Bank Negara Malaysia Warns Banks to Prioritise AI Risk Management
Bank Negara Malaysia (BNM) has issued guidance underscoring the need for Malaysian banks to treat artificial intelligence (AI) risk management as a core strategic imperative, as the use of AI technologies expands across credit evaluation, customer service, fraud detection and decision‑making processes.
According to BNM, banks must ensure strong governance frameworks, clear accountability, robust AI controls and continuous monitoring to mitigate risks such as biased models, data privacy breaches, operational failures and unintended outcomes from autonomous systems. The central bank emphasised that the adoption of AI should be transparent, explainable and aligned with regulatory expectations, ensuring customer trust and financial stability.
The guidance signals a shift toward proactive supervisory oversight, compelling banks to integrate AI risk management into enterprise‑wide risk frameworks. Institutions are also encouraged to adopt ethical AI practices, rigorous validation and testing, and regular risk assessment to support innovation while protecting stakeholders.
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