Colorado Leads the Way: Comprehensive AI Legislation and What It Means for Compliance Professionals

June 10, 2024 | What's Hot | 5 min read

In a groundbreaking move, Colorado has become the first state to enact comprehensive legislation aimed at regulating artificial intelligence (AI). This pioneering step sets a precedent in the United States and signals a significant shift in how AI technologies are governed. 

As compliance professionals, it is crucial to understand the implications of this legislation and prepare for its potential impacts on your organization.

Understanding Colorado’s AI Legislation

The new law, known as the Colorado AI Act, introduces a framework for the ethical and transparent use of AI. The legislation aims to address concerns around AI’s potential biases, data privacy issues, and the overall impact on society. 

Key elements of the Colorado AI Act include:

  • Transparency Requirements: Organizations must disclose when AI systems are used in decision-making processes, especially those that significantly affect individuals’ lives, such as hiring, lending, and law enforcement.
  • Bias Mitigation: The Act mandates regular audits and assessments to identify and mitigate biases in AI algorithms. This is particularly important for systems used in sensitive areas like criminal justice and healthcare.
  • Data Privacy Protections: The legislation emphasizes the importance of protecting personal data used by AI systems. Organizations must ensure that data collection, storage, and usage comply with existing privacy laws and best practices. 

Deliver effective training solutions to increase awareness, engage employees, and affect lasting change.

  • Accountability Measures: Companies deploying AI systems must implement robust accountability mechanisms. This includes maintaining detailed records of AI decision-making processes and outcomes, which can be reviewed by regulatory bodies.

Why do these issues matter? Let’s look at an example that happened outside of the United States for guidance. 

Italy’s data protection authority, Garante, fined two of the country’s largest online food delivery apps for using algorithms to favor delivery drivers who could work during hours of high demand – especially Fridays, Saturdays, and Sundays. Workers unable to work on these days due to religious observance of the sabbath (for example) were penalized by the algorithms.

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Another example of why these issues matter lies in Air Canada’s AI ChatBot dilemma. A customer was promised a refund that he shouldn’t have received by the company’s ChatBot, and when the time came, Air Canada didn’t want to pay – citing that the responses of the ChatBot were non-binding. It was ultimately determined that Air Canda must follow through with the promised discount because it was responsible for all of the information available on its site.

Without transparency, bias mitigation, data privacy protection, and active accountability, your organization could face inadvertent consequences if it is not paying attention to how AI is being used by its people, systems, and processes.

That’s why a comprehensive AI training program is so important.

Implications for Compliance Professionals

As compliance professionals, your role is pivotal in ensuring that your organization adheres to the new regulations set forth by the Colorado AI Act which, essentially, requires good AI governance practices within the company. 

Here are some key actions to consider:

Develop clear policies and procedures. Establish clear policies and procedures that align with the Colorado AI Act. This includes guidelines for data privacy, regular bias assessments, and maintaining transparency in AI decision-making processes.

Implement training programs. Educate your team about the new legislation and its implications. Provide training on ethical AI practices, data privacy, and the importance of transparency and accountability in AI usage.

Engage with stakeholders. Collaborate with other departments, such as IT and legal, to ensure a comprehensive understanding and implementation of the use cases of AI within the organization and how the new regulation impacts those use cases. Engage with external stakeholders, including AI vendors, to ensure they also comply with the legislative requirements.

Conduct comprehensive audits. Begin by conducting thorough audits of your organization's AI systems. Identify where and how AI is being used and assess these systems for potential biases and compliance with transparency requirements.

Stay informed. The field of AI regulation is rapidly evolving. Stay informed about new developments, both at the state and federal levels, to ensure your organization remains compliant with the latest standards and best practices.

AI Governance Global 2024

Speaking of staying informed, I’m writing this having just left the second annual AI Governance Global 2024 event in Brussels. And while the event covered a multitude of topics, one of the main discussion points on attendees’ minds was the gravitas and impact of the EU AI Act. 

Many of the companies who attended the Summit where at various places in their AI Governance journey; however, one commonality emerged from both the keynotes and the breakouts. We must rise to this moment and operationalize AI governance in ways that likewise supports innovation. 

With the rising number of regulations, practices, frameworks, policies, tools and stakeholders in the AI governance conversation, it is imperative that we personalize our programs to the risks posed by AI development and deployment in our organization.

And in doing so, as I discussed in my LinkedIn post, we cannot forget the people–our employees—who are the most essential components of our programs.

Looking Ahead

Colorado’s pioneering AI legislation is likely to influence other states and potentially lead to federal regulations. Compliance professionals need to stay proactive – continuously adapting to new requirements and integrating ethical AI practices into their organizational frameworks.

By embracing the principles of transparency, accountability, and bias mitigation, organizations can not only comply with the Colorado AI Act but also build trust with their stakeholders and contribute to the responsible development and deployment of AI technologies.

There’s no doubt about it: the Colorado AI Act is a significant milestone in AI governance. Compliance professionals have a crucial role in navigating this new regulatory landscape, ensuring that their organizations not only meet legal requirements but also uphold ethical standards in the use of AI. 

Stay vigilant, informed, and proactive to lead your organization through this transformative era.