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Three Essential Actions to Help Leaders Navigate AI, Compliance Strategy
Decision-makers need to balance day-to-day responsibilities with AI risk and focus on specific business functions
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Business leaders are exploring many opportunities to leverage artificial intelligence (AI) across their organizations. According to a recent EY CEO Outlook Pulse report, over 40% of CEOs prioritize the adoption of AI technologies to improve efficiency and overall business performance and investors agree. Research from an EY Center for Board Matters report on what directors need to know about the 2024 proxy season shows that 29% of investors rank innovation and emerging technologies as a top-three business priority.
While AI is primed to contribute to sustainable growth, its adoption could trigger increased risk related to compliance, data accuracy and transparency, and consumer privacy if leaders do not emphasize governance in the journey to widespread adoption.
This year, leaders in the adoption of AI will seek to understand what compliance looks like in an AI-enabled environment. The most successful use cases will do three things: balance innovation with sound day-to-day oversight, use historical context to help navigate an evolving regulatory landscape and implement functional AI applications that improve productivity in the short and long term.
Balancing Day-to-Day Responsibilities With AI Risk
Navigating a risk environment that is constantly changing while meeting compliance requirements requires a delicate balancing act. This includes the responsibility to not only adhere to regulatory requirements but also to follow internal compliance processes.
Staying on the leading edge of AI and technological innovation is a top-level business priority for many companies, allowing them to improve productivity and streamline operations across the value chain. Successful organizations will capitalize on this opportunity while ensuring their compliance teams are appropriately supported to navigate through potential oversight and governance challenges. The stakes are otherwise simply too high, with risks related to data accuracy, safety and privacy rising for today’s businesses.
In fact, AI-generated misinformation was among the top risks facing the C-suite this year, according to a World Economic Forum survey. Data governance and transparency are critical aspects of combating deepfakes and misinformation and the growing concern about the power of AI to cloak false information underscores the important role of compliance in the development of a long-term AI strategy that is both agile and responsive to commercial priorities.
In this environment, leaders should find ways to mitigate risk while enabling innovation. Whether organizations leverage AI applications to track and manage inventory levels, enhance app development or enable digital assistants, leaders must align on how to aggregate, interpret and action data within each functional business area. It is critical to have tailored discussions to drive the development of solutions that will enhance efficiency over the long term while managing risks. Leaders should assess the process for executing a range of tasks and understand where potential risks might arise to effectively structure a governance strategy that is effective and scalable.
Use the Past as Prologue
The AI regulatory landscape is shifting as new rules are proposed and questions surface across the globe around how to ensure safety, privacy and security. The executive order issued by President Biden in the U.S. in October is one example of a jurisdiction attempting to place a regulatory framework in addressing AI. The executive order establishes parameters around the safe and trustworthy use of AI. As with many early regulations on emerging technologies, current recommendations are broad and the path to implementing compliant policies and systems may not seem completely clear to some.
Slowing innovation with a wait-and-see approach is not the answer. Rather, leaders should empower teams to move forward by looking back. Using the past as a prologue, they should evaluate past experiences associated with managing technological advancements to inform future actions, help leaders combat opaqueness and bring clarity to a path forward. Those that apply the lessons they have learned can be better positioned to stay at the forefront as AI technologies advance. This simple concept can help high-performing organizations bridge innovation and compliance strategies and better manage AI deployment at scale.
Focus on Specific Business Functions
The C-suite is allocating capital at an incredible rate to the physical, digital and talent requirements to underpin AI deployment. Last year, economists estimated that AI-related investment could approach $100 billion in the US by 2025. As a result, many organizations, through different functional priorities, are working on accelerated timelines to enable AI solutions, which can create a lack of harmonization when it comes to compliance strategy across different departments within an organization.
Rather than making sweeping changes, executives will achieve more success with a step-by-step approach that considers available resources, functional needs and tailored solutions. To set the groundwork, start by asking what is realistic to accomplish within the current environment and what improvements will drive growth and bring value to the organization. Let that inform the strategy for AI adoption to meet both commercial goals and compliance-related obligations.
As AI continues to rise in importance on the C-suite agenda, executives also must implement strategies that mitigate related risks. Given that the environment will constantly evolve, taking the steps needed to stay in compliance with internal policies and today’s regulatory environment while keeping an eye on future considerations is foundational to future success. Organizations that are proactive in aligning governance, oversight and innovation to drive growth while meeting compliance requirements will be the ultimate winners in this ever-changing and competitive global business environment.
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