The National Bank of Georgia publishes an updated draft Regulation on Data-Driven Statistical, Artificial Intelligence and Machine Learning Model Risk Management at the Financial Institutions.

 

The use of data-driven models by the financial sector in the decision-making process is becoming increasingly relevant around the world. Also, there is an increased demand/interest in the safe and ethical use of the model. In line with current trends, the National Bank of Georgia is working on upgrading its Regulation on Data-Driven Statistical, Artificial Intelligence and Machine Learning Model Risk Management at the Financial Institutions and is pleased to make the revised document available for public consultation. Active involvement of the stakeholders and hearing their opinions, comments and recommendations is crucial for the final new version of the document.

 

The regulation now incorporates three new areas.

1. The need to develop a framework for ethical use of the model was prompted by the current trends in the sector. The regulation responds to this by defining the principles of ethics to be considered in the development, implementation and application of the model and ways to mitigate potential unethical use of it.
2. The second change concerns the expansion of the risk-based approach: as part of the update, a methodology for classifying models by risk was developed.
3. Third, the extension provides the model users the ability to achieve transparency and interpretation of the model via the statistical method.

 

The document fully reflects the comments and recommendations of the financial sector. The amendments also reflect the current practices and challenges of the financial sector of Georgia and modern international supervisory experience.

 

The updated regulations can be found on the Legal Acts Projects page. As part of the public consultation, the National Bank of Georgia welcomes suggestions and comments from interested parties. Submissions for the project will be accepted before March 1, 2022 and can be sent to the following e-mail address: innovationoffice@nbg.gov.ge