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Understanding How to Identify and Manage Big Risks with AI

Ranganathan Rajkumar

February 10, 2022

There is no question that the future of artificial intelligence and AI technology is bright. However, many organizations are just beginning to mitigate the potential risks of AI and outline a solid framework to deal with those risks.

Artificial intelligence brings about the opportunity for ethical operation issues, and it’s not overlooked that companies could potentially create a bias through the use of AI. For example, both the EU and FTC have enforced regulations regarding artificial intelligence and the inequities that may result from utilizing it.

Before we discuss the risks that come with artificial intelligence, it’s crucial to grasp what it is and what it can do for your business. When you have the correct information, you can prepare risk management accordingly.

What is AI?

If you find yourself wondering what artificial intelligence encompasses, you are not alone. There are many aspects of AI that we use today, both in our professional and personal lives. Every time you ask Alexa a question or tell her to play music or your favorite podcast, you’re engaging with artificial intelligence.

Of course, Alexa doesn’t encompass everything artificial intelligence can do, but it’s a fine example of how we use it regularly. Also, consider when you log onto a company website and ask their chatbot a question. Chatbots are fueled by AI and are a stellar example of how artificial intelligence can take business operations to the next level.

So, the answer to what’s artificial intelligence is simply this:

Artificial intelligence combines science and potent, human, and computer-powered databases that enable problem-solving.

AI technology works in all aspects of our lives, and it definitely makes things easier. However, it’s easy to see where this might become an issue for businesses, primarily significant corporations, that have access to better AI technology and thus have the option to use it unfairly, hence the ever-evolving regulations.

The Risks of Artificial Intelligence

It can be challenging to determine the aspects of AI you want to use for your company and best mitigate the risks within the territory. To control the risk factor, you first have to know them.

 

Unauthorized Introduction

As companies digitize and switch from old legacy systems to cloud-native applications, there is the potential to introduce artificial intelligence without your development, security, or AI team knowing. Understanding the potential for your employees to, advertently or inadvertently, use unauthorized SaaS applications at work means you can minimize that risk.

Biased Decision-Making

One of the biggest risks of companies regularly implementing AI is the introduction of a decision-making bias into significant platforms and algorithms. AI systems learn on a specific data system, that being the one in which they were initially trained. If that set of data reflects biases or assumptions, AI can then influence system decision-making.

 

Lack of Transparency

Most companies utilize AI systems to make better business decisions automatically, whether that be from an internal or customer service standpoint. However, the algorithms that come with AI implementation can often become so complex that those responsible for their creation cannot explain it.

AI specialists refer to this phenomenon as the “black box.” Unfortunately, transparency is crucial to good business, and AI can sometimes make that impossible, such as an automatic rejection for a bank loan that should have a stamp of approval.

 

Legal Responsibility

The issue of legal responsibility concerning AI is a risk for businesses because the topic itself contains many blurred lines. Machine learning can easily encourage a poorly designed AI system to refine itself, making it near impossible to assign legal responsibility if and when things go away.

 

Protecting Personal Privacy

Regardless of the industry of your business, your customers rely on you to protect the personal information they give you. There are endless amounts of structured and unstructured data that AI systems can manipulate, and when data breaches inevitably occur, your reputation is at stake. Top-of-the-line security measures using artificial intelligence are essential.

Managing Artificial Intelligence Risks

Now that you know the major risks that come with artificial intelligence, you can begin to figure out how to control them when it comes to your company and operations. Perfectly honing your risk management expectations and implementing security measures company-wide can help, but it’s not always possible to have complete control over our AI systems.

The use and growth of AI tools are unavoidable. While the risks are substantial, it will remain near impossible to manage those risks unless we take on the responsibility of learning more about AI systems.

Adopting Frameworks to Manage Risks

There is no denying that your company has to adopt and enforce a solid framework for managing AI risks. The more you focus on managing risks, the more successful your long-term AI investments will be, creating value without unwanted material erosion.

Prioritizing the management of artificial intelligence risks on an individual level is part of a greater movement to understand what AI can do for us and how we can control it to make it better. Familiarity with AI is truly a group effort. The more we can pinpoint how it will evolve in active use, the easier it will be to dodge the more considerable risks associated with long-term AI use for business.

By

Ranganathan Rajkumar

Head of Intelligence

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