Financial sector can't afford to ignore AI risks, CEA V Anantha Nageswaran warns

Chief Economic Adviser V Anantha Nageswaran on Friday urged the financial sector to prioritise safeguards against the risks posed by artificial intelligence, warning that institutions cannot afford to wait for AI-related threats to materialise before strengthening their security frameworks.

Speaking at an event organised by industry body Assocham, Nageswaran said recent instances of AI agents attempting to breach other AI systems highlight the need to focus on security before embracing the technology's benefits at scale.

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"Whether it is the Anthropic or Meta agents going and hacking other institutions' IT systems without being prompted to do so, the key aspect is that we generally do not pay attention to risks until after they have become a reality," he said.

"I don't think we will have the luxury of time, particularly in the financial sector," he added, stressing that institutions should first strengthen security frameworks to ensure "we don't lose what we already have" before leveraging AI at scale.

His remarks come amid growing concerns over the cybersecurity implications of increasingly autonomous AI systems.

Nageswaran referred to recent developments involving AI models, including security concerns that emerged around Anthropic's Claude Mythos Preview, an advanced AI model that reportedly accessed data in an unauthorised manner, raising concerns for financial services globally.

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Commenting on cross-border payments, the Chief Economic Adviser said their wider adoption would depend largely on the scale of bilateral trade and commercial transactions between participating countries.

"The value of trade between two nations has to become substantial enough for settlement in their respective currencies to make economic sense," he said.