AI governance in Bermuda: a moment of regulatory inflection

The Bermuda Monetary Authority’s (BMA) recent discussion paper on the responsible use of artificial intelligence in the financial services sector is both timely and necessary. In an environment where AI technologies are rapidly advancing, and their applications becoming more embedded in core financial operations, the paper offers a considered starting point for a risk and governance framework on how Bermuda might regulate the space without stifling innovation.

The challenge for jurisdictions like Bermuda is not just to respond to technological change, but to do so in a way that aligns with the unique character of our market - one that is internationally focused, heavily institutional, and reliant on strong regulatory credibility.

Aligning innovation with accountability

The BMA's risk and governance framework proposal for a proportionate approach to AI risk governance reflects a maturing understanding of the technology, supporting risk-based oversight. AI spans from narrow automation tools to generative and agentic systems capable of highly autonomous behavior. A blanket regulatory response would likely fall short.

Instead, the discussion paper proposes a risk and governance framework that is outcomes-based with principles-driven approach which is anchored in board accountability. This last point is particularly important. When technology becomes opaque, complex, and potentially autonomous, clarity on responsibility matters more than ever. Senior leadership cannot delegate accountability simply because AI is ‘technical.’

Observations from a Bermuda context

Since moving to Bermuda in 2017, I’ve worked across multiple roles and sectors. One recurring theme is the balance between robust regulation and enabling innovation. Bermuda has historically managed that balance well, both on the well-established insurance sector and on the digital assets space.

But AI introduces new complexity. Many firms are now deploying tools they do not fully control, often developed by third-party vendors or underpinned by machine learning models that evolve with minimal human input. The BMA’s proposed risk framework focuses on a few key pillars, e.g. governance and oversight, risk assessment, model validation, transparency and disclosure, aiming to establish a forward-thinking, principles-based regulatory framework that supports innovation while ensuring financial stability, customer protection, and systemic integrity.

It’s also encouraging to see proportionality featured so prominently. Smaller firms, or those in early stages of AI integration, need space to build their maturity without being overwhelmed by controls designed for global institutions. The risk and governance framework recognises this and provides flexibility - something many other jurisdictions are still grappling with.

Where we go next

The BMA’s proposed risk and governance framework isn’t regulation yet. It’s an open invitation to engage in shaping Bermuda’s response to one of the defining technologies of our time. That engagement is essential - not only to make the framework practical, but to ensure it reflects the reality of how financial services operate in and from Bermuda.

As risk professionals, we need to think beyond compliance. This is about ethics, fairness, transparency and trust. AI doesn’t just automate, it can reinforce systemic biases, introduce new risks, and challenge traditional notions of control. Governance isn’t just a regulatory requirement; it’s a precondition for responsible use.

The BMA has set out a strong starting point. Now, the onus is on all of us - boards, executives, risk leads and developers - to consider what good risk governance looks like in practice, and how we embed it in systems that are changing faster than most of us expected.