Barbara Bennett, JD AIGP
Frost Brown & Todd LLP
Guest Columnist

At some level, every tech-forward entrepreneur, venture portfolio manager and alternative-assets investor knows that -- from "Day One" - governance of artificial intelligence is a high priority, no matter the stage of development of their organization.

The good news is that AI governance programs are highly scalable and can be low-risk, high-return investments when tailored to a company's immediate size and resources, then later revised in-line with business growth.

No matter how new your business or how rosy your financials, you can start your governance process in three steps, with one caveat:

1. Map the technology - make and continually update a complete list of all your AI models or systems developed and-or deployed by your company. Add as many details as possible concerning, e.g., data provenance, technical specifications, testing for accuracy and bias, and targeted-use cases.

2. Identify the risks - make another list of all the potential "imaginary horribles" that could harm users or the business, such as intellectual property ownership issues, privacy or security breaches, and output error or bias.

3. Manage the risks - decide at a high level how to manage each identified risk, and document your decisions and the process. Policies and procedures, training, testing, notices and disclaimers, insurance coverage, and privacy-enhancing technologies are among the many risk-management tools available.

Caveat: The premium on procrastination can be high. Pausing for just a moment to take stock of risks and determining how to manage them from the beginning is the fastest way to succeed with AI.

When threats arise, having AI governance at even a rudimentary level can provide essential documentation of focused and sustained attention by founders, management and directors with respect to risks associated with intellectual property, privacy, discrimination, data security, systems malfunctions and other matters.

Meanwhile, Forbes Advisor recently projected AI market size growing to $407BN by 2027, with AI likely to contribute 21% net increase in U.S. GDP by 2030, among other calculations.

Each day, the imperative of AI governance is reinforced by news of challenges and-or business opportunities.

For example, last month Tennessee's ELVIS Act (Ensuring Likeness Voice and Image Security) went intoeffect, fortifying protection of Tennesseans working in our crucial Music and Entertainment sector.

And, in March, Tennessee's General Assembly and Gov. Bill Lee amended Tennessee law to require state-supported universities to join in creating policy regarding use of AI by students, faculty and staff for instruction-related purposes.

Nationally, in the past two months the Federal Trade Commission (FTC) has issued orders, statements and other communiques related to surveillance pricing techniques, competition among AI models and AI products, harmful effects of AI, and more. Recent FTC enforcements against numerous businesses using AI have targeted the lack of a governance or risk management programs as key to the agency's imposing corrective action and fines.

Also with growing momentum, the FTC, the Securities & Exchange Commission and the U.S. Department of Justice are pursuing "AI washing" by companies and their advisors and others that hype investments.

Whether you're girding to pursue opportunity or building documentation as a contingency against turbulence, it's time for concerted action on governance. ✦

VNC Guest Columnist BARBARA BENNETT JD AIGR is Partner, Frost Brown & Todd LLP in Nashville. FBT AI. LinkedIn Profile here.-Editor

12 August 2024 1515