AI, Risk & Regulation: Are Financial Institutions Ready?

Video

Model risk management is evolving, but are financial institutions keeping pace? Rodanthy Tzani, an independent risk and compliance advisor, explores the challenges of AI-driven models, the confusion over definitions, and the regulatory gaps that could leave firms exposed.

Apr 01, 2025

Rodanthy Tzani, former Head of Model Risk Management, New York Life Insurance

Tags: AI and Technology (including Fintech) Model risk

The views and opinions expressed in this content are those of the thought leader as an individual and are not attributed to CeFPro or any other organization

Financial institutions face growing uncertainty in model risk management as AI reshapes the landscape. Rodanthy highlights the critical need for a structured governance framework that includes inventory tracking, risk assessments, and validation.

Companies struggle to define AI models, leading to confusion and potential regulatory misalignment. Without proactive risk management, cost-cutting today may lead to significant losses in the future.

Firms must integrate AI governance within existing risk frameworks, stay adaptable to evolving regulations, and ensure bias testing where necessary. Establishing a centralized function for governance is crucial to avoid silos and strengthen oversight.

Rodanthy Tzani Bio

Dr. Rodanthy Tzani is a Freelance Risk Executive who partners with organizations across industries to help them identify, assess, and mitigate financial, operational, and regulatory risks. Drawing from her wide experience, she advises industry leaders on the best approaches in building sustainable risk management practices, including Model Risk Management, Stress Testing and AI Application frameworks. Until end of 2024, Dr. Tzani was a Vice President and Head of Model Risk Management in New York Life Insurance Company, where she joined in 2018 and successfully built and operationalized the Model Risk Management function of the company. Recently, she established the enterprise-wide Governance and Risk Assessment framework for AI applications developed by the company. From 2009 to 2017 she was a Supervising Examiner and Risk Analytics Manager in the Supervision Group of the Federal Reserve Bank of New York. During her tenure at the Fed, she led numerous examinations evaluating all types of models and approaches used by large domestic and foreign bank SIFIs (Systemically Important Financial Institutions). Dr. Tzani oversaw model risk across the Systemically Important Insurance Companies while they were under the Fed’s supervision and established supervising standards for insurance practices. Supporting an internal Fed effort to advance analytical tools for efficient supervision, she also led her team in testing Large Language Models. Working with leaders within the Federal Reserve System, Dr. Tzani was instrumental in extending supervisory standards to foreign banking institutions and insurance SIFIs. Before joining the Fed, Dr. Tzani was the Head of the Structured Finance Risk Management at ACA Capital, where she oversaw the restructuring and winding down of the company during the 2008 crisis. Prior to that she was a Vice President with the Derivatives Group of Moody’s Investors Service. Dr. Tzani holds a Ph.D. in Theoretical Physics from the City College of CUNY and has spent time in academia conducting research in various universities in Europe and the USA before moving to finance in 2001. She has published numerous papers in refereed journals both in physics and finance.