EU AI Act classifies credit scoring and insurance underwriting as high-risk for Canadian and UK cross-border financial institutions.
The EU AI Act, adopted in April 2019, reclassifies credit scoring and insurance underwriting from low to high risk artificial intelligence (AI) applications. This move poses a significant challenge for cross-border financial institutions operating in Canada and the United Kingdom that sell into the European Union market. As organisations like yours rely on these activities to operate, you must understand how this change affects your exposure.
The reclassification of credit scoring and insurance underwriting as high-risk AI applications demands immediate action from Canadian and UK financial institutions selling into the EU market. The risks associated with these activities are twofold: first, capability risk – do the AI systems perform as promised? Second, governance risk – can you defend your decisions when regulators or courts ask questions? Finally, there is liability risk – what are you accountable for when the AI system makes an error?
A prudent organisation takes immediate action to mitigate these risks. This includes reviewing existing AI-based credit scoring and insurance underwriting systems to ensure they comply with EU regulations, implementing robust testing and validation procedures for new systems, and ensuring that decision-making processes and accountability mechanisms are clearly defined.
Straven & Co offers independent validation services specifically tailored to help Canadian and UK cross-border financial institutions navigate the reclassification of credit scoring and insurance underwriting as high-risk AI applications. Our experienced team examines AI decisions against your organisation’s operations, people, governance and legal exposure, and vendor claims before delivering a plain verdict – proceed, proceed with conditions, or do not.
Straven & Co examines AI decisions before they are acted on: stravenandco.com