Ensuring Ethical AI: US Federal Agencies’ New Mandate

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The White House has mandated federal agencies to conduct risk assessments on AI tools and appoint officers, including Chief Artificial Intelligence Officers (CAIOs), for oversight. This directive, led by the Office of Management and Budget (OMB), aims to modernise government AI adoption and promote responsible use. Agencies must integrate AI oversight into their core functions, ensuring safety, security, and ethical use. CAIOs will be tasked with assessing AI’s impact on civil rights and market competition. Agencies have until December 1, 2024, to address non-compliant AI uses, emphasising swift implementation.

How will this impact global AI adoption? Ecosystm analysts share their views.

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Click here to download ‘Ensuring Ethical AI: US Federal Agencies’ New Mandate’ as a PDF.

The Larger Impact: Setting a Global Benchmark

This sets a potential global benchmark for AI governance, with the U.S. leading the way in responsible AI use, inspiring other nations to follow suit. The emphasis on transparency and accountability could boost public trust in AI applications worldwide.

The appointment of CAIOs across U.S. federal agencies marks a significant shift towards ethical AI development and application. Through mandated risk management practices, such as independent evaluations and real-world testing, the government recognises AI’s profound impact on rights, safety, and societal norms.

This isn’t merely a regulatory action; it’s a foundational shift towards embedding ethical and responsible AI at the heart of government operations. The balance struck between fostering innovation and ensuring public safety and rights protection is particularly noteworthy.

This initiative reflects a deep understanding of AI’s dual-edged nature – the potential to significantly benefit society, countered by its risks.

The Larger Impact: Blueprint for Risk Management

In what is likely a world first, AI brings together technology, legal, and policy leaders in a concerted effort to put guardrails around a new technology before a major disaster materialises. These efforts span from technology firms providing a form of legal assurance for use of their products (for example Microsoft’s Customer Copyright Commitment) to parliaments ratifying AI regulatory laws (such as the EU AI Act) to the current directive of installing AI accountability in US federal agencies just in the past few months.

It is universally accepted that AI needs risk management to be responsible and acceptable – installing an accountable C-suite role is another major step of AI risk mitigation.  

This is an interesting move for three reasons:

  • The balance of innovation versus governance and risk management.
  • Accountability mandates for each agency’s use of AI in a public and transparent manner.
  • Transparency mandates regarding AI use cases and technologies, including those that may impact safety or rights.

Impact on the Private Sector: Greater Accountability

AI Governance is one of the rare occasions where government action moves faster than private sector. While the immediate pressure is now on US federal agencies (and there are 438 of them) to identify and appoint CAIOs, the announcement sends a clear signal to the private sector.

Following hot on the heels of recent AI legislation steps, it puts AI governance straight into the Boardroom. The air is getting very thin for enterprises still in denial that AI governance has advanced to strategic importance. And unlike the CFC ban in the Eighties (the Montreal protocol likely set the record for concerted global action) this time the technology providers are fully onboard.

There’s no excuse for delaying the acceleration of AI governance and establishing accountability for AI within organisations.

Impact on Tech Providers: More Engagement Opportunities

Technology vendors are poised to benefit from the medium to long-term acceleration of AI investment, especially those based in the U.S., given government agencies’ preferences for local sourcing.

In the short term, our advice to technology vendors and service partners is to actively engage with CAIOs in client agencies to identify existing AI usage in their tools and platforms, as well as algorithms implemented by consultants and service partners.

Once AI guardrails are established within agencies, tech providers and service partners can expedite investments by determining which of their platforms, tools, or capabilities comply with specific guardrails and which do not.

Impact on SE Asia: Promoting a Digital Innovation Hub

By 2030, Southeast Asia is poised to emerge as the world’s fourth-largest economy – much of that growth will be propelled by the adoption of AI and other emerging technologies.

The projected economic growth presents both challenges and opportunities, emphasizing the urgency for regional nations to enhance their AI governance frameworks and stay competitive with international standards. This initiative highlights the critical role of AI integration for private sector businesses in Southeast Asia, urging organizations to proactively address AI’s regulatory and ethical complexities. Furthermore, it has the potential to stimulate cross-border collaborations in AI governance and innovation, bridging the U.S., Southeast Asian nations, and the private sector.

It underscores the global interconnectedness of AI policy and its impact on regional economies and business practices.

By leading with a strategic approach to AI, the U.S. sets an example for Southeast Asia and the global business community to reevaluate their AI strategies, fostering a more unified and responsible global AI ecosystem.

