Mitigating AI Hallucinations in ESG-Driven Credit Risk Advisory-Human–AI Co-Governance in the Enterprise Metaverse

The chapter explores how financial institutions can mitigate AI hallucinations while delivering ESG-driven credit risk advisory within the enterprise metaverse. It argues that hallucinations in generative and predictive models threaten responsible lending, regulatory alignment, and sustainable value creation when unchecked in immersive, real-time advisory environments. Framed around a widening talent gap, the chapter positions human–AI co-governance as essential, requiring advisors who blend financial acumen, ESG expertise, and AI literacy. It proposes an adaptive framework built on strategic upskilling, cultural transformation that normalizes challenging AI outputs, and targeted recruitment and partnerships. Within metaverse-based advisory channels, this framework embeds explainability, stress-testing, and escalation protocols so that human experts can detect, interpret, and constrain hallucinations, enabling trustworthy, ESG-aligned credit decisions in next-generation financial ecosystems.