AI and compliance: the most important facts

from | 22 July 2024 | Basics

The rapid development of artificial intelligence is opening up numerous new opportunities and possibilities for companies. These opportunities are also accompanied by considerable challenges. Companies are faced with the task of not only utilising their AI applications effectively, but also ensuring that they comply with legal requirements and ethical standards. AI and compliance is therefore a key factor for the long-term success of a company. In this context, compliance with data protection regulations, the avoidance of discrimination and the transparency of AI decisions are of great importance. 

Why is compliance important for AI applications? 

Adherence to compliance regulations is of paramount importance in technology and industrial companies. crucial to fulfil legal requirements and maintain ethical standards. With the progressive integration of Artificial intelligence and Machine learning algorithms data- and process-driven companies are facing new challenges.

AI applications process huge amounts of data Data and make decisions that can have far-reaching consequences. It is therefore essential that these Systems transparent, fair and secure operate. Compliance in AI applications helps to meet regulatory requirements and minimise the risk of misconduct. Without strict compliance, companies can be exposed to legal and financial risks that can jeopardise their reputation and market position. Furthermore, a lack of compliance can lead to ethical dilemmas, especially when AI systems make decisions that favour discrimination or prejudice. 

The importance of compliance is also reflected in the strict regulations that apply worldwide to the Data protection and the Data security apply. With the introduction of laws such as the General Data Protection Regulation (GDPR) in Europe, companies must ensure that their AI systems comply with data protection regulations. This means that data processing must be transparent, user consent must be obtained and measures must be taken to protect the data. 

Another aspect is the Comprehensibility and transparency of decisionsthat are made by AI systems. It is important that companies can explain how and why a particular decision was made. This, as Explainable AI model is not only necessary to comply with legal regulations, but also to maintain the trust of customers and partners in the technology. 

Learn how Explainable AI (XAI) makes the decision logic of highly complex AI models such as Large Language Models (LLMs) understandable and trustworthy.

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Risks of artificial intelligence

The integration of AI into operational processes harbours various risks and challenges that need to be carefully monitored and managed. Possible risks for companies when using artificial intelligence include 

RiskDescription
Data protection breachesData breaches are a significant risk, as AI systems often access extensive and sensitive data sets. This data may contain personal information, the misuse of which can have significant legal and financial consequences. Inadequate protection can lead to personal data being stolen, manipulated or misused. 
Discrimination and biasAI algorithms learn from historical data. If this data contains prejudices or discrimination, the AI can adopt and reinforce these patterns. This leads to unfair decisions that penalise certain groups. A well-known example is discrimination in recruitment processes, where algorithms can favour or disadvantage certain demographic groups. 
Wrong decisionsWrong decisions by AI systems can have serious consequences. This can be due to inadequate training of the models, incorrect data or algorithmic errors. Such wrong decisions can not only cause financial losses, but can also lead to legal problems and shake confidence in the technology. 
Transparency and traceabilityA major problem with many AI systems is their lack of transparency. With complex models in particular, it is often difficult to understand how a decision was reached. This makes it difficult to review and understand the decision-making processes and can lead to mistrust and legal challenges. 
Overview: Risks of artificial intelligence
What is artificial intelligence

Artificial intelligence (AI) is a key trend with multiple interpretations. Despite the known benefits, only 12 % of companies use AI to date, which is surprising given the enormous potential applications.

What is Artificial Intelligence (AI)

How does AI support operational compliance? 

In addition to the aforementioned risks, artificial intelligence also offers significant opportunities for operational compliance. Some of these are 

Automation and increased efficiency 

AI can automate repetitive and time-consuming compliance tasks, such as monitoring transactions for suspicious behaviour or compliance with regulations. This not only saves time, but also reduces human error. For example, AI-based systems can be used to monitor financial transactions in real time and automatically trigger alerts in the event of suspicious activity. This significantly increases the efficiency and accuracy of monitoring processes. 

Risk assessment and management 

Alongside automation, AI can analyse large volumes of data to identify potential compliance risks at an early stage and suggest measures to minimise risk. This increases responsiveness and precision in risk management. AI-supported systems can recognise patterns and anomalies in data that indicate potential compliance violations and thus enable proactive measures to be taken. 

Documentation and reporting 

AI can help to create compliance documentation and generate reports that meet the requirements of the regulatory authorities. This facilitates record keeping and audits. Automated systems can generate reports in real time and help to ensure that all relevant information is recorded correctly and completely. 

Training and communication 

AI-based systems can, for example, develop tailored training programmes that alert employees to specific compliance risks and raise their awareness. These programmes can be customised and continuously updated to meet ever-changing regulations and best practices. In addition, the communication of compliance-relevant issues can be optimised through the use of AI-supported Chatbots by answering questions from employees and contributing to clarification. 

While there are some challenges and risks associated with the use of AI, it can also offer significant opportunities that companies can utilise as an advantage. It will be crucial to have a Balanced relationship between the benefits of AI and the necessary protective measures to ensure the integrity and security of the systems. The Implementation of clear compliance guidelines and processes is therefore essential in order to fully exploit the opportunities offered by AI while at the same time counteracting and minimising the risks. 

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How does the European AI Act affect compliance? 

The European AI Act sees a Categorisation of AI systems according to their risk from minimal to unacceptable risk. This categorisation makes it possible to develop specific regulations and protective measures for different types of AI systems that address their respective risks. Companies must also ensure that their AI systems transparent and comprehensible are. Users should be informed when they interact with an AI.

The AI Act also sets out high requirements for the safety and ethical acceptability of AI systems to ensure that they are used in a safe and ethical manner. In line with European values stand. Companies must also implement comprehensive compliance management systems to document and verify compliance with the regulations, whereby the European AI Act should raise the standards for AI compliance in Europe and encourage companies to be even more careful when implementing and using AI technologies. 

EU AI Act Whitepaper, a figure of Justitia with scales

Download the free white paper on the European AI Act. In it, we provide companies with a concise explanation of the consequences and key provisions of the first European AI legislation.

EU AI Act Whitepaper

The important interrelationship between AI and compliance 

The integration of artificial intelligence in companies offers significant opportunities, particularly in terms of automation, increased efficiency and precise risk management. At the same time, however, the use of AI also brings with it serious challenges and risks, including data breaches, discrimination, poor decisions and a lack of transparency. A strict compliance framework is therefore essential to manage these risks and ensure that AI applications are operated ethically and in compliance with the law. The European AI Act represents an important step in this context by defining guidelines and standards for the safe and responsible use of AI technologies. Through the targeted use of AI to support compliance, companies can not only improve compliance, but also strengthen the trust of customers and partners. 

Author

Patrick

Pat has been responsible for Web Analysis & Web Publishing at Alexander Thamm GmbH since the end of 2021 and oversees a large part of our online presence. In doing so, he beats his way through every Google or Wordpress update and is happy to give the team tips on how to make your articles or own websites even more comprehensible for the reader as well as the search engines.

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