How does the principle of transparency address the black box issue in AI systems according to the chapter?

The principle of transparency addresses the black box issue in AI systems by ensuring that the workings of AI are clear and understandable to users and regulators. This transparency allows stakeholders to comprehend how decisions are made, thereby enhancing trust and accountability in AI-driven processes.

Transparency in AI systems is crucial for addressing the black box issue, as it requires that the decision-making processes of AI be explained to users and regulators. By making these processes understandable, stakeholders can appreciate how specific decisions are reached, which fosters compliance and trust. Furthermore, transparency is linked to accountability, as it enables financial institutions to trace decisions back to the AI system and hold the appropriate parties responsible for any issues that may arise.