Automated AI Risk Assessment & Mitigation
Financial institutions are increasingly adopting AI within their complex model inventory, creating new
business and regulatory challenges that must be identified and managed. At its core, AI models
function as another form of End User Computing (EUC) applications. For over 25 years, CIMCON
Software has helped financial institutions mitigate risks associated with models and EUCs. Leveraging
this expertise, CIMCON now offers tools that automatically detect and assess AI models, enabling
organizations to maintain an inventory, monitor changes, and manage associated risks effectively.
AI’s rapid adoption introduces unprecedented complexity,
impacting data lineage, governance, and risk management. A 2020
survey by The Economist highlighted that 77% of global bankers
believe AI will define winners and losers, while Gartner predicts
85% of AI projects will yield erroneous results.
Historical examples, like Knight Capital’s $440 million loss due to a
trading algorithm error and the recent collapse of Silicon Valley
Bank from unidentified risk model errors, underscore the critical
need for robust controls and automated oversight in AI-driven
operations.
What can firms do to mitigate AI risk?
Firms are moving into unchartered territory and without the appropriate updates to their policies,
procedures, and controls, they will fail when deploying AI models within their organization.
Moreover, any audit failures that result from flawed implementations will be significant and costly.
Based on our experience with 500+ clients over the last 30 years in Model/EUC Risk Management,
CIMCON has developed a holistic approach to identify, assess and reduce AI Model risk. This
approach is built to optimize the end user experience, accelerate business processes, and empower
its users through actionable insight, intelligent automation, and powerful purpose-built workflows.
A Complete AI Model Risk Management Solution
CIMCON’s EUC Insight software delivers a holistic, end-to-end approach to managing and evidencing
AI model risk management and regulatory compliance, by providing the following features and
benefits in a single integrated platform:
1. Identification of AI Models: Identify the prevalence of AI models in the organization, including
where they are being used, type of model being used, associated activity and frequency of use.
2. Automated AI Risk Assessment: Perform an automated risk assessment of the AI model
using our proprietary algorithm based on a model’s complexity, code quality, dependencies,
and other factors.
3. Model Inter-dependency: Explicitly called out in regulatory frameworks such as SS 1/23, a
company must know how many models depend on the outputs of one or more other models. In this
respect, input / output interdependence is of primary consideration when determining the inherent
risk any particular model can present to an organization. By understanding the inherent risk and
applying the necessary controls, an organization can understand whether its residual risk is within
acceptable bounds.
CIMCON understands this critical relationship between inherent and residual risk and is able to
customize an organization’s risk assessment models to ensure that this ‘balance of risk' is accurately
managed.
A key functional component of the CIMCON solution is to provide our customers with the ability to
visualize model dependencies, both upstream and downstream including the ability to determine
whether a ‘link’ is working correctly or is broken and requires the model owner’s attention to recover
the link.
4. Inventory: Maintain an inventory of all your AI models, with configurable forms, workflows and
alerts for periodic attestations.
5. Monitoring: CIMCON monitors the frequency with which a model is modified or accessed, who
makes the changes, when and what is modified with a complete audit trail of all changes, that also
includes a side by side compare of the before and after version.
In summary, by applying both quantitative and qualitative measurements to these key areas of risk, a
company can implement a structured process of maintaining a balanced and accurate AI model risk
management program.
Concluding Thoughts
Large language models such as Chat GPT, deep learning text to image models such as DALL-E, as well
as many others are transforming what is possible for us to accomplish as a society. For all of us to be
a part of that future and reap the rewards that it can bring, we will need to embrace this change and
become a part of this rapidly expanding future. We will need to collaborate, explore and creatively
implement this new technology, while at all times remaining mindful that it is not perfect. AI Models
can and will generate errors, which in turn could potentially hurt the organization’s bottom line, or
even worst, damage its most valuable asset – the company’s reputation.
In the new normal, the world of model risk management has become exponentially more complex. Hence
investing in automated tools that can identify, measure, and mitigate AI risk before any damage is caused
has become the new imperative.
About Us
CIMCON Software, LLC, established in 1988, leads the field in
end-user computing (EUC) risk management, serving over 500
companies globally across diverse industries. Our software
solutions are comprehensive, well-tested, and feature-rich,
providing unmatched assurance of success. With
headquarters in Boston and offices in Europe and Asia, we
offer strong global support for EUC system implementation.
www.cimcon.com
Contact Us
Boston (Corporate Office)
+1 (978) 692-9868
234 Littleton Road
Westford, MA 01886, USA
New York
+1 (978) 496 7230
394 Broadway
New York, NY 10013