Adopting AI in Business: Navigating Procurement and Legal Risks

As the adoption of artificial intelligence (AI) tools continues to surge across various industries, updating risk-management frameworks to align with best procurement practices becomes a necessity. Without this, organizations may inadvertently open themselves up to a host of regulatory enforcement and litigation risks. To ensure responsible AI adoption, businesses should heed the guidelines provided by the World Economic Forum and consider a range of questions when procuring AI tools.

AI tools, such as AI images generator or AI text generator, may appear complex, but their efficacy is contingent on the quality of the data they are trained on. Therefore, it is essential for businesses to obtain guarantees from their AI vendors regarding the collection, use, and disclosure of data used to train the model. Vendors need to prove that they have obtained all necessary consents when collecting data from consumers in accordance with applicable laws.

In addition, businesses should scrutinize the AI tool’s data usage and training methods during onboarding. Vendors need to provide comprehensive information about their governance programs, audits, and other mechanisms that ensure the tool’s usability, reliability, and potential for bias, inaccuracies, and unfairness. When it comes to incorporating company data, businesses need to grasp how the vendor will utilize that data for training purposes. They should also consider potential use cases for internal data that may or may not be uploaded.

Regulatory bodies such as the Department of Justice and Federal Trade Commission are closely monitoring whether technology companies and their tools foster anti-competitive environments or disadvantage consumers. Given the profound insights that AI tools can offer, regulators are wary of potential harm to consumers. For instance, an AI tool such as an AI video generator could be employed in marketing and pricing strategies to accurately predict a specific consumer’s spending capacity. This could enable businesses to sell each product at the highest price that each individual consumer is willing to pay.

Furthermore, regulators are examining how bias and inaccuracies in AI output can disadvantage certain consumer groups. AI tools could potentially facilitate anti-competitive market collaboration. For instance, if an AI tool sifts through a massive amount of competitors’ historical price data, it could blur the lines between past and current or aggregated versus disaggregated data. This could heighten regulatory concerns if competitors adopt the same pricing algorithms.

Cyberattacks on AI vendors can affect the integrity of the AI model’s decisions and predictions, according to the World Economic Forum’s guidelines. Data duplicated into an AI tool is susceptible to access by malicious actors, and companies should exercise caution when inputting personally identifiable information. Depending on how the tools are integrated, they could potentially create a new backdoor into company systems. This risk is particularly high for AI tools that crawl through systems looking for efficiency creation opportunities and where AI tools can make certain fetch or “get” requests for data.

It is crucial to understand the vendor’s cybersecurity defenses, including proactive measures to detect attacks and an incident response plan to minimize the effects of a breach. Businesses should also ensure that their contracts with AI vendors include appropriate clauses addressing data usage, data retention and destruction, intellectual property rights, security breaches, and other standard contractual clauses.

In conclusion, AI is revolutionizing the way businesses operate. To harness the potential of AI while mitigating its risks, companies must be diligent in their proactive assessment of AI tools and protect themselves through each contract. As the latest AI news & AI tools continue to evolve, businesses must also evolve their risk-management frameworks to ensure responsible AI adoption.