Risk Aspects of Technological Innovation That Boards May NOT Be Thinking About

BDO in the Boardroom

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Human Resources and Workforce Impact:

Bias in Automation: Ensure that automated HR processes undergo regular audits to identify and mitigate biases, particularly in candidate selection and hiring.
Regulatory Oversight: Implement annual bias audits for automated employment decision tools to comply with regulations.
Employee Surveillance: Review and update employee monitoring practices to ensure compliance with privacy regulations, and OSHA and HIPAA.

Regulatory Compliance and Legal Risks:

Decentralized AI Regulation: Develop a comprehensive strategy to track and comply with AI regulations across different states.
EU AI Act: Assess the impact of the EU AI Act on your operations and ensure compliance with its requirements, even if your systems are used within the EU.
Terms of Service: Establish a process to monitor and review changes in terms of service for AI, other technology and communications tools, ensuring compliance and proper data usage.

Operational Resilience and Business Continuity:

System Dependencies: Regularly evaluate AI systems for data representativeness and bias and adapt to real-time changes in company operations.
Supply Chain Vulnerabilities: Conduct frequent audits of third-party components and vendors to identify and mitigate supply chain vulnerabilities.
Cyber Threats: Update employee training programs to include awareness and prevention of deepfake scams and other sophisticated cyber threats.

Strategic Oversight and Accountability:

Ethical Considerations: Form multidisciplinary task forces for AI adoption, including general counsel, to classify use cases based on risk levels.
ROI and Uncertainty: Ask for detailed ROI estimates, timelines, and milestones for AI projects, considering the uncertainty and potential qualitative outcomes.
Director Education: Encourage directors to engage in educational opportunities, such as NACD masterclasses and other governance-focused content, to enhance their understanding of AI governance.

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