While the craze over generative AI, ChatGPT, and the fear of employees in the professions landing on breadlines in the imminent future may have subsided a bit, many concerns remain about how best to use and manage AI. Of course, these concerns are not specific to Fortune 500 companies.

A recent story in CIODive reports that most Fortune 500 businesses have identified AI as a potential risk factor in their SEC filings. As the article suggests, many organizations are grappling with how to use AI and derive a discernable benefit amid many present challenges. Perhaps the most critical challenge, as organizations toil to find and deliver effective use cases, is a lack of effective governance, leaving business leaders and risk managers concerned. No doubt, organizations below the Fortune 500 are facing the same obstacles, likely with fewer resources.

Putting a structure around the use of AI in an organization is no easy task. There are so many questions:

  • Who in the organization leads the effort? Is it one person, a group? From what areas of expertise? With what level of institutional knowledge?
  • As an organization, do we have a sufficient understanding of AI? How deep is our bench? Does our third-party service provider(s)?
  • If we engage a third party to help, what questions should we ask? What should we cover in the agreement? Can we shift some of the liability?
  • What is the ongoing quality of our data? Does it include inherent biases? Can we adjust for that?
  • How do we measure success, ROI?
  • Who is authorized to use AI or generative AI, and under what circumstances?
  • How do we train the AI tool? How do we train employees or others to use the tool?
  • Have we adequately addressed privacy and security of confidential and personal information?
  • What kind of recordkeeping policies and procedures should we adopt?
  • Have we appropriately considered potential ethical issues surrounding the development and use of the AI?
  • How do we keep up with the rapidly emerging law and compliance obligations relating to the development and deployment of AI? What requirements are specific to our industry?
  • How do we approach notice, transparency, safety, etc.?
  • How do we track what different groups in the organization are doing with AI, the problems they are having, and the ones they may not be aware of?  

On top of this list being incomplete, organizations also should be thinking about whether and how these and other considerations may be shaped based on the particular use case. That is, for example, deploying a generative AI tool to develop content for a marketing campaign likely has significantly different challenges to wrestle with than, say, permitting sales and other employees to use AI notetakers, or permitting the HR department to source, select, and assess candidates and employees in the workplace.

For sure, the development and deployment of AI will continue to face significant headwinds in the near future. While no governance structure eliminates all risk, addressing some of the questions above and others should help to manage that risk, which many organizations inside and outside the Fortune 500 recognize.   

Tags: AI, artificial intelligence, CIODive, ethics, Fortune 500, generative AI, governance, privacy, risk management, security
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Photo of Joseph J. Lazzarotti Joseph J. Lazzarotti

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP)…

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP) with the International Association of Privacy Professionals. Trained as an employee benefits lawyer, focused on compliance, Joe also is a member of the firm’s Employee Benefits practice group.

In short, his practice focuses on the matrix of laws governing the privacy, security, and management of data, as well as the impact and regulation of social media. He also counsels companies on compliance, fiduciary, taxation, and administrative matters with respect to employee benefit plans.

Privacy and cybersecurity experience – Joe counsels multinational, national and regional companies in all industries on the broad array of laws, regulations, best practices, and preventive safeguards. The following are examples of areas of focus in his practice:

  • Advising health care providers, business associates, and group health plan sponsors concerning HIPAA/HITECH compliance, including risk assessments, policies and procedures, incident response plan development, vendor assessment and management programs, and training.
  • Coached hundreds of companies through the investigation, remediation, notification, and overall response to data breaches of all kinds – PHI, PII, payment card, etc.
  • Helping organizations address questions about the application, implementation, and overall compliance with European Union’s General Data Protection Regulation (GDPR) and, in particular, its implications in the U.S., together with preparing for the California Consumer Privacy Act.
  • Working with organizations to develop and implement video, audio, and data-driven monitoring and surveillance programs. For instance, in the transportation and related industries, Joe has worked with numerous clients on fleet management programs involving the use of telematics, dash-cams, event data recorders (EDR), and related technologies. He also has advised many clients in the use of biometrics including with regard to consent, data security, and retention issues under BIPA and other laws.
  • Assisting clients with growing state data security mandates to safeguard personal information, including steering clients through detailed risk assessments and converting those assessments into practical “best practice” risk management solutions, including written information security programs (WISPs). Related work includes compliance advice concerning FTC Act, Regulation S-P, GLBA, and New York Reg. 500.
  • Advising clients about best practices for electronic communications, including in social media, as well as when communicating under a “bring your own device” (BYOD) or “company owned personally enabled device” (COPE) environment.
  • Conducting various levels of privacy and data security training for executives and employees
  • Supports organizations through mergers, acquisitions, and reorganizations with regard to the handling of employee and customer data, and the safeguarding of that data during the transaction.
  • Representing organizations in matters involving inquiries into privacy and data security compliance before federal and state agencies including the HHS Office of Civil Rights, Federal Trade Commission, and various state Attorneys General.

Benefits counseling experience – Joe’s work in the benefits counseling area covers many areas of employee benefits law. Below are some examples of that work:

  • As part of the Firm’s Health Care Reform Team, he advises employers and plan sponsors regarding the establishment, administration and operation of fully insured and self-funded health and welfare plans to comply with ERISA, IRC, ACA/PPACA, HIPAA, COBRA, ADA, GINA, and other related laws.
  • Guiding clients through the selection of plan service providers, along with negotiating service agreements with vendors to address plan compliance and operations, while leveraging data security experience to ensure plan data is safeguarded.
  • Counsels plan sponsors on day-to-day compliance and administrative issues affecting plans.
  • Assists in the design and drafting of benefit plan documents, including severance and fringe benefit plans.
  • Advises plan sponsors concerning employee benefit plan operation, administration and correcting errors in operation.

Joe speaks and writes regularly on current employee benefits and data privacy and cybersecurity topics and his work has been published in leading business and legal journals and media outlets, such as The Washington Post, Inside Counsel, Bloomberg, The National Law Journal, Financial Times, Business Insurance, HR Magazine and NPR, as well as the ABA Journal, The American Lawyer, Law360, Bender’s Labor and Employment Bulletin, the Australian Privacy Law Bulletin and the Privacy, and Data Security Law Journal.

Joe served as a judicial law clerk for the Honorable Laura Denvir Stith on the Missouri Court of Appeals.

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