Global Financial Insights is a weekly feature for the Accounts and Audit Module subscribers of Taxmann.com. It provides you with the latest updates on financial reporting and auditing practices from across the globe. Here is this week’s financial update.
FRC releases updated actuarial guidance on AI and Machine Learning integration
The Financial Reporting Council (FRC) has issued updated Technical Actuarial Guidance to address the increasing use of Artificial Intelligence (AI) and Machine Learning (ML) in actuarial work. This revised guidance is designed to assist practitioners in applying the principles-based Technical Actuarial Standard 100 (TAS 100) when using advanced AI/ML techniques, ensuring the continued high quality of actuarial outcomes.
While the FRC’s guidance is not mandatory, it is strongly encouraged to help improve the quality of technical actuarial work. The guidance specifically supports compliance with Principle 5 of TAS 100, which emphasizes the importance of using models that are fit for purpose and subject to sufficient controls and testing.
The key provisions outlined in the guidance include:
- Practitioners must fully understand the models they use, including their intended uses and limitations.
- Adequate model governance must be in place for all models used in actuarial work.
- Material biases within the models should be identified and assessed.
- Practitioners must consider the impact of any material limitations in the models or methodologies.
- Where key stakeholders require models to reflect material actions, the implications of those actions must be carefully considered.
This guidance aims to ensure that actuarial professionals continue to produce reliable and robust actuarial information in the evolving landscape of AI and ML.
Source: Financial Reporting Council
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