Achieving these desired outcomes is necessarily a community endeavor that must involve regulators, supervised firms, and technology pioneers. Only through their collective action can we establish a “consensus structure” around critical questions which demand answer: what data is relevant; how is that data is to be collected and shared securely; how are privacy interests and ethical considerations to be met; how may algorithmic models be adequately trained and tested for bias and reliability; how are these models to be made compellingly ‘explainable’; how are the insights they yield to be harnessed to create collective goods; and how might we deploy industry-standard ‘utilities’ that facilitate knowledge sharing, adoption of best practices, and horizontal peer review capabilities.
In the last year we have seen big banks banding together to measure and manage climate risk.1 Ana Botín, of Spain’s Santander, has called on central banks to coordinate climate-related stress testing.2
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