Artificial intelligence (AI) has become a catalyst across industries, opening the door to endless innovation and fundamental changes to the way people live, work, and play. As an emerging technology, the possibilities of AI have driven unbridled excitement, as it has the potential to deliver new levels of productivity, efficiency, and data-driven insights.

However, even as organizations seek to push the boundaries of what’s possible with AI, the need for AI regulation and corporate governance is strikingly clear. The consequences of unregulated AI are potentially dire, leading to a host of challenges that include ethical questions, privacy and data security issues, concerns with data quality, and other predicaments. This is not lost on policymakers who are working to introduce legislation in the U.S., such as the contentious SB 1047 in California, to regulate AI and ensure appropriate safety measures are in place.

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As debates rage over this type of legislation, one simple fact remains: Organizations need a structured way to govern their use of AI so that they balance the need for innovation against potential risks. This is essential for their business and their customers.

The challenges with implementing AI governance

A few hurdles have interfered with the ability to implement a large-scale AI governance framework. AI remains a nascent technology, though one that is advancing rapidly. Given its quick rise, many companies lack a full understanding of the capabilities of AI and the potential risks it presents.

AI’s speedy development makes it difficult for those creating a governance framework to stay ahead of the latest breakthroughs and risks. Also, the lack of standard regulations for AI governance across different countries and regions creates ambiguity for organizations operating internationally. It wasn’t until August 2024 that the European Union officially introduced the EU Artificial Intelligence Act, the world’s first legal framework on AI, to govern the development and use of AI in the EU and address its associated risks. This landmark law calls for strict transparency obligations on high-risk AI systems while the requirements for general-purpose AI models are softer. The EU AI Act was viewed as more comprehensive than the voluntary compliance approach of the U.S., which is consistent with the EU typically enacting more stringent privacy laws.

A new standard for responsible AI

In an encouraging sign of progress, the International Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC) introduced ISO/IEC 42001:2023 – Artificial Intelligence Management System (AIMS) standard. Among the earliest AI standards of its kind, ISO 42001 provides a framework for organizations to implement, maintain, and continually improve an AI management system, ensuring ethical, secure, and transparent AI practices. It establishes a structured way for organizations to manage risks and opportunities associated with AI, balancing innovation with governance.

As an international standard, ISO 42001 serves as both (1) a rubric for creating and maintaining an AIMS, making it easier for more organizations to adopt a more complete and systematic approach to AI governance, and (2) a benchmark against which any AIMS might be evaluated. Companies with an accredited ISO 42001 certification have to be rigorously evaluated by an impartial management systems certification body which, in turn, must be authorized by an accreditation body.

While the evaluation process is strict, it helps remove much of the uncertainty and risk associated with managing AI systems.

The benefits of introducing an AI governance standard

Organizations can benefit from the ISO standard in numerous ways, especially those serving a global customer base and operating in heavily regulated markets such as finance, pharmaceuticals, life sciences, and even procurement and the supply chain. The areas in which these organizations can benefit most include:

• Trust and Reliability:ISO certifications represent conformity with globally recognized standards that ensure quality and reliability. The ISO 42001 certification specifically addresses AI systems management and validates that companies with AI solutions meet these high standards of quality, safety, and efficiency. At a time when business leaders are determining the best ways to deploy AI-based technology, working with a certified vendor provides assurance that both current and future solutions will be guided by a commitment to robust AI governance.

• Risk Management:Every organization needs to ensure that it is working with reliable and compliant vendors. The ISO 42001 certification indicates that a vendor has robust processes in place to manage risks associated with AI systems.

• Compliance and Regulation:As regulations around AI and data management become stricter, working with a certified vendor can simplify compliance efforts. Organizations can be assured that certified vendors adhere to international schemes, potentially reducing the burden of compliance.

• Innovation and Competitiveness:Utilizing certified AI systems can enhance a company’s competitive edge. It signals that the organization is leveraging cutting-edge technology that meets rigorous benchmarks, which can improve efficiency, decision-making, and overall performance.

• Cost Efficiency:Reliable AI solutions can optimize workflow processes, reduce errors, and streamline operations. Certified AI systems are likely to be more efficient and effective, leading to cost savings in the long run.

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Altogether, these advantages translate into higher ROI through cost avoidance and risk elimination. They also result in increased efficiency by minimizing effort on the part of organizational resources, system stability and coherence, and continuous improvement guided by a clear vision for responsible AI.

While challenges remain with implementing AI governance on a broad scale, a solid framework is now available for organizations to move forward. The ISO 42001 standard and certification can reassure organizations of the quality and reliability of their AI systems, enhancing trust, compliance, and operational efficiency. The standard establishes a benchmark for evaluating the quality of AI governance within organizations. It should be used to evaluate vendors as well as internal AI governance initiatives to ensure AI is used responsibly with minimal risk.

Of course, more standards and policies are needed for effective AI governance, but ISO 42001 is a step in the right direction. Savvy organizations will take note and act sooner rather than later to adopt the ISO standard and harness the true power of AI ethically and responsibly.

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