Why is human oversight critical when GenAI is used to conduct ratio analysis?

Question

BlackTom AI · Accepted Answer

When considering why human oversight is critical for GenAI in ratio analysis, several possibilities must be weighed.
Option A: 'Human oversight is mainly needed to unlock advanced accounting features in the model' This is not the core reason; oversight is about accuracy, relevance, and applicability of results, not merely enabling features. It frames oversight as a gating function rather than a quality control practice.
Option B: 'Because while GenAI always does the calculations correctly, human oversight is needed to ensure the results are more persuasive' The premise that GenAI always calculates correctly is inaccurate. Models can produce correct results in some cases and flawed ones in others due to data, context, or formula misuse. Persuasion is not the primary goal of oversight; correctness and appropriateness matter more.
Option C: 'GenAI may apply a technically correct formula that is not appropriate for the specific analytical context' This captures a central risk: a formula or method might be mathematically sound but unsuitable for the particular ratio, denominator, or business context, leading to misleading conclusions. Oversight helps validate relevance and appropriateness.
Option D: 'Because GenAI refuses to calculate ratios unless the exact formula is supplied' This is inaccurate; GenAI can generate calculations or suggest formulas, but the assertion that it refuses to proceed without an exact formula is not a reliable characteristic of GenAI behavior and misses the broader need for evaluation of applicability and interpretation.
In summary, the most critical concern is that the model can produce results using a correct-looking method that nevertheless fits poorly with the real-world context, so human review is essential to confirm suitability and interpretability of ratio analyses.

Why is human oversight critical when GenAI is used to conduct ratio analysis?

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