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Jul 2019

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Singapore: Regulator extol benefits of technology in understanding risk

Source: Asia Insurance Review | Jun 2019

Shying away from technology is an unlikely option for industry practitioners looking to thrive in today’s digital economy, but it would be insufficient to look at the benefits of technology in a vacuum, Dr David Hardoon, chief data officer of MAS, has said.
 
In a speech on the subject “Will FinTech and digital innovations provide an ultimate solution for risk management?” at the Asia-Pacific Risk Management Council Q2 Meeting on 14 May, Dr Hardoon cited examples of solutions for risk management:
  • In the area of AI and data analytics, the use of these technologies can assist in risk monitoring and management in various areas, such as anti-money laundering, fraud detection, internal compliance and business/market risks.
  • MAS has employed greater use of data analytics for risk detection and targeting, using suspicious transaction reports and other data sets. This has enabled the regulator to identify suspicious fund flow networks more effectively and focus our supervisory attention on networks of higher risk accounts, entities or activities.
  • MAS has also developed Project Apollo, an Augmented Intelligence tool that automates the computation of key metrics for trade analysis, and predicts the likelihood that an expert will opine that market manipulation has occurred. The use of this technology helps improve detection of market abuse.
 
He said that as a regulator, MAS strives to deepen its understanding of emerging technologies, including the risks they present. For this reason, MAS is one of the first regulators to adopt a regulatory sandbox regime. The regulatory sandbox allows experimentation to facilitate FinTech innovation within pre-defined boundaries, while limiting its risks to consumers and the financial system.
 
He cited three key risks associated with technology:
  • cybersecurity;
  • data privacy and protection; and
  • unfair discrimination, with regulators having detected cases where AI-based decision-making has led to systematic exclusion of certain demographics. A 
 
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