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Cleary Gottlieb Discusses AI’s Risks for Boards and Managers

Feb 20, 2024 - clsbluesky.law.columbia.edu
The article discusses the potential risks and challenges associated with the adoption of artificial intelligence (AI) in businesses. It highlights that while AI has revolutionized business operations and offers numerous value-creation opportunities, it also presents significant risks that require sophisticated governance and risk management strategies. Key areas of risk include deepfakes and public relations, crisis management, governance and expertise gap, AI decision-making bias, regulatory issues, cybersecurity, data analytics, mergers and acquisitions, and regulated financial services. The article suggests that businesses should adopt AI with a focus on risk mitigation, maintain highly skilled workers to counteract AI reliance risk, and involve senior leaders in AI adoption and oversight.

The article also emphasizes the importance of regulatory compliance, as the regulation of AI is still in its infancy and is expected to evolve dramatically in the coming years. It also mentions the potential cybersecurity threats posed by AI and the need for businesses to prioritize cybersecurity investment and develop or outsource AI defense mechanisms. Furthermore, the article suggests that businesses should consider AI risk early in the M&A process and engage advisors with the necessary expertise to adequately examine the risks. Finally, the article concludes by stating that AI should not replace subject matter experts, but should be integrated with their roles to protect against over-reliance risks.

Key takeaways:

  • Artificial Intelligence (AI) offers significant benefits but should be adopted with risk mitigation in mind to maximize value and minimize unforeseen liability.
  • Senior leaders should be involved in AI adoption, and boards should be involved in its oversight, as it poses key risks in addition to great benefits.
  • AI should not replace subject matter experts, but instead should be integrated with their roles to protect against over-reliance risks.
  • Corporations that are not adopting AI still face risks associated with the AI revolution and should prioritize mitigating this new type of risk in all its various aspects.
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