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How businesses should respond to the EU’s Artificial Intelligence Act
Ethical and Inclusive Leadership by AcademiaCentral

How businesses should respond to the EU’s Artificial Intelligence Act

The EU strikes again with a new set of regulations that take aim at the use of artificial intelligence (AI) to address the variety of risks associated with the societal adoption of AI. Like its sibling the General Data Protection Regulation (GDPR), the Artificial Intelligence Act (AIA) actually has teeth, with fines rising to €30 million, or 6% of global revenue. Is the answer to delete all your AI systems to minimize your risk to zero, or continue using AI for a competitive edge? Can you manage the recurring costs required to maintain compliance with the AIA even as the technology itself increases your bottomline?

Take the famous UK pub chain JD Wetherspoon, founded by British businessman Tim Martin in 1979 who has been an outspoken critic of the EU and a Brexit campaigner. Their response to personal identifiable information (PII) protection, legislated by the GDPR in 2017, was to delete their entire CRM database. Perhaps a drastic and knee-jerk reaction, but with the EU imposing GDPR-related fines of up to €20 million, or 4% of global revenue, my guess is JD Wetherspoon didn’t fancy taking on the risk, or investing a similar sum necessary to assure their GDPR compliance.

What is the aim of the Artificial Intelligence Act?

AI as a technology isn’t the problem; the human creators and business professionals require the intervention. The EU aims to create a globally recognized “factory” for producing safe, trusted, and ethical AI outcomes that respect existing laws on fundamental human rights and EU values. To enable the EU’s ethical AI mission, the AIA primarily aims to do two things:

  • Identify AI systems that present unacceptable risk (e.g., from social scoring by governments to toys using voice commands that encourage dangerous behaviour).
  • Apply strict obligations to AI systems that present high risk (e.g., from CV-sorting software for recruitment procedures, to credit scoring denying citizens the opportunity to obtain a loan).

Businesses that choose to build high-risk AI systems will be legally required to meet a defined list of criteria before they can be integrated into the single market. This means designing AI systems with transparency, explainability, and ethics embedded in their core, and having monitoring, guardrails, and governance capabilities already in place to ensure continued ethical compliance.

Many organizations have already implemented data protection and cybersecurity frameworks that provide a similar groundwork for AIA compliance. This makes meeting the requirements of the AIA not as challenging as starting compliance from scratch.

Complying with regulation that requires continuous risk evaluation and mitigation are standard parts of doing business in our economic reality. It’s not easy, but it should not be a giant leap for humankind. Successfully turning a prototype of an algorithmic design into an integrated version that can be easily mass-produced, and yields recurring value – while being able to clearly explain how that AI system positively impacts a dozen micro KPIs that all roll up into revenue gains, cost savings, and improved margins – now that’s hard.

To delete or not to delete?

The Center for Data Innovation’s analysis of The European Commission’s impact assessment concludes many things concerning the current AIA proposal, including:

  • “The AIA will cause an additional 17% of overhead on all AI spending”. Therefore, is AI worth the additional 17% out of your pocket to maintaincompliance with the AIA?
  • “A business with €10 million turnover would see its profits fall by 40%: Ouch!

For small to medium-sized businesses you might be thinking AI (and the associated AIA obligations) aren’t worth the trouble – I hear you. You could delete all of your AI like JD Wetherspoon did with their CRM and email-based customer marketing capabilities back in 2017. Problem solved, right? If something isn’t valuable to your business and shows no realistic competitive upside in the future, it makes sense to remove it….[Read more at: https://www.weforum.org/agenda/2022/02/how-businesses-should-respond-to-eu-artificial-intelligence-act/]