Edited by Nydia Remolina & Aurelio Gurrea-Martinez (Edward Elgar Publishing, 14 Apr 2023)
Abstract: This chapter develops a regulatory framework for understanding and addressing the increasing role of AI in finance, and focuses on human responsibility, the ‘human-in-the-loop’, as central to tackling AI ‘black box’ issues ie the risk that AI results in processes and operations unknown to and uncontrolled by human beings, producing undesirable results for which only the AI is responsible. Part II highlights the risks created by the increased reliance on AI in finance. Part III summarises the regulatory challenges concerning financial services AI and the tools available to address them and highlights the necessity to address the ‘black box’ problem. Part IV presents our solution to the latter problem. Part V concludes suggesting that our framework offers the potential to address ‘black box’ issues in the context of AI in finance but also in any regulated industry.