The conversation around regulating artificial intelligence (AI) technology is gaining momentum worldwide. Countries such as the United States, the United Kingdom, the European Union, and Canada are at the forefront of establishing guidelines that aim to balance the benefits of AI with the need for safety, privacy, and ethical considerations. This intricate dance between innovation and regulation presents a unique challenge for third-party risk managers and cybersecurity professionals. They are tasked with navigating a diverse landscape of regulations to ensure both the responsible development of AI technologies and the realization of efficiency gains.
The European Union’s Trailblazing Legislation
The European Union has consistently been a pioneer in the regulatory space, a trend that continues with the passage of the EU Artificial Intelligence Act. Following its tradition of setting precedents with regulations like the General Data Protection Regulation (GDPR), the EU AI Act represents the first comprehensive legislation aimed at regulating generative AI and future developments within the field. Introduced in 2021, the Act takes a risk-based approach to regulation, categorizing AI systems according to the level of risk they pose, from unacceptable to minimal. This approach seeks to address the potential risks associated with AI applications, impose strict requirements on high-risk AI systems, and ensure a governance structure at both European and national levels.
Implications for Third-Party Risk Management
The implications of the EU’s AI Act for third-party risk management are significant. Companies within the EU, as well as those engaging with EU-based organizations, will need to align with these regulations closely. This will require a thorough evaluation of how AI is utilized by vendors and suppliers, alongside an integration of AI Act compliance within GDPR-compliant processes.
The United States’ Approach to AI Governance
Although the United States has yet to enact official AI regulations, there has been substantial guidance from political figures and standards bodies. This includes the National Institute of Standards and Technology’s AI Risk Management Framework, President Biden’s Executive Order on AI, and Senator Chuck Schumer’s SAFE Innovation Framework. These initiatives emphasize responsible AI development and provide a framework for addressing the risks associated with AI technologies.
Navigating AI Regulations in the United Kingdom
In the UK, efforts to regulate AI are underway with Lord Holmes of Richmond’s introduction of an AI Regulation Bill in the House of Lords. This bill focuses on creating an AI Authority, defining regulatory principles, and establishing regulatory sandboxes, among other measures. It emphasizes transparency, accountability, and the inclusive design of AI systems, highlighting the need for responsible officers within companies to oversee AI applications.
Canada’s Artificial Intelligence and Data Act
Canada’s approach, encapsulated in the Artificial Intelligence and Data Act (AIDA), aims to establish consistency in AI regulations across the country. AIDA focuses on human oversight, transparency, fairness, safety, accountability, and the validity and robustness of AI systems. This Act underscores the need for organizations to adopt comprehensive measures to monitor AI usage and ensure compliance with emerging regulations.
Looking Ahead
As governments worldwide deliberate on the best ways to regulate AI, it is clear that the focus will likely be on addressing privacy, security, and environmental, social, and governance (ESG) concerns. The upcoming months are expected to bring more clarity on how organizations globally will need to adjust their third-party risk management strategies in response to AI technology. For third-party risk managers, adopting a cautious approach to AI integration and maintaining open lines of communication with vendors and suppliers are prudent steps toward ensuring compliance and fostering responsible AI development.
The regulatory landscape for AI is complex and evolving. Organizations and their risk management professionals must stay informed and adaptable to navigate this terrain successfully. As AI continues to integrate into various facets of operations, the regulatory frameworks established by the EU, the US, the UK, and Canada will serve as benchmarks for responsible and ethical AI development, guiding companies toward a future where innovation and safety coexist harmoniously.
