Navigating Data Privacy and Generative AI: Insights for Corporate Boards in 2024

Corporate boards and management teams are facing increasing pressure to incorporate generative AI technology into their operations while navigating changing data privacy regulations in the U.S. and the European Union. These challenges have raised concerns about compliance, data security, and ethical considerations for many organizations.

In a recent conversation with Corporate Board Member columnist Matthew Scott, Amy Rojik, head of BDO’s Center for Corporate Governance and board member for the Association of Audit Committee Members, Inc. (AACMI), shared insights on the importance of addressing data privacy issues and integrating AI into business strategies. Rojik emphasized the need for companies to understand and comply with privacy laws and regulations, especially as they collect and use consumer data.

One key issue highlighted by Rojik is the importance of transparency in how companies handle consumer data. She stressed the need for clear privacy policies, obtaining consent for data collection, and allowing consumers to control their personal information. Failure to safeguard privacy can not only result in legal penalties but also damage a company’s reputation and brand loyalty.

When it comes to incorporating AI into business operations, Rojik advised companies to take a multidisciplinary approach and establish policies that align with their strategic goals. Boards and management teams should consider the potential benefits of AI, assess the risks, and establish guardrails to ensure compliance and mitigate any unintended consequences.

In addition, Rojik highlighted the importance of vetting third-party suppliers to ensure they meet privacy and data governance standards. Companies must be vigilant in monitoring compliance with laws and regulations, especially when working with suppliers from different jurisdictions with varying regulatory requirements.

Overall, Rojik emphasized the need for proactive measures to protect consumer data, mitigate risks associated with AI integration, and ensure compliance with privacy laws. By prioritizing data privacy and ethical AI practices, companies can enhance their brand reputation, build consumer trust, and avoid costly legal consequences. Boards and management teams play a crucial role in overseeing these efforts and ensuring that proper safeguards are in place to protect company data and mitigate risks associated with AI technology.