(MENAFN- Swissinfo)
Didier Sornette is the Chair of Entrepreneurial Risks, Department of Management, Technology, and Economics, Swiss Federal Institute of Technology ETH Zurich. Elisabeth Real / Keystone
Banks like Credit Suisse use sophisticated models to analyse and predict risks, but too often they are ignored or bypassed by humans, says risk management expert Didier Sornette.
This content was published on March 28, 2023 March 28, 2023 minutes Writes about the impact of new technologies on society: are we aware of the revolution in progress and its consequences? Hobby: free thinking. Habit: asking too many questions.
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(it)
l'intelligenza artificiale non salverà le banche dalla loro miopia (original) Português
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inteligência artificial não salva bancos Français
(fr)
l'intelligence artificielle ne sauvera pas les banques de leur myopie
The collapse of Credit Suisse has once again exposed the high-stakes risk culture in the financial sector. The many sophisticated artificial intelligence (AI) tools used by the banking system to predict and manage risks aren't enough to save banks from failure.
According to Didier Sornette, honorary professor of entrepreneurial risks at the federal technology institute ETH Zurich, the tools aren't the problem but rather the short-sightedness of bank executives who prioritise profits.
SWI swissinfo.ch: Banks use AI models to predict risks and evaluate the performance of their investments, yet these models couldn't save Credit Suisse or Silicon Valley Bank from collapse. Why didn't they act on the predictions? And why didn't decision-makers intervene earlier?
Didier Sornette : I have made so many successful predictions in the past that were systematically ignored by managers and decision-makers. Why? Because it is so much easier to say that the crisis is an“act of God'' and could not have been foreseen, and to wash your hands of any responsibility.
Acting on predictions means to“stop the dance”, in other words to take painful measures. This is why policymakers are essentially reactive, always behind the curve. It is political suicide to impose pain to embrace a problem and solve it before it explodes in your face. This is the fundamental problem of risk control.
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