ISO/IEC 42001 is an international standard for Artificial Intelligence Management Systems (AIMS). It applies to organisations that develop, deploy or use AI and provides a framework for governance, risk management, accountability and oversight. For AFS licensees using AI, ISO/IEC 42001 is not mandatory but can support ASIC’s expectations around governance, controls and responsible AI use.
Expanded Answer
ISO/IEC 42001 is the first internationally recognised management system standard specifically designed for artificial intelligence. Published by the International Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC), it establishes a structured framework for governing AI throughout its lifecycle. The standard focuses on accountability, transparency, risk management, human oversight, monitoring and continuous improvement.
For financial services businesses, ISO/IEC 42001 provides a practical governance model for managing AI-related risks. It helps organisations identify AI use cases, assess potential harms, allocate responsibilities, implement controls and monitor performance. The framework aligns with broader governance principles that regulators such as ASIC increasingly emphasise when firms adopt emerging technologies.
Key elements:
- Risk-based AI governance.
- Defined accountability and oversight.
- Human review and intervention controls.
- Monitoring, testing and continuous improvement.
- Documentation and auditability requirements.
ISO/IEC 42001 does not replace financial services regulation or compliance obligations. Instead, it provides a governance structure that can help AFS licensees demonstrate that AI systems are being managed in a controlled, transparent and accountable manner. For additional guidance, see Guide for advisers and licensees: navigating AI in financial services and The hidden risks of AI: ASIC’s review of licensees’ embrace of artificial intelligence.
Why it matters
As AI adoption increases, regulators expect stronger governance and clearer accountability. ISO/IEC 42001 provides a recognised framework for managing AI risks and demonstrating that controls, oversight and decision-making processes are operating effectively.
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Practical guidance
- Assess whether existing governance frameworks adequately cover AI-related risks and controls.
- Map AI use cases and assign accountable owners for oversight and monitoring.
- Document policies, testing procedures and review processes consistent with AI governance principles.
Further reading
Guide for advisers and licensees: navigating AI in financial services
The hidden risks of AI: ASIC’s review of licensees’ embrace of artificial intelligence