Introduction

Artificial intelligence (AI) is not a philosophical discussion, business dream, or science fiction for CPAs—whether they are risk managers, auditors, or financial executives. Unlike many business development or operational executives who dream of expanding opportunities and efficiencies, CPAs and other financial professionals recognize and respect the accompanying threats that could just as quickly hinder the organization’s survival and stakeholder value. The concern is not so much the macro threats that impact society at large, over which an organization has little control, but the micro threats that require the navigation of governance and management to facilitate the achievement of organizational objectives.

Common ‘Worst Practices’ in AI Risk Management

1. Failure to Use Existing Organizational Governance Practices

While AI is a relatively new technology for the enterprise, an organization’s existing governance and policies still apply. Governance should provide processes for emerging technology issues, ensuring stakeholders are informed of deviations from agreed-upon practices.

2. Insufficient Understanding of AI

Some professionals rely too heavily on media reports for guidance on AI, leading to a lack of necessary knowledge to adequately engage with advisors. Consulting reputable whitepapers like the UK National Cyber Security Centre’s will provide a more grounded understanding.

3. Ignoring Financial Statement Implications

AI impacts financial statement reporting significantly, yet some CPAs overlook this aspect. Timeless risks such as access privileges, erroneous changes, and data reliability should be consistently managed.

4. Neglecting Industry-Specific AI Risks

Each sector must address its unique AI risks and challenges. Information Sharing and Analysis Centers (ISACs) can provide vital support by disseminating actionable threat information.

5. Failing to Obtain Real-World Risk Insights

Learning from other industries, especially financial services, about AI implementations can provide valuable insights into effective risk management practices.

Conclusion

Understanding and mitigating AI-related risks is essential for financial professionals to thrive in an evolving technological landscape. As the demand for responsible AI implementation grows, so too must the commitment to sound risk management practices.