AI Compliance, Innovation, and Everything In Between: Opportunities and Risks for Global Businesses

Artificial Intelligence (AI) is an interesting conundrum for businesses globally. It has long been accepted that automation is the future. The better an organization adapts to this eventuality, the better it can equip itself with the resources and knowledge necessary to thrive in such a future.

However, businesses have also struggled with handling this technology responsibly.

Biased outputs, misinformation, model hallucinations, and user data privacy violations are just some of the issues that most widely used AI models have been found guilty of.

If not appropriately addressed, these issues will only coagulate over time and become harder to deal with. Governments around the world have begun enacting regulations to mitigate some of these issues.

The European Union's AI Act is a landmark regulation that's already being lauded as the most comprehensive piece of AI-related legislation in the world. This is not all that dissimilar to when the General Data Protection Regulation (GDPR) came into force in 2018. Back then, businesses globally understood that it represented a watershed moment and that other countries and jurisdictions would inevitably follow a similar route. And they did.

Today, almost every country in the world either has a data protection law in effect or is in an advanced legislative process towards drafting such a regulation.

Hence, AI regulations are here to stay. In the coming years, they will expand, with each country developing its own set of laws on how businesses operating in their jurisdictions or using their citizens' data must manage their use of AI technologies.

Compliance with these regulations, while a major challenge, will only be one of the challenges posed in such a future. Other challenges include dealing with numerous regulations that may differ wildly from one another across jurisdictions, managing resources in the face of obligations placed by these regulations, how best to develop internal controls to ensure timely compliance, and so on.

Upon mild observation, it becomes apparent that absolute compliance with AI-related regulations will require efficient and effective resource use. To do so, businesses must develop a proactive understanding of what the future of the AI regulatory landscape might look like, both domestically and internationally.

The Current State of AI Regulations

The EU has adopted a similar approach to AI regulations as it did to data privacy. Curiously, the US has also adopted a similar approach to data privacy: instead of a federal regulation, there is a patchwork of departmental and state-level regulations and guidelines.

This approach has its own pros and cons. The most important aspect is that it allows the states and departments to tailor these regulations and guidelines based on their unique needs and values. Some states may adopt a relatively laissez-faire approach, while others may extensively police acceptable business practices. However, this comes at the cost of uniformity, which may inhibit innovation or the availability of such innovation across the board since what may be perfectly legal in one state can be explicitly banned in another.

A perfect example of this is facial recognition technology. Both Illinois and Texas have laws regulating the use of facial recognition. However, Illinois's Biometric Information Privacy Act (BIPA) expressly prohibits the collection, storage, or use of any data collected through facial recognition without explicit consent from the individual. On the other hand, Texas' Capture or Use of Biometric Identifier Act (CUBI) only prohibits the use of such data for "commercial purposes" without the need for individual consent by businesses using them for internal use.

Such disparity in technology legality can often lead to businesses adopting a more cautious approach to developing and deploying AI technologies. While this would heighten their chances of compliance with the patchwork of regulations and guidelines, it would stymie extensive innovation, as the two cannot go hand in hand.

Apart from the US, the rest of the world is more likely to lean towards the EU's approach to AI regulations. A central regulation allows businesses and citizens to better understand their obligations and rights. Clearer and less ambiguous requirements are more likely to be met and considered when developing new AI-related products and services.

Additionally, it enables businesses to be more dynamic in their compliance efforts as they can adapt more efficiently to any changes or amendments, thus ensuring that they can mitigate risks associated with non-compliance more effectively.

Risks Of Uncertain Regulatory Environment

One school of thought would argue that despite the operational challenges of increasing AI regulations, the lack of such regulations would be a far more volatile and unpredictable alternative.

The absence of AI regulations would make the internet more akin to the Wild West. While those with a more libertarian attitude may consider this the perfect scenario for businesses, it is important to note that businesses do not operate in a vacuum. Regardless of how innovative or revolutionary a business's product or service may be, it relies entirely on customers' trust to be viable in the long term.

