Legal Operations Grapple with Risk, Regulatory, Compliance Challenges of Generative AI

Generative AI (GenAI) brings risk, compliance and regulatory challenges to Legal Ops teams, as outlined in an article by McKinsey & Company. Key GenAI concerns include a potential lack of transparency: the data used to train its systems, bias and fairness issues, intellectual property infringements, privacy violations, third-party risk, and disinformation and security matters.

The goal of regulators, in general, is to establish legal certainty for companies engaged in the development or use of GenAI and international regulatory standards to stimulate international trade and data transfers. 

To date, there has been no comprehensive AI or GenAI regulation. However, efforts have been made by Brazil, China, the European Union, Singapore, South Korea, and the United States. The approaches taken by these countries vary, from broad AI regulation supported by existing data protection and cybersecurity regulations, to sector-specific laws, and guidelines-based approaches. 

Organizations that are waiting to see what AI regulations emerge may face large legal, reputational, organizational, and financial risks. These are the four key areas in which they should take preemptive actions.

1. Transparency: Create a taxonomy and inventory of models as well as detailed documentation of development, risks, and usage.  
2. Governance: Implement a governance structure that can adapt to evolving technology, business priorities, and regulatory requirements. Include roles and responsibilities in AI and GenAI management as well as an incident management plan.
3. Data, model, and technology management: Establish reliable data management, model management with robust principles and guardrails, and cybersecurity management that ensures a secure technology environment.
4. Individual rights: Educate users, provide a point of contact and clear instructions for using AI, and prioritize the ethical considerations of AI use.

Focusing on these four areas will provide a basis for future data governance and risk reduction. The preemptive actions taken will help streamline operations across cybersecurity, data management and protection, and responsible AI.