🛟 Turn AI Crises Into Your Competitive Edge

👋 Welcome, Abbie here.

The AI Check In is your playbook for navigating AI governance and strategy in banking and finance. This weekly newsletter isn’t just a guide—it’s your next power play.

My goal? To arm you with the knowledge and tools to not just survive but rise up in the rapidly evolving AI-driven financial world.

Each weekly edition arms you to rewrite the rules, outmaneuver competitors, and stay two steps ahead of regulators.

Here’s what to expect this week:

· 🛟 Need to Know: Strategic Opportunities in Banking Regulation AI

· 🥷 Deep Dive: Incident Management and Crisis Protocols: Exploiting AI Failures

· ⚔️ Instruments of Mastery: Everbridge

· 📈 Trends to Watch: Turning AI Crisis Response into Strategic Dominance

Let the games begin.

🛟 Need to Know: Strategic Opportunities in Banking Regulation AI

The evolving U.S. federal AI regulations demand strategic positioning, not just compliance. For finance leaders, this shift cannot be understated. The below points are key:

· Executive Order on AI: President Biden’s 2023 directive has driven regulatory momentum, with the FTC, NASA, and DOJ preparing tailored rules.

• October 2024 AI Memorandum: Focused on secure, ethical AI in government, its principles—enhanced safeguards and robust responses—are expected to shape financial governance soon.

• Key Risks: FTC scrutiny on copyright for large language models may affect proprietary systems, while licensing mandates and new oversight could tighten control.

• Global Influence: U.S. alignment with the Council of Europe’s AI Framework signals globally harmonized regulations, benefiting adaptable institutions.

These developments create risks but offer opportunities to shape the standards that will define the industry.

🥊 Your Move: Master regulation and use compliance to consolidate your competitive thrust.

1. Shape the Standards: Engage proactively with regulators and peers to influence forthcoming rules while monitoring legislative developments to stay ahead.

2. Fortify Governance: Conduct rigorous AI audits, align frameworks with federal and global principles, and ensure operational flexibility to mitigate risks.

3. Build Organizational Readiness: Elevate AI literacy across leadership and staff to create a workforce strategically aligned with regulatory demands and opportunities.

🥷 Deep Dive: Incident Management and Crisis Protocols: Exploiting AI Failures for Strategic Dominance

With JP Morgan’s use of AI tools such as LLM Suite, DocGraphLM and Quest IndesxGPT, Goldman Sachs’ use of GS AI Platfrom, Citi’s use of gen AI to review new capital rules, Wells Fargo’s eponymous tool Fargo, and Morgan Stanley’s Debrief, failure and disruption risks are developing both internally and externally.

It doesn’t take much for these risks to tip from risk to incident.

Think of AI incidents as opportunities to consolidate power, influence stakeholders, and strengthen operational resilience.

With malfunctions and compliance breaches inevitable, success lies in mastery, not avoidance. US banking leaders must embrace a strategic, calculated approach to incident management, ensuring they outmaneuver competitors while maintaining the confidence of regulators and investors.

This week’s Your Move is a proven playbook to ensure your handling of the inevitable is adept and not a series of clumsy missteps.

🥊 Your Move: Turn Crisis into Competitive Advantage

1. Master Preparation

   • Conduct vulnerability assessments and penetration testing regularly to identify exploitable weaknesses early—both in your systems and those of competitors.

   • Deploy AI-driven anomaly detection tools to anticipate disruptions before they become public.

   • Maintain a comprehensive AI inventory to demonstrate operational superiority and pinpoint vulnerabilities swiftly.

2. Control the Narrative

   • Immediately isolate affected systems to halt damage and signal decisive action.

   • Engage legal experts not just to assess liabilities but to shift blame and limit exposure.

   • Develop a dual-layered communication strategy:

     • Internally, emphasize rapid resolution to secure employee trust.

     • Externally, position transparency as a strength while subtly undermining competitor reputations.

3. Exploit Stakeholder Networks

   • Identify and prioritize stakeholders based on influence and potential leverage.

   • Tailor messaging to key players, ensuring your response aligns with their interests and expectations.

4. Turn Weakness into Strength

   • Use the incident as a platform to showcase advanced governance capabilities.

   • Implement dynamic containment measures like network segmentation to demonstrate foresight and technical prowess.

   • Leverage post-incident learnings to tighten your systems while subtly pointing out the vulnerabilities in industry standards.

5. Weaponize Recovery

   • Formulate a detailed restoration plan that not only restores operations but also positions your institution as a benchmark for resilience.

   • Conduct error analyses to refine your defenses, highlighting continuous improvement to regulators and the market.

⚔️ Instruments of Mastery: Everbridge’s Platform

Everbridge isn’t just a tool; it’s a weapon for operational dominance. By automating workflows and centralizing incident management, it enables leaders to outpace rivals and secure stakeholder trust.

• AI-Powered Intelligence:
  Real-time reporting and ML-based categorization ensure precision.

• Command Centralization:
  Manage crises with a unified hub, projecting control and competence.

• Integrated Resilience:
  Use API-driven integrations to streamline incident responses and ensure faster recoveries.

• Analytics as Leverage:
  Deploy customizable reports to demonstrate superior response capabilities and position your organization as an industry leader. 

🥊 Your Move:

Every malfunction is a moment to redefine the narrative. By harnessing crisis management as a tool of influence, you can elevate your institution's standing, fortify defenses, and neutralize threats—both internal and external.

📈 Trends To Watch: Turning AI Crisis Response into Strategic Dominance

Post-pandemic, financial institutions are weaponizing crisis management to solidify their power in an AI-driven banking landscape. The trend highlights the strategic necessity of mastering AI-specific risks to outmaneuver competitors while maintaining stakeholder confidence.

• Enhanced Protocols: AI-powered anomaly detection, specialized crisis teams, and proprietary playbooks fortify defenses.

• Rapid Recovery: Automated rollbacks, redundancies, and robust backups minimize disruptions and project resilience.

• Narrative Control: Pre-approved messaging and AI-driven sentiment analysis craft precision narratives for regulators and the public.

• Collaborative Edge: Industry simulations expose competitors’ weaknesses, while selective data-sharing builds influence.

• Regulatory Alignment: Proactive AI risk assessments and sandbox participation shape compliance frameworks to your advantage.

🥊  Your Move

1. Deploy cutting-edge detection and playbooks to signal control while safeguarding proprietary methods.

2. Showcase recovery speed with redundancies and automated rollbacks to demonstrate invulnerability.

3. Dominate narratives with tailored messaging and sentiment insights.

4. Exploit collaboration for intelligence, not vulnerability.

5. Preempt regulation by influencing standards through strategic assessments and testing.

Seize crises as opportunities to cement your institution’s dominance in AI-powered finance.

🔮 Next Week

We explore how Real-Time Compliance Monitoring Tools are essential to ensure your AI initiatives haven’t gone offline or turned rogue. Your use of canaries in the code mine, spot checkers, double vision and other techniques will give you visibility.

Yours,

Disclaimer

This newsletter is for informational and educational purposes only and should not be considered financial, legal, or investment advice. Some content may include satire or strategic perspectives, which are not intended as actionable guidance. Readers should always consult a qualified professional before making decisions based on the material presented.