Robin Lumsdaine, Professor of Applied Econometrics at Erasmus School of Economics and member of the ESRB Advisory Scientific Committee, was recently invited as speaker at the annual European Systemic Risk Board Conference, held in Frankfurt at the European Central Bank. Participating in the panel discussion on ‘Artificial Intelligence and systemic risk’, Lumsdaine discussed how AI is reshaping the landscape of financial stability and systemic risk.
Lumsdaine began her remarks by dispelling the notion that AI is a new phenomenon, even though that is a common perception. While its popularity and applications are growing rapidly today, many examples of AI have been with us for a while, she explained.
In this “evolution not revolution”, with each new development of AI, we gain the ability to do more, more frequently, and a lot quicker. Lumsdaine describes this as a great benefit, if it is working well, but it also has the potential to amplify risk if it is not. Moreover, the increasing speed of AI-driven systems could be a challenge for timely risk assessment and mitigation. Lumsdaine urged regulators to embrace and recognise the possibility that AI tools may enhance the efficiency of risk assessment processes.
Although the future of AI is still highly uncertain and will presumably bring both opportunities and challenges, excessive regulation on AI is not the answer. Instead, she advocated for increased discussion between academics, industry, and regulators on the responsible use of AI, emphasising the need for a balanced approach to harnessing its potential.
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You can watch the full panel discussion with Robin Lumsdaine at the ESRB Conference, 27 September 2024, here.
For more information, please contact Ronald de Groot, Media and Public Relations Officer at Erasmus School of Economics, rdegroot@ese.eur.nl, or +31 6 53 641 846.