The Risks

U.S. government agencies face the challenge of sourcing experts in  technology, legal frameworks, risk management, privacy regulations, civil rights, and security, while also identifying ongoing AI initiatives. Establishing a unified definition of AI and cataloguing processes involving ML, algorithms, or GenAI is essential, given AI’s integral role in organisational processes over the past two decades.

However, there’s a risk that focusing on AI governance may hinder adoption.

The role should prioritise establishing AI guardrails to expedite compliant initiatives while flagging those needing oversight. While these guardrails will facilitate “safe AI” investments, the documentation process could potentially delay progress.

The initiative also echoes a 20th-century mindset for a 21st-century dilemma. Hiring leaders and forming teams feel like a traditional approach. Today, organisations can increase productivity by considering AI and automation as initial solutions. Investing more time upfront to discover initiatives, set guardrails, and implement AI decision-making processes could significantly improve CAIO effectiveness from the outset.

The Future of AI
Accelerate AI Adoption: Guardrails for Effective Use

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“AI Guardrails” are often used as a method to not only get AI programs on track, but also as a way to accelerate AI investments. Projects and programs that fall within the guardrails should be easy to approve, govern, and manage – whereas those outside of the guardrails require further review by a governance team or approval body. The concept of guardrails is familiar to many tech businesses and are often applied in areas such as cybersecurity, digital initiatives, data analytics, governance, and management.

While guidance on implementing guardrails is common, organisations often leave the task of defining their specifics, including their components and functionalities, to their AI and data teams. To assist with this, Ecosystm has surveyed some leading AI users among our customers to get their insights on the guardrails that can provide added value.

Data Security, Governance, and Bias

AI: Data, Security, and Bias
  • Data Assurance. Has the organisation implemented robust data collection and processing procedures to ensure data accuracy, completeness, and relevance for the purpose of the AI model? This includes addressing issues like missing values, inconsistencies, and outliers.
  • Bias Analysis. Does the organisation analyse training data for potential biases – demographic, cultural and so on – that could lead to unfair or discriminatory outputs?
  • Bias Mitigation. Is the organisation implementing techniques like debiasing algorithms and diverse data augmentation to mitigate bias in model training?
  • Data Security. Does the organisation use strong data security measures to protect sensitive information used in training and running AI models?
  • Privacy Compliance. Is the AI opportunity compliant with relevant data privacy regulations (country and industry-specific as well as international standards) when collecting, storing, and utilising data?

Model Development and Explainability

AI: Model Development and Explainability
  • Explainable AI. Does the model use explainable AI (XAI) techniques to understand and explain how AI models reach their decisions, fostering trust and transparency?
  • Fair Algorithms. Are algorithms and models designed with fairness in mind, considering factors like equal opportunity and non-discrimination?
  • Rigorous Testing. Does the organisation conduct thorough testing and validation of AI models before deployment, ensuring they perform as intended, are robust to unexpected inputs, and avoid generating harmful outputs?

AI Deployment and Monitoring

AI: Deployment and Monitoring
  • Oversight Accountability. Has the organisation established clear roles and responsibilities for human oversight throughout the AI lifecycle, ensuring human control over critical decisions and mitigation of potential harm?
  • Continuous Monitoring. Are there mechanisms to continuously monitor AI systems for performance, bias drift, and unintended consequences, addressing any issues promptly?
  • Robust Safety. Can the organisation ensure AI systems are robust and safe, able to handle errors or unexpected situations without causing harm? This includes thorough testing and validation of AI models under diverse conditions before deployment.
  • Transparency Disclosure. Is the organisation transparent with stakeholders about AI use, including its limitations, potential risks, and how decisions made by the system are reached?

Other AI Considerations

AI: Ethical Considerations
  • Ethical Guidelines. Has the organisation developed and adhered to ethical principles for AI development and use, considering areas like privacy, fairness, accountability, and transparency?
  • Legal Compliance. Has the organisation created mechanisms to stay updated on and compliant with relevant legal and regulatory frameworks governing AI development and deployment?
  • Public Engagement. What mechanisms are there in place to encourage open discussion and engage with the public regarding the use of AI, addressing concerns and building trust?
  • Social Responsibility. Has the organisation considered the environmental and social impact of AI systems, including energy consumption, ecological footprint, and potential societal consequences?

Implementing these guardrails requires a comprehensive approach that includes policy formulation, technical measures, and ongoing oversight. It might take a little longer to set up this capability, but in the mid to longer term, it will allow organisations to accelerate AI implementations and drive a culture of responsible AI use and deployment.

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