The international nature of both the Barclays Bank Group’s business and its IT infrastructure also means that data and personal information
may be available in countries other than those from where the information originated. Accordingly, the Barclays Bank Group must ensure
that its collection, use, transfer and storage of data, including personal information complies with all applicable laws and regulations in all
relevant jurisdictions, which could: (i) increase the Barclays Bank Group’s compliance and operating costs; (ii) impact the development of
new products or services, or the offering of existing products or services; (iii) affect how products and services are offered to clients and
customers; (iv) demand significant oversight by the Barclays Bank Group’s management; and (v) require the Barclays Bank Group to review
some elements of the structure of its businesses, operations and systems in less efficient ways.
Data, including personal information, is subject to external as well as internal (whether intentional or accidental) security risks. Concerns
regarding the effectiveness of the Barclays Bank Group’s measures to safeguard data, including personal information, or even the
perception that those measures are inadequate, could expose the Barclays Bank Group to the risk of loss or unavailability of data or data
integrity issues and/or cause the Barclays Bank Group to lose existing or potential clients and customers, and thereby reduce the Barclays
Bank Group’s revenues. Furthermore, any failure or perceived failure by the Barclays Bank Group to comply with applicable privacy or data
protection laws and regulations may subject it to potential contractual liability, claims, litigation, regulatory or other government action
(including significant regulatory fines) and require changes to certain operations or practices which could also inhibit the Barclays Bank
Group’s development or marketing of certain products or services, or increase the costs of offering them to customers. Any of these events
could damage the Barclays Bank Group’s reputation, subject the Barclays Bank Group to material fines or other monetary penalties, make
the Barclays Bank Group liable for the payment of compensatory damages, divert management's time and attention, lead to enhanced
regulatory oversight and otherwise materially adversely affect its business, results of operations, financial condition and prospects.
In addition, increased adoption of AI technologies, which rely on the collection of large amounts of data, including personal information,
and use of such data for training purposes, has led legislators in numerous jurisdictions to propose and adopt new laws addressing AI-
related usage of personal information and data protection authorities around the world to adopt new and evolving interpretations of
existing data protection laws in light of such technology, in both cases, imposing specific obligations with respect to the processing of
personal information, including required notices, consents and opt-outs. These obligations may be burdensome and costly to comply with
and may affect the ways in which the Barclays Bank Group can collect, process, or use personal information for AI technologies, thus
negatively impacting the Barclays Bank Group’s business. Further, there is increased risk of inadvertent disclosure of confidential
information or personal information in connection with the utilisation of AI technologies, whether through AI model errors, data breaches,
or other vulnerabilities, which may also result in stronger regulatory scrutiny, leading to legal and regulatory investigations and enforcement
actions that could negatively impact the Barclays Bank Group’s business, even if unfounded.
For further details on data protection regulation applicable to the Barclays Bank Group, refer to the supervision and regulation section.
f) Algorithmic trading
In some areas of the investment banking business, trading algorithms are used to price and risk manage client and principal transactions.
An algorithmic error or hallucination could result in erroneous or duplicated transactions, a system outage, or impact the Barclays Bank
Group’s pricing abilities, which could have a material adverse effect on the Barclays Bank Group’s business, results of operations, financial
condition, prospects and reputation.
g) Processing errors
The Barclays Bank Group’s businesses are highly dependent on its ability to process and monitor, on a daily basis, a very large number of
transactions, many of which are highly complex and occur at high volumes and frequencies, across numerous and diverse markets in many
currencies. Given Barclays Bank Group’s diverse customer base and geographical reach and the increase in volume, speed, frequency and
complexity of transactions, especially electronic transactions (as well as the requirements to report such transactions on a real-time basis to
clients, regulators and exchanges), developing, maintaining and upgrading operational systems and infrastructure becomes more
challenging. The risk of systems or human error, including errors produced through the integration of AI technologies, in connection with
such transactions increases with these developments, as well as the potential consequences of such errors due to the speed and volume of
transactions involved and the potential difficulty associated with discovering errors quickly enough to limit the resulting consequences. As
the Barclays Bank Group works to implement AI technologies into the Barclays Bank Group’s product and service offerings, these challenges
may become more significant, as AI technologies give rise to risk of bias, errors and hallucinations which may impact the Barclays Bank
Group’s ability to accurately execute, track or report transactions. There can be no assurances that AI usage will enhance the Barclays Bank
Group’s product or services offerings, and any such errors or inaccuracies resulting from AI usage could result in competitive or reputational
harm or increased legal liability. Furthermore, events that are wholly or partially beyond the Barclays Bank Group’s control, such as a spike
in transaction volume, could adversely affect the Barclays Bank Group’s ability to process transactions or provide banking and payment
services.
Processing errors could result in the Barclays Bank Group, among other things: (i) failing to provide information, services and liquidity to
clients and counterparties in a timely manner; (ii) failing to settle and/or confirm transactions; (iii) causing funds transfers, capital markets
trades and/or other transactions to be executed erroneously, illegally or with unintended consequences; and (iv) adversely affecting
financial, trading or currency markets. Any of these events could materially disadvantage the Barclays Bank Group’s customers, clients and
counterparties (including them suffering financial loss) and/or result in a loss of confidence in the Barclays Bank Group which, in turn, could
have a material adverse effect on the Barclays Bank Group’s business, results of operations, financial condition and prospects. Any of these
events could also lead to breaches of laws, rules or regulations and, hence, regulatory enforcement actions, which could result in significant
financial loss, imposition of additional capital requirements, enhanced regulatory supervision and reputational damage.
h) Supplier exposure
The Barclays Bank Group depends on suppliers for the provision of many of its services and the development of technology, including AI
technology. Whilst the Barclays Bank Group depends on suppliers, it remains fully accountable to its customers and clients for risks arising
from the actions of suppliers and may not be able to recover from its suppliers any amounts paid to customers and clients for losses
suffered by them. The dependency on suppliers and sub-contracting of outsourced services introduces concentration risk where the failure
of specific suppliers could have an impact on the Barclays Bank Group’s ability to continue to provide material services to its customers. In
addition, the use of third party AI technologies may also expose the Barclays Bank Group to third party infringement or misappropriation
claims, as well as privacy and data protection related claims, as it can be very difficult, if not impossible, to validate the processes used by
