Modern Banking Risks, Big Tech Legal Battles, And AI Deepfake Crackdowns
Birgul COTELLI, Ph. D.
Top 100 Thought Leader Thinkers360🔸Board Director🔸Transformation🔸Ethics🔸Technology 🔸Innovation🔸Governance Risk Compliance 🔸VR AR AI🔸Metaverse🔸LinkedIn Top Voice in VR (May-Aug 24)🔸Speaker
From financial institutions to Big Tech and law enforcement, the rapid advancement of AI and digital technologies is reshaping the risk landscape. Banking Chief Risk Officers (CROs) must now manage an increasingly complex web of financial, cyber, and compliance risks, adapting to heightened regulatory scrutiny and emerging technological threats.
Meta’s ongoing legal battles over privacy underscore the growing importance of data governance, while the UK's crackdown on AI-generated deepfakes highlights a global shift toward stricter digital oversight. As AI-generated content becomes more sophisticated, collaborative efforts between governments, academia, and industry leaders are essential to developing robust detection and mitigation solutions.
Why Today’s Banking CRO Must Be Master Of Many Trades?
In today’s financial landscape, the role of a Chief Risk Officer (CRO) has expanded beyond traditional risk management to encompass a vast array of strategic, operational, and technological challenges. As financial institutions navigate an increasingly complex and volatile environment, CROs must develop a multifaceted approach to risk, integrating cyber threats, geopolitical uncertainties, regulatory changes, and technological advancements into their frameworks.
A Broader Risk Mandate in a Shifting Landscape
The findings of the 13th annual EY and Institute of International Finance (IIF) global risk management survey reveal that banking CROs are facing mounting challenges. Financial risks, once thought to be under control, have re-emerged due to economic volatility. Liquidity risk, consumer credit concerns, and interest rate fluctuations are back at the top of CRO agendas. Simultaneously, the threat landscape has evolved with cyber risks, third-party vulnerabilities, and AI-driven fraud posing new and complex threats.
The heightened scrutiny of regulatory bodies worldwide adds another layer of complexity. With institutions like the UK government enforcing stricter policies to combat AI-generated deepfakes, banks must enhance their monitoring and compliance mechanisms. Similarly, ongoing legal battles, such as Facebook’s $725 million privacy settlement defense in a U.S. appeals court, reinforce the growing importance of data protection and consumer privacy—areas that also fall within the CRO’s purview.
The Seven Roles of the Modern CRO
As CROs assume greater responsibility, they must embrace multiple roles to effectively manage risks and steer their organizations toward sustainable growth. Key roles identified in the EY/IIF survey include:
Fortune Teller – Anticipating emerging risks, from evolving regulatory focus areas to the impact of quantum computing on cybersecurity.
Risk Management Traditionalist – Strengthening core capabilities in liquidity, operational resilience, and credit risk management.
Firewatcher – Constantly monitoring cyber threats, fraud, and financial crimes to prevent crises.
Transformative Technologist – Guiding digital transformation efforts while ensuring robust risk frameworks around AI, machine learning, and other emerging technologies.
Data Guru – Safeguarding data integrity while enabling strategic insights and compliance with evolving regulations.
Geopolitical Expert – Tracking global events, trade policies, and economic trends to assess potential business impacts.
Change Agent – Aligning risk strategy with long-term growth initiatives, ESG priorities, and digital innovation.
Balancing Innovation and Risk Oversight
The increasing integration of advanced technologies such as generative AI, blockchain, and cloud computing into banking operations brings both opportunities and risks. CROs are expected to ensure the responsible adoption of these technologies while mitigating associated threats, including data breaches, algorithmic bias, and regulatory violations.
Furthermore, as banks embrace digital transformation to enhance customer experience and operational efficiency, risk leaders must collaborate with technology teams, legal experts, and regulators to create a secure and compliant ecosystem.
Regulatory Pressures and Compliance Challenges
Regulatory bodies worldwide are heightening their oversight of financial institutions, particularly in areas such as cybersecurity, anti-money laundering (AML), and consumer protection. The UK’s recent crackdown on AI-generated deepfakes exemplifies the regulatory tightening aimed at curbing technology-enabled fraud. Similarly, data privacy and ethical AI use are becoming focal points in financial regulations, with global watchdogs requiring banks to demonstrate stronger governance in these areas.
For CROs, this means staying ahead of regulatory shifts, adapting internal controls, and fostering a risk-aware culture within the organization. Proactive engagement with policymakers, participation in industry forums, and leveraging predictive analytics to anticipate compliance risks are becoming essential strategies for managing regulatory demands.
