Switzerland: Closed FINMA inquiry on AI governance and risk management

On 18 December 2024, the Swiss Financial Market Supervisory Authority (FINMA) concluded its inquiry with the publication of Supervisory Notice 08/2024, focusing on governance and risk management in the use of artificial intelligence (AI) in the Swiss financial market. This inquiry, part of FINMA's ongoing supervisory activities, aimed to address the increasing use of AI in the financial market and the associated operational, IT, cyber, legal, and reputational risks. The notice outlines the observed challenges in governance and risk management structures within financial institutions, emphasizing the need for comprehensive AI governance, a central inventory with risk classification, and enhanced data and model quality controls. According to FINMA, the inquiry highlights the need for explainability in AI applications and the necessity for independent testing to ensure the robustness and reliability of AI systems.