AI Ethics and Regulation: How Investors Can Navigate the Maze

From potentially brand-damaging ethical risks to regulatory uncertainty, AI poses challenges for investors. But there is a path forward.

Artificial intelligence (AI) poses many ethical issues that can translate into risks for consumers, companies and investors. And AI regulation, which is developing unevenly across multiple jurisdictions, adds to the uncertainty. The key for investors, in our view, is to focus on transparency and explainability.

The ethical issues and risks of AI begin with the developers who create the technology. From there, they flow to the developers’ clients—companies that integrate AI into their businesses—and on to consumers and society more broadly. Through their holdings in AI developers and companies that use AI, investors are exposed to both ends of the risk chain.

AI is developing quicky, far ahead of most people’s understanding of it. Among those trying to catch up are global regulators and lawmakers. At first glance, their activity in the AI area has grown quickly in the last few years; many countries have released related strategies and others are close to introducing them (Display).

In reality, the progress has been uneven and is far from complete. There is no uniform approach to AI regulation across jurisdictions, and some countries introduced their regulations before ChatGPT launched in late 2022. As AI proliferates, many regulators will need to update and possibly expand the work they’ve already done.

For investors, the regulatory uncertainty compounds AI’s other risks. To understand and assess how to deal with these risks, it helps to have an overview of the AI business, ethical and regulatory landscape.[…]

From potentially brand-damaging ethical risks to regulatory uncertainty, AI poses challenges for investors. But there is a path forward.

Share this:

Related