Risk Channel delivers the latest, most relevant and useful business intelligence to key decision makers and influencers, each weekday morning.

The Bank of England is conducting tests to better understand the risks and opportunities AI presents for the financial sector, BoE Deputy Governor for Financial Stability Sarah Breeden said in a letter to parliament’s Treasury Committee. Testing will focus on "herding" behaviour that could amplify selloffs during periods ​of market stress, Breeden said. The BoE said it disagreed with an assessment ‌by the Treasury Committee that it was taking a "wait-and-see" approach to the risks presented by AI.

 

PYMNTS.com

Reuters

UK automotive industry group SMMT has said carmakers need clarity urgently on whether Britain will count as 'Made in ​EU' in the European Commission's Industrial Accelerator Act (IAA) policy. Ambiguity risks delaying investments, SMMT chief ​executive Michael Hawes told reporters. "So for a couple of years unless there is a clear indication from the outset . . . it casts a cloud over the UK ⁠automotive ​industry. It's harder to put UK investment on ​a boardroom agenda if you can't cost the future. We're trying to get a clear political ​statement now," Hawes said.

 

Reuters

The European Commission has said Google should allow third-party search engines, including that of artificial ‌intelligence chatbots with search functionalities, to access its search data in order to comply with the Digital Markets Act. Clare Kelly, senior competition counsel at Google, said the company would contest the measures, which it said overreached and would jeopardise ​users' privacy. "Hundreds of millions of Europeans trust Google with their ⁠most sensitive searches - including private questions about their health, family, and finances - ​and the Commission's proposal would force us to hand this data over ​to third parties, with dangerously ineffective privacy protections," Kelly said.

 

EU Today

Engadget

Reuters

The European Commission has said Meta’s recent attempt to charge fees for rival AI assistants on WhatsApp does not address its antitrust concerns. "The Commission notified Meta that the ​revised policy seems to have the same effect of excluding third-party ⁠AI assistants from WhatsApp and thus appears at first sight to ​be in breach of EU competition rules," the EU's executive arm said. Interim measures would remain in place until the end of the investigation, the Commission said, adding: "To prevent serious and irreparable harm ​to competition, the Commission intends to order Meta to reinstate access for ​third-party AI assistants under the same conditions as before 15 October 2025."

 

Politico

Reuters

The Guardian reports that senior officials from the US Federal Reserve, the European Central Bank and the Bank of England were set to participate in a wargaming exercise in Washington on Saturday to assess responses to a potential collapse of a globally significant bank. The event, organised by the Federal Deposit Insurance Commission, aimed to enhance co-ordination among regulators. It comes amid concerns over the growing risks to financial stability from AI and private credit lending. Officials have voiced concern over the capabilities of Anthropic's Mythos AI model, which experts say poses a risk due to its ability to expose flaws in IT systems. Bank of England governor Andrew Bailey, who also chairs the Financial Stability Board of global regulators, has said such risks could threaten banks and represent "a very serious challenge for all of us."

 

The Guardian

The FT presents a series of reports about risk management in financial institutions, including how AI is aiding cyber attacks, and diverging transatlantic investment approaches to ESG.

 

Financial Times

There could be a widening of a proposed UK ban on non-disclosure agreements (NDAs) that silence victims of workplace harassment, discrimination and abuse to include agency workers and the self-employed. Launching a 12-week ​consultation, the government will seek views on the details underpinning new changes - including the conditions an NDA must meet to still be valid, and who workers should be free to speak to about their experience, regardless of what they have signed. "We are committed to ending a culture of ​silence and impunity and stand with all survivors of harassment and abuse in the workplace," ​Employment Rights Minister Kate Dearden said. "These changes will ensure no one has to suffer in silence and give workers confidence that inappropriate behaviour will be dealt with."

 

GOV.UK

Reuters

The increasing dominance of four major investment banks - BNP Paribas, Barclays, Goldman Sachs and Morgan Stanley - in supplying billions of dollars to help juice bets at hedge funds and proprietary trading firms is precipitating new financial stability risks, ratings agency S&P Global has warned. “A small network of global banks has underpinned nonbank trading firms’ ascent to the centre of the financial ecosystem,” S&P's report said. “Together with record leverage and scale and the concentration of such exposures in a handful of banks, this means the ecosystem exhibits an inherent fragility that could be tested under severe stress.”

 

Bloomberg

Financial Times

The $3.5trn private credit market does not present a systemic risk to the wider financial ​system, bond giant PIMCO's group chief investment officer Daniel Ivascyn ‌has said. "We do not see ​systemic risks within private credit, we see disappointment, we see ⁠lower returns than anticipated," Ivascyn told a PIMCO media conference ​in London. Reuters notes that alternative asset managers' stocks this year have been badly hit by risks linked to AI, fund outflows and fears of credit stress.

 

Reuters

Norway’s finance minister Jens Stoltenberg says the world’s biggest sovereign wealth fund does not intend to shed US assets, despite concerns over the Middle East war and America’s mounting debt.

 

Financial Times

Insurers are seeking to avoid paying out nearly €580m ($684m) over September 2022 attacks on Nord Stream ​gas pipelines that were a direct result of Russia's invasion ‌of Ukraine. Nord Stream is suing Lloyd's and Arch Insurance over blasts that ruptured pipelines carrying Russian gas under the Baltic Sea to Germany. No state has taken responsibility for the explosions. Lawyers representing Lloyd's and Arch at the High Court in London say Nord Stream's insurance policy excludes damage caused by war or under the ‌order of ⁠any government. The trial is expected to last about five weeks.

 

Financial Times

Reuters

Samsung Electronics wants a court to block the company's South Korean labour unions from engaging in illegal activities ​during strike action. Unionised workers at the world's largest manufacturer of memory chips last month voted to authorise strike plans and threatened to walk out for 18 days ​from May 21, should a ​wage deal with management not be agreed upon. The unions accused Samsung of infringing on workers' right to strike, which is protected under the law. A strike at the company could worsen bottlenecks in the global supply of semiconductors.

 

Straits Times

The US wants other nations to back a “trade over aid” initiative at the United Nations as part of the Trump administration’s broader shift away from donor-focused development assistance and toward greater private investment. “The idea that trade and free market capitalism is the surest path to prosperity has been proven by the facts and by history,” said Tommy Pigott, a State Department spokesman. “The US remains the most generous country in the history of the world, but those arguing for ‘aid not trade’ are really arguing for lining the pockets of a corrupt NGO industrial complex.” The new US position has drawn criticism from the non-profit sector and others working on economic development goals.

 

Financial Times

Washington Post

The Guardian