighter approach for lower-risk applications, maintaining control with flexibility. 

• Implement a “fail fast” culture, using sandbox environments. Controlled environments allow for experimentation and validation, ensuring AI models meet compliance standards before full deployment. 

These strategies help banks balance AI innovation with governance rigor. For more insights, including approaches to close AI governance gaps and foster responsible innovation, read the complete article on our website. Don’t miss the encore presentation of Sengar’s webcast on November 13, which includes a live Q&A session.