SEBI and CAG push for use of AI to check Cyber-Security and Improve Performance

SEBI sets up 'cyber-suraksha.ai' task force to check AI-driven cyber risks

• SEBI has noted it aims to tackle cybersecurity risks posed by AI by setting up a task force. Setting up a task force, Sebi noted that the rapid evolution of AI-driven vulnerability detection tools such as "Claude Mythos" has "introduced new dimensions of risks for Regulated Entities." The task force comprises experts from stock exchanges, regulated companies, and tech stakeholders. 

• It was created in response to threats from AI to identify and exploit weaknesses in the financial systems that human supervision will not detect. This can have a domino effect, with most likely breaches of confidential data. 

• The task force will build a uniform plan to fight the issue. It will share information about new threats and develop foolproof plans using AI itself to prevent cyber threats. 

• For effectively tackling these issues, cyber incidents have to be reported fast; software and security systems have to be updated; proper and regular audits will be needed, and a system of 24/7 real time monitoring instituted. (just check whether USA or EU are also doing the same thing)

CAG urges use of AI and data analytics to detect corruption in government tenders

• Comptroller and Auditor General of India Mr K Sanjay Murthy said India should leverage artificial intelligence, machine learning and data analytics to detect corruption, bid rigging and cartelisation in government tenders.

• He also emphasized a stronger coordination between CAG and CCI to identify collusion and protect public funds. He further added collusion to fix prices, rig bids, or divide markets, do not merely violate competition law, they also cause direct and measurable loss to the public exchequer.

• Mr Murthy advocated the use of AI and machine learning to strengthen audit systems. He further mentioned that the CAG-CCI collaboration can create “enormous national value” by sharing data and insights.

Our view:

• Indian regulators have begun to step up efforts on AI. Some of these we have captured in our Newsletters. So, whether it be tracking the AI summit and its importance in the Indian context, or its impact on Banks, or the progress of AI made in Indian and global context, we have covered many of them. Other regulators too have focussed on AI, as in case of NFRA.  

• SEBI;s efforts to tackle cybersecurity risks posed by AI by setting up a task force will go a long way in improving the faith of investors in the markets. As newer risks associated with AI rise, the regulators, especially in the financial world must keep ahead of the times and be fully prepared to curb any frauds evolving suddenly and be taken off guard.   

• Keeping pace with the other institutions, the Comptroller and Auditor General of India (CAG) too, favoured use of the latest technologies to improve performance. Its emphasis on stronger coordination with Competition Commission of India (CCI) clearly shows the intent to strengthen audit systems even further, especially as India’s public procurement ecosystem becomes more digital and complex. It needs to be mentioned that the CCI Chairperson Ms Ravneet Kaur had advocated the use of AI in the AI summit during February this year - while rightly highlighting the importance of transparency. 

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Related Article 

•https://legal.economictimes.indiatimes.com/news/regulators/sebi-launches-cyber-surakshaai-task-force-to-combat-rising-ai-cyber-risks/130867013

•https://www.thehindubusinessline.com/economy/policy/cag-urges-use-of-ai-and-data-analytics-to-detect-corruption-in-government-tenders/article71001146.ece