Federal Reserve Vice Chair for Supervision Michelle Bowman warned banks on Sept. 29 to buffer their systems against artificial intelligence threats while emphasizing the technology can benefit lenders.
“AI offers great potential — both to threat actors and those buttressing their defenses to those threats,” Bowman said in prepared remarks for an event in Colorado. “AI is becoming a critical component of these security measures as both a defensive tool and an evolving risk.”
Bowman previously said the Fed should “not micromanage” banks on issues like AI as US officials weigh the impact of the rapidly evolving technology. Bloomberg reported earlier this year that regulators were pausing some cyber-related examinations to give banks time to bolster their systems against threats exposed by the latest AI models.
“Defending against these risks begins with strong cyber hygiene — up-to-date asset inventories, phishing-resistant multifactor authentication, strong identity and access controls, and robust vulnerability identification and patch management programs,” said Bowman.
The Fed’s top bank cop also said although cybersecurity requires proactive risk management by bank boards of directors and senior management, regulators recognize that preparing for such threats can be burdensome and challenging for community banks.
“That’s why we continue to tailor our approach to IT examinations to consider risk profile and emerging threats and risks,” she said.
Morgan & Morgan, which has called itself the largest U.S. injury law firm with offices in all states, plans to spend $1 billion on artificial intelligence and other legal technology over the next decade.
The firm already has spent $300 million developing its AI system, known as MX2, and plans to market it to other law firms.
Insurance defense lawyers said they’ve already seen some type of AI at work by Morgan & Morgan lawyers in the courtroom, and it’s impressive—if not always effective in winning cases. Others said that defense firms also are employing technology to scour vast amounts of records, vet jurors and try on arguments in injury and claims litigation.
“It’s a two-way street. Defense firms also are using AI to counter plaintiffs’ actions,” Paul Lopez, an insurance attorney and chief operating officer with the Tripp Scott law firm in Florida, told Insurance Journal Wednesday. “AI can make good, hard-working lawyers better and more efficient.”
