From forecasting and budgeting to credit risk assessments, AI is quickly becoming an effective tool for data-driven planning, with 83 percent of businesses agreeing that its adoption is important, according to a 2023 Paro Future of Finance Survey. However, 42 percent of businesses have not yet adopted AI, with a majority of businesses citing the loss of human judgment as a key concern.
For businesses that hope to maximize value from their AI, how can finance professionals in particular inject human expertise into the process to ensure greater accuracy and ethics?
3 Ways Finance Professionals Can Inject Human Judgment In AI
AI provides data-driven recommendations, but it can lack a level of real-world context. Professionals contribute three key elements that AI alone cannot replicate:
Domain Knowledge
Finance experts have a depth of knowledge beyond what the numbers and algorithms capture. Contextual understanding is fundamental in finance. Recognizing the wider implications of economic events or grasping the subtleties of market shifts can significantly shape financial strategies.
Domain-specific insight plays a key role in advancing AI models. By integrating human domain expertise, AI systems can deliver more accurate and contextually relevant projections.
Intuition
Implicit knowledge, developed over years of hands-on experience, guides the most effective financial decisions. This understanding can make the difference between a winning and losing strategy.
AI models provide robust analytical capabilities but can falter when faced with unprecedented events like the COVID-19 pandemic. With the limitations of historical data, human intuition becomes even more crucial. In these situations, the implicit knowledge of financial experts shines, unlocking insights beyond what data alone offers. Their seasoned judgment contextualizes unusual scenarios, steering decisions amid turbulence.
Ethics & Corporate Values
While AI delivers valuable projections and recommendations, humans hold final responsibility and accountability. Human judgment is critical to line up data-driven decisions with ethical norms and corporate values. Implementing AI recommendations without critical review can disrupt these values. Therefore, finance experts must control the final strategy, evaluating AI outputs against their judgment.
The Power of Human Expertise: An Example
As AI integrates deeper into finance, human interpretation grows even more critical. Beyond data, human strengths like reasoning and contextual understanding prove vital when assessing AI outputs. They ground decisions in business realities and nuances.
Consider a hypothetical scenario with a multinational corporation. After processing market data, the AI model suggests investments in major emerging markets given recent growth trends. However, the experienced CFO recalls past volatile cycles and geopolitical tensions that the AI may not capture. Using their seasoned judgment, the CFO suggests diversifying investments, allocating only a small portion to emerging markets.
Months later, sudden political upheaval rocks a major emerging market. But thanks to the CFO’s balanced asset allocation, the company’s portfolio persists largely unscathed. This showcases the merits of human judgment and expertise when translating and acting upon AI predictions in light of real-world conditions.
Using AI Is an Iterative Process
Businesses should establish regular feedback loops between AI models and finance teams. Working with AI requires continuous refinement of models, and that continuous human guidance keeps algorithms aligned with shifting business dynamics over time.
As illustrated in the example above, human-AI partnership ensures data-driven insights are validated against real world conditions before actions are taken. Together, AI provides the quantitative projections while human specialists contextualize these findings with qualitative perspectives.
Balance AI Insights With Elite Professional Expertise
Organizations must invest as much in cultivating human expertise as procuring AI tools. With seasoned professionals guiding decisions, businesses can strategically leverage predictive insights from AI while retaining the irreplaceable value of human judgment.
Ensure your business has the human capital it needs to bring greater context to AI solutions. Paro matches businesses with elite fractional talent, including financial analysts and CFOs, who can bring the right experience to your finance team. Schedule a free consultation to learn more about how we can help your business achieve its goals.
Kody Myers, Senior Director of Product at Paro, brings a decade of product management experience fueled by a passion for AI-driven solutions. Kody thrives in the ambiguous environment of early-stage, high-growth startups, developing long-term product and data strategies. His entrepreneurial and financial background, coupled with the analytical rigor developed during his time in market research, positions him at the forefront of AI product innovation in finance.
