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AI requires dynamic governance to seize opportunities and manage risks

By John M. Bremen and Kyle Heurich | June 20, 2024

Effective organizations move away from traditional risk management and governance models to fully leverage AI’s potential.
Corporate Risk Tools and Technology|Risk and Analytics|Work Transformation
Future of Work

Artificial intelligence (AI) is changing rapidly, creating opportunities and innovations at a pace rarely experienced before. But these breakthroughs also create new risks that are straining traditional methods of risk management and governance. AI requires new governance models that are as innovative as the developing technologies they oversee. These new risk management strategies are readily adaptable and responsive to ensure appropriate risk mitigation and value realization.

In brief

  • AI demands governance that changes with its pace, ensuring risks are managed and opportunities seized.
  • Static governance lags in AI's fast-changing world; dynamic models offer agility and sustainability.
  • A strategic approach is crucial for dynamic governance, aligning with AI goals and involving stakeholder engagement.
  • Transitioning to dynamic governance faces resistance; balancing centralization and autonomy is key.

Traditional governance falls short

Typically hierarchical, traditional or static governance models provide stability and predictability by clearly establishing where authority and responsibility lie. Decision making is often centralized. Senior managers, top-level executives or boards of directors make key strategic decisions.

To manage AI risks, many organizations still use a traditional governance framework and existing policies and regulations covering data protection, ethics and consumer protection. Because these methods don’t address AI’s unique challenges and opportunities, they can’t keep pace with the rapid advancements in AI technologies, leading to inefficiencies and missed opportunities.

Dynamic challenges require dynamic solutions

AI requires dynamic governance models that can adapt and evolve in a constantly changing landscape. Dynamic models provide a more agile and sustainable approach, enabling leaders to identify and act on internal and external signals and quickly respond to the changing regulatory and risk landscape. By filling gaps in traditional governance, dynamic models enable organizations to anticipate arising risks – and opportunities – for competitive advantage.

Moving away from the centralized authority and decision making of traditional governance, dynamic strategies enable organizations to tailor their governance practices to their AI objectives. Dynamic governance models enable organizations to monitor and evaluate the performance and outcomes of their AI systems and to adjust and improve their governance practices accordingly. By adopting dynamic governance models, organizations can benefit from AI technologies while minimizing the risks and maximizing trust and accountability.

What are dynamic governance models

With mechanisms for regular updates, feedback loops and continuous improvement, dynamic governance models are flexible and responsive. They enable continuous improvement by adapting to internal and external changes, unlike static governance models.

Characteristics of dynamic governance

  1. Flexibility: Adjust governance frameworks in response to changing circumstances
  2. Responsiveness: Quickly address emerging issues and capitalize on new opportunities
  3. Continuous improvement: Ensure governance methods remain effective and relevant
  4. Feedback loops: Enable organizations to gather input from stakeholders and adjust their governance frameworks accordingly
  5. Regular updates: Reflect the latest developments in AI technologies and best practices

Dynamic governance models also promote innovation by enabling organizations to experiment with new approaches and technologies in a balanced manner, driving progress in AI development and implementation.

Implementing dynamic AI governance

Implementing a dynamic governance model requires a strategic approach that aligns with the organization's overall AI strategy and objectives. Key steps include:

  • Assessing readiness to evaluate the organization's current governance practices and identify areas for improvement
  • Defining objectives of the dynamic governance model, including its scope, goals and key performance indicators
  • Engaging stakeholders, including senior leadership, AI practitioners and external experts, to obtain feedback and ensure buy-in
  • Implementing mechanisms for regular updates, feedback loops and continuous improvement, such as regular reviews and audits
  • Monitoring and evaluation of the dynamic governance model and make adjustments as needed to ensure its continued relevance and effectiveness

Challenges and limitations of dynamic AI governance

Dynamic governance models present a paradigm shift in organizational management. As such, they come with their own set of challenges and limitations. One significant hurdle is the organizational change required to implement them. Employees may resist adopting new or shifting processes and turn away from unfamiliar roles or additional responsibilities. This resistance can stem from a fear of the unknown, a lack of tolerance for ambiguity or change, a perceived threat to job security or a simple preference for the status quo. Overcoming this inertia requires a careful change management strategy that includes clear leadership and employee communications, training and support to ease the transition.

Balancing centralization and decentralization also can be difficult. Too much decentralized decision making can result in a lack of cohesion and direction as well as an increase in risk. Dynamic governance models navigate this delicate balance, ensuring that the organization can act decisively when necessary while still promoting autonomy and collaboration. Because dynamic AI governance can be challenging and regulations are new or in process, many have simply retrofitted AI governance into their existing processes. These cases miss the vast opportunities in AI.

Embracing change

Dynamic models offer a sustainable approach to AI governance that enables organizations to adapt and evolve in an ever-changing AI landscape. By embracing flexibility, responsiveness and continuous improvement, organizations can ensure that their governance frameworks remain effective and relevant, driving long-term success in the era of AI.


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