Monday, August 28, 2017

AI

By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc.
Lots of jokes have been made about AI (Artificial Intelligence); Artificial Ignorance and Artificial Imbecility are two that readily come to mind.  AI is a tool, and a very useful tool at that – in my opinion.  However, AI does not replace the human factor.  AI does not understand the human factor.  AI cannot (almost by definition) deal with the paradigm shifts caused by the human factor – namely human creativity.  Likewise, AI is not so good at dealing with or predicting seemingly random human stupidity.
The point that the good risk manager remembers is that virtually all risk is human in nature.  Humans are real.  Humans are not artificial (okay, some reality TV stars – and former reality TV stars – are very artificial).  While AI is a very helpful risk management tool and a complement to human wisdom and intuition, ultimately you need humans to understand and manage humans.  Risk is human, and so ultimately the final word in risk management should be human as well.

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