3 BEST PRACTICES FOR NAVIGATING AI USE IN ORGANIZATIONS
To effectively harness AI’s potential while mitigating associated risks, firm leaders can adopt best practices that ensure responsible AI integration and governance. Here are three strategies to consider when overseeing the use of AI.
1. Understand and define your business use case for AI
Leaders should start by thoroughly understanding and defining the specific ways AI will be applied within the company. Engaging with stakeholders is imperative to determine which AI technologies are being utilized, their purposes and their operational methods. AI can serve various functions within a business, including:
- Enhancing customer acquisition and retention, driving revenue growth and fostering customer loyalty through marketing and personalization.
- Performing due diligence on third-party relationships (e.g., customers, vendors, partners and service providers).
- Innovating and improving existing processes by decreasing development time and facing iterative testing of products and customer experiences.
- Reducing compliance risks by automating data collection, analysis and reporting processes.
2. Collaborate with experts
Leaders should gather a diverse group of experts both from within and outside the firm to stay informed as AI technology evolves. They should seek representatives with expertise in IT, finance, operations and other pertinent fields. An initial step in risk mitigation is to establish an advisory committee at the board level. This committee, composed of management-selected members, will work with the board to develop a clear governance policy and oversight plan for AI adoption and implementation.
“To stay ahead of the technological curve, firm leaders must determine how to best navigate and mitigate the risks tied to AI, even amid its uncertain future trajectory.”
Collaboration with advisers is essential to assess potential AI-related risks, including security, data privacy and regulatory compliance. Additionally, legal organizations should formulate an AI-use strategy that identifies and prioritizes the potential and existing applications of AI tools.
3. Mitigate your directors and officers (D&O) liability
Attention to mitigating D&O liability is crucial. Liability can arise if directors and officers fail to exercise proper oversight and due diligence in AI implementation. Key steps include:
- Protecting data against breaches and reinforcing compliance with data privacy regulations.
- Making sure AI systems and applications adhere to ethical and legal standards, complying with laws and regulations concerning anti-discrimination, data privacy and other relevant areas.
- Document board-level AI oversight efforts in agendas, minutes and presentations as appropriate.
Additionally, boards should work with brokers to ensure that risks are covered by D&O insurance and other business policies. Transferring risk is vital in safeguarding the organization and its leadership against potential liabilities associated with AI deployment.
AI CAN’T BE IGNORED
Embracing AI is a strategic necessity for today’s legal organizations. By implementing best practices, collaborating with experts and diligently mitigating D&O liability, firm leaders can work through the complexities of AI integration. Proactive governance will enable companies to leverage AI’s potential while safeguarding against its inherent risks.