The CRO as a Strategic Leader
The modern CRO is no longer just a gatekeeper of risk but a key strategic leader who must balance innovation, resilience, and compliance. By wearing multiple hats and adapting to the evolving landscape, CROs can help banks embrace uncertainties while seizing new growth opportunities. As financial institutions continue to undergo digital transformation and regulatory scrutiny intensifies, CROs must remain agile, forward-thinking, and proactive in shaping the future of risk management.
Facebook Defends $725 Million Privacy Settlement In US Appeals Court
Meta Platforms, the parent company of Facebook, urged the 9th U.S. Circuit Court of Appeals in San Francisco last Friday to uphold a $725 million class action settlement resolving allegations that the company violated user privacy rights. The settlement, initially approved by a lower court in 2023, faces challenges from objectors who argue that the payout is insufficient and that legal fees awarded to attorneys are excessive.
The Legal Battle Over the Settlement
The lawsuit stems from Facebook’s involvement with Cambridge Analytica and other third-party entities accused of improperly accessing users’ personal data without their consent. The plaintiffs claim that the tech giant failed to protect its users' privacy, violating consumer protection laws.
Meta, while denying any wrongdoing, agreed to the settlement as part of efforts to put the case behind it and avoid prolonged litigation. However, challengers insist that the compensation is inadequate compared to the scale of the privacy breach. They also contest the $181 million in legal fees awarded to the plaintiffs’ attorneys, arguing that the amount represents an unjustified “windfall.”
Arguments in Favor of the Settlement
During Friday’s hearing, attorney Derek Loeser, representing the class action plaintiffs, defended the settlement, asserting that it was thoroughly vetted by U.S. District Judge Vince Chhabria. He emphasized that the judge rigorously examined the agreement to ensure fairness.
Loeser further argued that the attorney fee award, which represents 25% of the settlement, was reasonable given the complexity and duration of the litigation. He pushed back against claims that the legal team benefited disproportionately, noting that the settlement provides meaningful relief to affected users.
Meta’s Position and Regulatory Scrutiny
Meta has consistently stated that the settlement is a fair resolution, allowing the company to move forward without the uncertainty of continued legal disputes. The tech giant has been under increasing scrutiny from regulators and lawmakers regarding data privacy practices, leading to broader discussions about stronger consumer protections and corporate accountability.
The Cambridge Analytica scandal, which first surfaced in 2018, has remained a defining moment in debates over digital privacy. The unauthorized data harvesting of millions of Facebook users for political advertising campaigns triggered global backlash and regulatory reforms.
What’s Next?
The 9th Circuit Court of Appeals will now review the arguments presented by both sides before issuing a ruling on whether to uphold or modify the settlement. A decision could set a precedent for how major tech firms handle data privacy settlements in the future.
With digital privacy concerns, Meta and other technology companies face mounting pressure to strengthen data security practices while navigating legal and regulatory challenges. The outcome of this appeal will likely shape the broader conversation around corporate responsibility in handling user data.
UK Brings New Enforcements To Clamp Down On AI-Generated Deepfakes
The rise of AI-generated deepfakes has become a growing concern worldwide. In 2023, an estimated 500,000 deepfakes were shared, but projections for 2025 indicate this number could skyrocket to eight million. This exponential increase, coupled with the growing sophistication of deepfake technology, reinforces the urgent need for robust detection and mitigation strategies.
Concerns over the criminal manipulation of digital text, images, and videos are not new. However, the recent proliferation of generative AI tools that enable individuals to create deepfake content quickly, easily, and at minimal cost has significantly changed the landscape. In response, governments, law enforcement agencies, and industry leaders have ramped up their efforts to develop practical solutions to counter the threats posed by deepfakes.
Collaborative Efforts to Detect AI-Generated Deepfakes
The Accelerated Capability Environment (ACE) has played a key role in bridging the gap between government agencies and cutting-edge technology providers. Through a series of focused commissions, ACE has spearheaded initiatives to accelerate the detection of AI-generated deepfakes across multiple domains.
One of the most significant milestones in this endeavor was the Deepfake Detection Challenge. Spearheaded by the UK Home Office, the Department for Science, Innovation and Technology, ACE, and the The Alan Turing Institute, this initiative brought together academia, industry, and government experts to drive innovation in deepfake detection.
The Deepfake Detection Challenge: A Major Step Forward
The Deepfake Detection Challenge was launched with five challenge statements designed to push the boundaries of current capabilities. Over 150 experts attended the initial briefing, emphasizing the critical importance of collaboration in addressing this growing threat. Major technology firms, including Microsoft and Amazon Web Services (AWS), provided practical support, further bolstering the initiative.
