Aon | Financial Services Group
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The Securities and Exchange Commission (SEC) recently announced an increased scrutiny around artificial intelligence (AI) washing, including a focus on AI disclosures related to financial institutions.
On October 21, 2024, the SEC Division of Examinations published its exam priorities for the 2025 fiscal year. Not surprisingly, AI is expected to receive heightened attention.
In relation to investment advisers, the priority list includes, in part, a focus on “AI integrat[ion] into the advisory operations, evaluating disclosures related to AI.” In fact, SEC Chairman Gensler, in September 2024, directed advisers not to mislead the public through “AI washing.” He warned that “(s)uch AI washing, whether it's by companies raising money or by financial intermediaries like investment advisers and broker dealers, may violate the securities laws.”
The SEC announcement echoes similar messaging from other financial regulatory bodies around the implementation of the emerging technology. The concern of the regulators emphasizes the potential exposure of directors & officers in exercising their fiduciary duties with respect to AI, including the oversight of underlying algorithms and their potential discrimination, and the overall systemic risk associated with the implementation of AI.
Directors’ & officers’ (D&O) insurance is one tool that can help organizations and their D&Os mitigate exposures related to emerging technologies. Companies using AI should regularly review their D&O policies and consider seeking AI-specific coverage enhancements, alongside other policy enhancements tied to notable risk factors.
Watch our webinar or review our Directors and Officers Guide to Navigating AI-Related Risks to learn more on evolving risks related to AI, the regulatory landscape, and governance and oversight processes with respect to implementing generative AI.
Consult with your Aon broker for any questions regarding the implications of emerging AI exposures and your D&O insurance. If you have any questions about your coverage or are interested in obtaining coverage, please contact your Aon broker.
About Aon
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