It has been well-documented that businesses continue to grapple with how best to leverage AI technology responsibly. Several incidents have highlighted this, leading users to question whether blind trust in businesses' ability to use this technology responsibly can really be relied upon.

Furthermore, without a clear regulatory framework, the likelihood of such catastrophic incidents would only increase. Public outcry and backlash would be quite severe, with the loss of public trust being the least of worries for businesses. Like a set of dominoes, an unfortunate incident in one jurisdiction would have a crippling effect on the business operations globally.

All of the above is just a glimpse of what a world without AI regulations would potentially look like.

Opportunity…?

At the same time, it is important to acknowledge that regulations have traditionally represented a hurdle for businesses globally. From an operational point of view, they force organizations to restructure and reevaluate several of their business practices while placing additional strain on their resources to ensure compliance. Inability to do so leads to monetary fines and reputational damage, which in turn damages their standing with customers, leading to a loss in customer trust, and so on. In short, comply or wither.

While AI regulations will bring a similar set of challenges, they also bring significant opportunities. Businesses that adopt a proactive approach in implementing responsible AI measures, such as using only ethically sourced datasets, making explainable AI (XAI) resources available online, and taking public feedback into the loop when making AI-related decisions, can use these measures to raise customers' trust and ultimately win their loyalty while also fulfilling their responsibilities related to transparency and ethical considerations.

Secondly, as discussed earlier, different jurisdictions with different regulations may place different obligations upon organizations. Organizations can prioritize their development processes accordingly. If a business is working on an innovative AI-related product or service, it can evaluate which jurisdictions it can proffer the product or service in. This would reduce the time and resources spent on ensuring all such products or services are regulatory-compliant for the most promising markets. Efforts to ensure wider compliance can follow later, but the more urgent resources required for compliance can be spent on markets offering a better value proposition.

Finally, AI regulations can ensure a safer and more predictable market leading to investors feeling both secure and confident in funding research and development ventures with a clear understanding of the established frameworks in place to protect their investments. The absence of regulatory oversight would dilute any such confidence.

What The Future Holds

As far as the future of AI regulations is concerned, the global data privacy regulatory trajectory provides the most reliable precedent of what may likely follow. The EU's AI Act will act as the blueprint for several nations around the world as they draft comprehensive and detailed frameworks, guidelines, and regulations for businesses leveraging AI-related technologies within their jurisdictions.

Other critical factors, such as technological advancements, geopolitical developments, and societal dynamics, may also dictate global regulatory norms. Ironically, depending on when or whether AI models are deemed efficient enough to be included in the decision-making loop, AI models may become part of the process involved in developing future governance models.

Furthermore, public participation may also spike as users become more informed and aware of the implications of these regulations on their internet use and overall digital experience. This will lead to a more democratic approach to AI regulation, ensuring that AI's social and ethical implications are taken into account just as much as the economic and innovation agendas.

How Securiti Can Help

Securiti is the pioneer of the Data Command Center, a centralized platform that enables the safe use of data+AI. It provides unified data intelligence, controls, and orchestration across hybrid multicloud environments. Some of the most reputable global enterprises rely on Securiti's Data Command Center for data security, privacy, governance, and compliance.

This is because the Data Command Center comes equipped with several individual modules and solutions that have been intricately designed to ensure your organization's compliance with any and all major obligations it may be subject to under various data privacy and AI-related regulations from across the world.

More specifically, the AI Security & Governance functionality allows organizations to discover and catalog all AI models in use across public and private clouds and SaaS applications.

Additionally, these models can be assessed for various risks, such as toxicity, bias, copyright infringement, and misinformation, to ensure they are classified and dealt with per global regulatory requirements.

Request a demo today and learn more about how Securiti can help you ensure compliance with some of the major AI-related regulations in the US and worldwide.