Preparing Your Business for AI Regulation

Artificial intelligence (AI) is quickly transforming industries and businesses. Governments worldwide are catching up. Expect new laws and regulations, and plan accordingly.

The Developing Regulatory Landscape

The European Union’s AI Act is currently in the process of implementation. It is the most comprehensive attempt to regulate AI to date. It introduces a risk-based framework, imposing stricter requirements on high-risk applications such as biometric identification, medical devices, and critical infrastructure. In the U.S., the White House has released an AI Bill of Rights and federal agencies are beginning to establish sector-specific rules. States like California are also moving forward with their own AI-related legislation. Other jurisdictions, including the U.K., Canada, and China, are developing their own approaches as well.

Why Act Now?

AI regulations will impact not just developers of AI systems, but also companies that use AI in their products, services, or internal processes. Delaying compliance efforts until regulations are finalized could expose businesses to liability, reputational damage, or operational disruption. Early preparation also signals to investors, partners and customers that the company takes responsible AI seriously.

Steps To Take:

1. Conduct an AI Inventory: Identify where and how AI tools are used in your business, including third-party systems. This helps assess exposure to regulatory requirements.

2. Classify Risks: Evaluate whether any AI applications fall into high-risk categories under upcoming frameworks, such as hiring algorithms, healthcare tools, or financial decision-making systems.

3. Review & Update Contracts with Vendors and Customers: Ensure agreements with AI technology providers and customers (where appropriate) include clear terms on compliance responsibilities, data use, IP ownership, and liability for regulatory breaches.

4. Strengthen Data Governance: AI regulations often overlap with privacy and data protection laws. Implement strict policies for data quality, consent, and transparency in AI-driven decision-making.

5. Establish AI Governance Policies: Create internal frameworks for oversight, including ethics boards or compliance officers responsible for monitoring AI use.

6. Monitor Regulatory Developments: Assign responsibility for tracking AI legislation in the jurisdictions where your business operates, as requirements will vary globally.

Looking Ahead

The AI regulatory environment will continue to evolve, and early adopters of compliance practices will be better positioned to adapt. Businesses that take proactive steps now will not only minimize legal risk but also gain a competitive edge by building trust and demonstrating accountability.

AI regulation is no longer a distant possibility. Instead, it is rapidly becoming a business reality. Companies that act early by auditing AI use, addressing compliance gaps, and implementing governance structures will be best prepared to thrive in an increasingly regulated environment.