A new research study on “responsible AI” says the risks associated with loose management can lead not only to reputational damage, but “loss of customer trust, financial losses, regulatory penalties, and even litigation.”
That conclusion comes from a September 21 report from the MIT Management Sloan School.
In it, MIT analyst Sara Brown says that as AI rises, the risks of things going awry and leaving company financial and technology management with a black eye at best – and other more negative outcomes at worst.
Of particular importance to C-suite managers are third-party AI risks, according to MIT’s New Building Robust RAI Programs risk report.
In just a few short months since its release, OpenAI’s ChatGPT tool has catapulted the capabilities, as well as the ethical challenges and failures, of artificial intelligence into the spotlight,” the report states. “Countless examples have emerged of the chatbot fabricating stories, including falsely accusing a law professor of sexual harassment and implicating an Australian mayor in a fake bribery scandal, leading to the first lawsuit against an AI chatbot for defamation.”
The MIT report also cites an April incident where Samsung made headlines when three of its employees accidentally leaked confidential company information, including internal meeting notes and source code, by inputting it into ChatGPT.
“That news prompted many companies, such as JPMorgan and Verizon, to block access to AI chatbots from corporate systems,” the report notes.
The report also concludes the “fast pace” of AI advancements is making it harder to use AI responsibly and is “putting pressure on responsible AI (RAI) programs to keep up.”
MIT cites burgeoning troubles with the increasing reliance on a supply of third-party AI tools, along with the rapid adoption of generative AI algorithms-based tools like ChatGPT, Dall-E 2, and Midjourney.
“These (technologies) use training data to generate realistic or seemingly factual text, images, or audio and it’s exposing them to new commercial, legal, and reputational risks that are difficult to track,” MIT states.
The Path Forward
Taken together, third-party AI risks may be gathering at such an accelerated pace that senior executives, especially in the finance and technology suite, “may not even be aware of the situation.”
“RAI frameworks were not written to deal with the sudden, unimaginable number of risks that generative AI tools are introducing,” says Stanford Law CodeX fellow Riyanka Roy Choudhury.
What’s the way forward for senior executives dealing with third-party AI management risks?
According to the MIT report, company decision-makers should focus on these key points.
1. Move quickly to expand responsible AI programs. To stay one step ahead of risks, “organizations should broaden the scale and scope of responsible AI programs and make sure they are implemented throughout the organization instead of on an ad hoc basis,” MIT states.
2. Properly evaluate third-party tools. While there isn’t an easy way to mitigate the risks posed by these tools, organizations should continue to evaluate their use of third-party AI “using a variety of methods, including evaluating a vendor’s responsible AI practices and adherence to regulatory requirements,” the report adds.
3. Prepare for regulation. With more perceived risks, more regulations could be on the way too, as new rules are drafted and begin to take effect at local and national levels.
“According to the research report, all organizations can benefit from the structured risk management approach of a responsible AI program, particularly when it comes to using or integrating third-party AI tools,” the study concludes.
Brian O’Connell, a former Wall Street bond trader and best-selling author, is a prominent figure in the finance industry. With a substantial background as an ex-Wall Street trader, he has authored two best-selling books: ‘The 401k Millionaire’ and ‘CNBC’s Creating Wealth’, demonstrating his profound knowledge of finance and investing.
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