Mani Padisetti, co-founder and COO of Digital Armorexplores the wonders of technology through ideas.
In today’s ever-changing technology landscape, many companies are relying on powerful AI tools like Azure OpenAI Service and Microsoft 365 Copilot to drive innovation and efficiency. However, a common question that arises when discussing the importance of AI governance is: “Why do we need AI governance if we are using third-party tools?”
It’s understandable that businesses may assume that third-party tools have built-in safeguards, but the responsibility for ethical and effective use of AI ultimately lies with the business itself. Here’s why AI governance is crucial, whether your AI solutions are built in-house or purchased from external vendors.
1. Responsibility and liability
When you deploy AI within your organization, you are responsible for its outcomes. This is true whether you developed the AI solution in-house or use a third-party tool. Governance frameworks ensure a clear line of accountability, helping to mitigate risks and manage negative impacts that could arise from the use of AI.
Governance frameworks are structured approaches to ensure that AI is used responsibly within an organization. For example, a company can develop a governance framework by defining the roles and responsibilities of different departments to oversee AI operations, such as an AI ethics committee or a specific governance committee.
To implement this approach, companies can start by conducting an AI audit to assess current practices, then establish clear policies and procedures that define accountability for AI decision-making processes and outcomes.
2. Personalization and control
Third-party AI tools are often designed to be flexible and customizable to fit different business needs. However, without proper governance, these customizations can lead to unintended consequences. Establishing a governance framework allows you to control and monitor how these tools are adapted and implemented, ensuring they are consistent with your ethical standards and business objectives.
3. Data confidentiality and security
Using third-party AI tools involves sharing your business data, which can raise significant privacy and security concerns. AI governance helps establish data handling protocols, ensuring that your sensitive information is protected. This includes defining data access, storage, and sharing policies, as well as ensuring compliance with applicable regulations.
4. Prejudice and fairness
AI systems, including those provided by third-party vendors, are not immune to bias. Without proper oversight, bias can perpetuate unfair practices and decisions within your organization. Governance frameworks should include mechanisms to regularly audit AI systems for bias and take corrective action, thereby promoting fairness and justice.
5. Compliance with regulations
The regulatory landscape for AI is evolving, with new laws and guidelines being introduced globally. AI governance ensures that your use of third-party AI tools complies with these regulations, helping you avoid legal repercussions and safeguard your reputation. This includes upholding standards for transparency, accountability, and ethical use of AI.
6. Ethical considerations
Beyond legal compliance, businesses must consider ethical considerations when using AI. Governance frameworks help you define and uphold ethical standards, ensuring your AI implementations reflect your organization’s values. This fosters trust among your stakeholders, including customers, employees, and partners.
7. Continuous improvement and risk management
AI governance is not a one-time effort, but an ongoing process. It involves continuous monitoring and evaluation of AI systems to identify and mitigate risks. This proactive approach allows you to adapt to new challenges and opportunities, ensuring that your AI tools remain effective and beneficial.
While third-party AI tools can offer incredible capabilities, your organization is responsible for their ethical and effective use. Implementing a strong AI governance framework is essential to managing this responsibility, ensuring your AI initiatives are accountable, fair, and aligned with your business goals. In doing so, you can harness the full potential of AI while maintaining the integrity and success of your organization.
Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs, and technology leaders. Am I eligible?
