A recent survey by Compliance Week revealed that nearly 70 percent of organizations use AI, but do not have adequate AI governance. This is shocking. But the most alarming part is that these organizations do not perceive that lack of governance as a high risk. This lack of awareness is not just surprising, it could allow real organizational harm since it fosters complacency with insufficient governance measures. In effect, these organizations are adopting a high-risk position without the safeguards to manage those risks and fail to grasp the current and potential threats posed by unregulated AI.
AI has already been linked to significant failures across various industries. Examples include bad actors using deepfake technology compromising cybersecurity by impersonating trusted platforms, biased resume screening in employment decisions, and harmful errors in healthcare applications. Believing that your organization is immune to such risks is not only reckless, but potentially catastrophic.
The Equal Employment Opportunity Commission (EEOC) has already warned employers that they will be held accountable for AI systems used in hiring decisions. Similarly, major insurers such as Humana, Cigna, and UnitedHealthcare are facing class-action lawsuits for allegedly using advanced technology to deny claims, highlighting the legal risks of ungoverned AI.
Governments are increasingly recognizing these risks. Although regulations may not yet be fully established, history shows that delayed regulatory action often catches organizations off guard when they assume no such measures are on the horizon. A recent example is the misuse of off-channel communications by financial institutions, where a lack of self-regulation ultimately led to the U.S. Securities and Exchange Commission and Commodity Futures Trading Commission levying almost $3 billion in penalties on financial institutions.
Moreover, as Kevin Werbach of the Wharton School notes, AI policy under the Trump administration is showing “surprising continuities” with Biden’s approach, suggesting that the current administration will likely continue advancing AI regulation and encouraging self-regulation. Ignoring these signals and failing to prepare for incoming regulations could leave organizations exposed to both operational and legal consequences.
Effective AI governance is not just a regulatory requirement but a critical element in safeguarding organizations against the growing risks posed by unregulated AI systems.
