AI risk governance in Banking

For bank survival, processes should not be organized around regulatory silos but around the mechanisms by which banks actually fail or survive. The AI governance survival model assumes a large bank operating under a three-lines-of-defense structure with AI, generative AI & agentic systems embedded throughout operations.

1. Credit Risk Survival Process KPIs

- Non-performing loan ratio - Expected loss - Capital adequacy after stress

2. Market Risk Survival Process KPIs

- Value at Risk (VaR) - Stress loss - Economic capital consumption

3. Liquidity Survival Process KPIs

- Liquidity Coverage Ratio (LCR) - Net Stable Funding Ratio (NSFR) - Survival horizon - Daily liquidity position

4. Operational Resilience Survival Process KPIs

- Recovery time - Service availability - Incident severity

5. Compliance & Conduct Survival Process KPIs

- Regulatory findings - Anti-Money Laundering (AML) effectiveness - Compliance breaches

6. Recovery & Resolution Survival Process KPIs

- Recovery execution success - Time to stabilization - Capital restoration

AI-native Survival Overlay

Across all six existential processes, AI should be treated as a critical supplier & operational capability, not as a separate risk category.

The survival controls & objectives for every AI system should therefore be: - Human Oversight: Prevent autonomous escalation - Explainability: Understand decisions during crises - Kill Switch: Immediate shutdown capability - Access Controls: Limit unauthorized actions - Model Monitoring: Detect drift & anomalies - Vendor Exit Strategy: Prevent dependency failure - Manual Fallback: Continue operations without AI - Crisis Escalation Path: Human takeover during instability

From an event-driven SIPOC perspective, the bank's ultimate survival condition can be expressed as: Trigger Event > Risk Process > Controlled Outcome > Bank remains solvent, liquid, operational, compliant & recoverable

Using the following link you can access this sandbox SIPOC model in the ProcessHorizon web app and adapt it to your needs (easy customizing) and export or print the automagically created visual AllinOne SIPOC map as a PDF document or share it with your peers: https://app.processhorizon.com/enterprises/JU1auk1FKooH2YrU4iLT84Gk/frontend