This article first appeared in Digital Edge, The Edge Malaysia Weekly on October 14, 2024 - October 20, 2024

It is a well-known fact that every business today is a tech business. All over the world, including in Asia, many organisations are leveraging the latest innovations and rapidly adopting new technologies.

Generative artificial intelligence (Gen AI) blends easily into existing business operations and is already used by many businesses for important tasks such as detecting fraud, predicting market trends, personalising customer services and automating strenuous decision-making processes.

There are tremendous benefits to be gained from Gen AI. However, as with all new things, there comes a risk with the integration of AI, especially to privacy, data security and governance.

In its recent assessment, Time magazine identified “ungoverned AI” as one of the top risks of 2024. This underscores the imperative need for organisations to proactively approach their risk analysis.

Already, businesses have encountered risks related to the use of Gen AI in areas such as data privacy, legal obligations and intellectual property. As we embrace the potential of Gen AI, organisations must strike a delicate balance between harnessing its power while effectively mitigating data risk.

With AI systems becoming integral to financial operations, the volume of sensitive data processed and stored has skyrocketed. This surge makes financial institutions prime targets for cyberattacks. A robust data security framework is essential to mitigate these risks.

Globally, countries have been exploring ways to develop guidelines for the responsible use of AI. Earlier this year, Asean published a framework for AI governance that seeks to establish common principles for trustworthy AI and recommend best practices for implementing ethical AI in the region. Such initiatives lead the way for more regulation that can enable AI to be used more responsibly across industries, especially the finance sector.

This is even more significant especially with the vast opportunities propelled by AI that can reshape the financial services sector in Southeast Asia. Nevertheless, with opportunity comes a fair amount of risk to various elements of the system.

Therefore, organisations must proactively adapt their AI-driven financial systems to align with regulatory mandates, ensuring transparency, accountability and consumer trust. Collaborating with regulatory authorities and industry stakeholders fosters a conducive environment for innovation while safeguarding against regulatory risks. Here are ways organisations can thrive amid Gen AI risks:

The first step for an organisation looking to leverage Gen AI is to identify the strategic risks that it poses. This includes assessing the potential for data breaches, the integrity of AI-driven decisions and the reliability of AI systems. By understanding these risks, organisations can develop strategies to effectively safeguard their high-value data.

Understanding and quantifying the financial impact of data risks is crucial. By knowing the nature of the data you possess and implementing robust protective measures, particularly in the context of Gen AI, you can significantly mitigate these risks.

Proper discovery and protection techniques can drastically offset disruptions and reduce associated costs by at least 64%, according to OpenText’s Quantifying data risk: Visualising financial exposure report.

Despite the inherent risks, Gen AI presents compelling prospects for strengthening cybersecurity measures. By leveraging advanced AI algorithms, organisations can swiftly and precisely identify threats, potentially safeguarding them from substantial financial losses.

It is important to recognise that an effective AI strategy is inseparable from a robust data strategy, ensuring data security is paramount in unlocking Gen AI’s full potential.

Organisations should adopt ethical guidelines for AI development to ensure responsible use of Gen AI technologies, implement measures to detect and eliminate biases in AI models to promote fairness and equality, and maintain transparency in AI operations while holding teams accountable for AI-driven decisions.

Providing regular training to employees on the risks and benefits of Gen AI can enhance their ability to work with AI technologies and increase AI literacy across the organisation to help manage AI-related challenges. This will also form cross-disciplinary teams with diverse expertise for comprehensive insights into AI deployment and risk management.

In Singapore, the Infocomm Media Development Authority has been ramping up efforts in pre-employment training and mid-career upskilling programmes to build and level up the country’s pool of tech talent, with a key focus on AI. A total of S$20 million (RM65.7 million) is being invested in AI-related SG Digital Scholarships and overseas internships over the course of three years.

As more financial institutions continue to embrace Gen AI, a proactive approach to managing financial risk is imperative. By fortifying data security, upholding privacy and establishing robust governance frameworks, organisations can navigate the complexities of AI integration effectively.

The journey towards a secure, private and well-governed AI-driven financial landscape is not just about compliance, it is about building a resilient ecosystem that fosters trust and innovation.

Financial institutions in the region must lead the way in adopting these proactive strategies to harness the full potential of Gen AI while safeguarding against its inherent risks.

Overall, a proactive and multifaceted strategy for cybersecurity is required given the junction of AI and financial risk in Southeast Asia. Countries can protect their financial borders from changing cyberattacks by utilising AI, encouraging teamwork, emphasising cybersecurity knowledge and implementing flexible legal frameworks.

Stephen McNulty is senior vice-president (Asia-Pacific) at OpenText, which provides enterprise information management solutions to help organisations manage their data

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