CFA Institute proposes framework for ethical AI

By Staff | October 19, 2022 | Last updated on October 19, 2022
1 min read
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Artificial intelligence is creating new opportunities for investment managers, but its increasing use also poses ethical challenges and risks. The CFA Institute is addressing those concerns with a new guide.

The organization released a framework on Wednesday for responsible AI in investment management. The framework aims to help professionals as they design and deploy AI tools, outlining steps to take and questions to ask along the way.

“The expansion of data sources and availability of AI tools to harness big data can improve investment decision making but can also introduce more complexity in investing,” said Rhodri Preece, senior head of research with the CFA Institute, in a release.

To manage that complexity and the ethical considerations that come with it, the framework addresses data integrity, the accuracy of models and the transparency of algorithms.

Models should avoid bias and opacity, and evaluation of those models should consider how biases may emerge in data, the framework says. That means regular testing to manage risks.

“Instilling an ethical decision framework in AI-driven investment processes is critical to ensure applications serve the best interests of clients,” Preece said.

“Given the complexity of AI projects, senior leadership must establish a strategic vision and ethical culture for AI development within the organization.”

Read the full framework.

Advisor.ca staff

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.