Machine Learning for Risk Management

Growing artificial intelligence systems are unearthing previously unknown wrongdoing in organisations, but they should be matched by human oversight.It all started as a normal day for David and John (not their real names). Out of the blue, the Audit and Compliance team called them, seeking clarifications about some of their recent trades. Shortly afterward, David and John realised they had just become more victims of the rise of the machines. Both traders had engaged in inappropriate behaviours. David had favoured a single counterparty at the expense of his employer but this had been cloaked by a complex trading pattern. John, on the other hand, had built a position with an unauthorised risk profile and camouflaged this through after-hours orders and inappropriate communications with other traders. For months, both individuals had…


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