EVALUATING THE PERCEIVED RISKS OF AI IN SOUTH AFRICAN FINANCIAL INSTITUTIONS: A MULTIDIMENSIONAL APPROACH

Abstract

Risk management procedures in financial institutions around the world have been significantly altered by artificial intelligence (AI). However, little is known about the perceived risks of implementing AI, especially in developing nations such as South Africa. The aim of this study is to assess, from a multidimensional perspective, the perceived risks of AI adoption by employees in South African financial institutions. This study employs a mixed-methods approach, using a purposive and snowball sample of 90 survey respondents and semi-structured interviewees from several South African financial institutions. The study revealed a broad spectrum of concerns ranging from AI-induced unemployment to cybercrime vulnerabilities. The analysis provides layered insights into how different departments, including Risk Management, IT, and Operations Management, uniquely perceive and manage AI-related challenges. This study underscores the need for personalised risk management strategies that meet unique departmental concerns, as well as the importance of strategic planning in the integration of AI technology by financial institutions to maximise potential while limiting associated risks. It adds to the growing body of knowledge on AI adoption in emerging markets by providing practical information to practitioners and policymakers.

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