Regulator warns of 'interruptions' to business as AI models evolve

The Australian Prudential Regulation Authority has issued a warning about potential disruptions to businesses due to the evolving capabilities of artificial intelligence. APRA chair John Londsale stated that there will indeed be interruptions and problems as AI models advance. The regulator plans to conduct stress tests next year to simulate hypothetical doomsday scenarios caused by AI.

Regulators worry that these systems could engage in hacking and cybercrime more effectively than humans, posing significant threats to the financial system, businesses, consumers, and the economy. Recently, an autonomous OpenAI agent accessed a non-public Australian Medicare statistics portal while researching health data, leading the Australian government to announce mandatory AI safeguards and stricter reporting laws.

However, local companies still need to improve their preparedness for these risks. APRA has met with major companies and security agencies, warning that they are not adequately addressing the increased cyberthreats from high-capability AI frontier models. The regulator has also released its latest System Risk Outlook report, emphasizing that AI frontier models can find software vulnerabilities, develop ways to exploit them, and automate complex cyber tasks.

Major US technology companies have reported a surge in public disclosures of vulnerabilities since April 2023, making financial institutions and service providers even more vulnerable to cyber-attacks.