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Finding Clarity in AI Regulations

13 May 2024 Riskonet

A Risk Management Perspective

The AI revolution has kicked off an era of unprecedented technological innovation with the market value of Artificial Intelligence projected to reach $407 billion by 2027. As this technology develops at a rapid rate, regulators and policymakers have been battling to keep up. The threats posed by AI extend from national security and data privacy to the reinforcement of existing inequalities through bias, emphasising the need for oversight.

Currently, the global AI regulatory landscape is characterised by a mix of frameworks dependent on regions and organisations with no overarching structure on a global scale to consolidate these approaches. This jumble of laws and regulations attempting to tame the beast can leave businesses scrambling to develop regulatory frameworks and guidelines in their organisations. The key to developing these policies is to keep a finger on the pulse when it comes to regulatory updates and tailor specific frameworks to your organisation’s needs.

The complexities of the regulatory landscape might make businesses shy away from AI adoption altogether – a grave mistake considering that the future of operations lies in AI integration across the organisational structure. AI integration can help businesses streamline operations, automating mundane tasks to free up employees’ time for more complex tasks and innovation. It’s an essential tool in wrangling complex data sets and utilising them to make better-informed decisions.

AI encompasses various applications, from transactional and documentation analytics to operational processes like self-driving cars and traffic safety systems. Operational AI, such as surveillance cameras linked to social scoring systems in China or high-tech drones used for crime prevention in the Western Cape, offers efficiency but raises concerns about privacy and misuse. Additionally, AI aids in agriculture, enhancing productivity and resource efficiency. However, while transactional AI offers benefits across sectors, concerns about privacy regulations, especially regarding data gathering through mobility, persist. Balancing the benefits of AI with ethical considerations remains crucial for its widespread adoption and societal impact.

In the realm of business, artificial intelligence (AI) holds immense promise for enhancing efficiency and driving innovation. However, its adoption introduces a spectrum of ethical and practical risks that businesses must navigate carefully. These risks include the amplification of biases present in data, potential socio-economic impacts stemming from job displacement, concerns about privacy violations, vulnerabilities leading to legal liabilities, security threats and manipulation, challenges in establishing accountability for AI-driven decisions, and the impact on customer trust.

While the US and China are dominating the market in terms of development and innovation, they are lagging when it comes to policy frameworks, with legislation primarily placing the onus on companies in the field to take charge of ethics. One of the most significant pieces of legislation of late is the recently passed EU AI Act, which takes a risk-based, human rights-centred approach to AI, encouraging innovation in the field and enhancing governmental oversight in development. Another pertinent policy in the works is the African Union Development Agency’s roadmap for AI development on the continent. The document views AI and policy development through an economic lens, focusing on data governance, partnerships, and skills development. It’s a promising step for Africa’s AI governance framework, although it lacks regional nuance.

Currently, South Africa has no laws to address AI, although existing laws may cover various ethical concerns when it comes to data privacy and IP infringement. So where does that leave organisations developing policies and guidelines on AI use? Businesses must develop tailor-made solutions and guidelines, considering all aspects of their operations. Risk managers need to develop a strong understanding of the key policies and regulations globally, ensuring that all operations across the supply chain comply with these region-specific guidelines. Internally, risk managers need to conduct a thorough analysis of where AI will be deployed and the ethical implications of its deployment, considering risks like data privacy and algorithmic bias. Continuous training and education about AI ethics for all stakeholders can ensure more informed and responsible use of this transformative technology is also a must.

Currently, AI regulations and policies are shifting and developing as quickly as the technology itself. This should be a key focus area in risk management strategies moving forward, with ethical practices and integrity at the forefront of strategic thinking. The ethical landscape it presents is complex and fraught with challenges. By proactively addressing these ethical concerns, businesses can harness the benefits of AI while ensuring its use remains both responsible and beneficial to society.

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