For eight weeks, researchers and developers worked on innovative detection solutions using a specially curated platform that housed approximately two million assets consisting of real and synthetic data for training and testing purposes. From this effort, 17 submissions were received, and six teams were selected to present their solutions to a panel of over 200 stakeholders.
Notable contributions came from Frazer-Nash Consultancy, Oxford Wave Research Ltd, the University of Southampton, and Naimuri. These teams developed a combination of existing products and early-stage proof-of-concept solutions targeting critical use cases such as combating child sexual exploitation and abuse (CSEA), countering disinformation, and improving audio-based deepfake detection. These solutions are now undergoing benchmark testing and user trials to determine their operational viability.
Key Insights and Lessons Learned
One of the major takeaways from the Deepfake Detection Challenge was the crucial role of curated data in the development of effective detection tools. The challenge highlighted the need for datasets that better reflect real-world operational scenarios, ensuring that deepfake detection solutions are as practical and effective as possible.
Additionally, collaboration between public and private sectors proved invaluable in accelerating progress in deepfake detection. By pooling expertise and resources, stakeholders were able to move beyond theoretical discussions and work toward actionable solutions.
Tackling Deepfakes in Policing and Digital Forensics
The fight against deepfakes is not limited to national security and information integrity. Law enforcement agencies are also facing significant challenges, particularly in digital forensics. Investigators often encounter massive amounts of digital content, including up to a million child abuse images on a single seized phone, making it imperative to integrate deepfake detection tools into the investigative process.
Recognizing this need, the UK government’s Defence Science and Technology Laboratory (Dstl) and the Office of the Chief Scientific Adviser (OCSA) commissioned ACE to further develop deepfake detection capabilities. This effort, in collaboration with community members Blueprint, CameraForensics, and The Rainmaker Group (TRMG), aims to refine and operationalize the Evaluating Video, Text, and Audio (EVITA) AI content detection tool.
The focus has shifted from mere volume analysis to developing solutions that add the most value during the investigative stage. The next step involves transitioning from research and development to real-world implementation by commissioning proof-of-concept trials for promising technologies.
Looking Ahead: The Future of Deepfake Detection
As the Deepfake Detection Challenge enters its next phase, the focus will be on making solutions more user-centric and relevant to practitioners in the field. This will require further refinement of detection technologies, improved dataset representation, and continued collaboration between governments, academia, and industry leaders.
The fight against AI-generated deepfakes is far from over, but the progress made in recent years demonstrates a promising trajectory. Through continuous innovation, strategic partnerships, and proactive policy measures, stakeholders are working tirelessly to stay ahead of this evolving threat
The Evolving Landscape of Risk, Regulation, And AI Oversight
From financial institutions to Big Tech and law enforcement, the rapid advancement of AI and digital technologies is reshaping the risk landscape. Banking Chief Risk Officers (CROs) must now manage an increasingly complex web of financial, cyber, and compliance risks, adapting to heightened regulatory scrutiny and emerging technological threats.
Meta’s ongoing legal battles over privacy underscore the growing importance of data governance, while the UK's crackdown on AI-generated deepfakes highlights a global shift toward stricter digital oversight. As AI-generated content becomes more sophisticated, collaborative efforts between governments, academia, and industry leaders are essential to developing robust detection and mitigation solutions.
The common thread across these developments is clear: in an era of rapid digital transformation, the intersection of risk management, regulatory enforcement, and technological innovation will define the future. Institutions must not only anticipate emerging threats but also embrace proactive, cross-sector collaboration to navigate the evolving digital and financial landscape.
Sources: Ey.com Reuters.com Innovationnewsnetwork.com
EY Institute of International Finance Facebook Meta Accelerated Capability Environment (ACE) Department for Science, Innovation and Technology The Alan Turing Institute UK Home Office Microsoft Amazon Web Services (AWS) Frazer-Nash Consultancy Oxford Wave Research Ltd University of Southampton Naimuri Dstl The Rainmaker Group (TRMG) CameraForensics Reuters Innovation News Network
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Top 100 Thought Leader Thinkers360🔸Board Director🔸Transformation🔸Ethics🔸Technology 🔸Innovation🔸Governance Risk Compliance 🔸VR AR AI🔸Metaverse🔸LinkedIn Top Voice in VR (May-Aug 24)🔸Speaker
1wThanks DR. ARIADNE-ANNE DeTSAMBALI for the reshare
Master Future Tech (AI, Web3, VR) with Ethics| CEO & Founder, Top 100 Women of the Future | Award winning Fintech and Future Tech Influencer| Educator| Keynote Speaker | Advisor| (ex-UBS, Axa C-Level Executive)
2wDeepfake is a huge challenge- in particular how you can identify them.
This insightful analysis highlights the evolving challenges for banking leaders. Collaboration is indeed key for effective risk management.