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Frontier AI developers need an internal audit function.

Jonas Schuett1

  • 1Centre for the Governance of AI, Oxford, UK.

Risk Analysis : an Official Publication of the Society for Risk Analysis
|October 21, 2024
PubMed
Summary

Frontier artificial intelligence (AI) developers require an internal audit function to enhance corporate governance and risk management. This function provides assurance to the board, addressing unique AI development challenges.

Keywords:
Three Lines Modelartificial intelligencecombined assurancecorporate governanceinternal auditrisk management

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Area of Science:

  • Artificial Intelligence
  • Corporate Governance
  • Risk Management

Background:

  • Frontier AI development presents unique governance challenges, including unpredictable capabilities and difficulty in risk assessment.
  • Existing risk governance practices in frontier AI development may not align with best practices.
  • Internal audit's role in corporate governance is to evaluate risk management, control, and governance processes.

Purpose of the Study:

  • To argue for the necessity of an internal audit function in frontier AI development.
  • To outline the challenges in frontier AI governance.
  • To discuss how internal audit can address these challenges while acknowledging its limitations.

Main Methods:

  • Descriptive analysis of internal audit's role in corporate governance.
  • Overview of governance challenges specific to frontier AI.
  • Discussion of the potential benefits and limitations of an internal audit function for AI developers.

Main Results:

  • Internal audit can identify ineffective risk management, improve board understanding of risks, and serve as a whistleblower channel.
  • Key limitations include potential for management capture and the need for skilled personnel.
  • Frontier AI developers need to strengthen risk governance by adopting established best practices.

Conclusions:

  • Implementing an internal audit function is a crucial first step for frontier AI developers to improve risk governance.
  • While not a complete solution, adopting existing best practices for internal audit is essential.
  • Strengthening governance is vital given the rapid advancement of AI research and development.