Biden’s Executive Order on AI: What Businesses Need to Know

Artificial intelligence (AI) promises to be one of the most transformative technologies of our time, with the potential to drive tremendous efficiencies, insights, and innovations across industries. However, without thoughtful governance, AI also poses risks related to issues like algorithmic biasdata privacycybersecurity, and more.

That’s why in September 2022, the White House released a sweeping executive order on Advancing Racial Equity and Support for Underserved Communities Through the Federal Government. This order lays outs a coordinated approach and set of principles for responsibly governing the development and use of AI technologies across areas like safety, innovation, privacy, equity and more.

For business leaders, this executive order signals both a new regulatory environment that your AI strategy will need to align with, as well as new opportunities to leverage AI for good. In this comprehensive overview, we’ll break down:

  • Key provisions of the order relevant for business
  • How to invest in responsible AI development aligned to new requirements
  • The critical role of cybersecurity and privacy protection
  • Ensuring fairness and transparency in AI systems
  • Special considerations for critical infrastructure and generative AI models
  • Tips for regulatory reporting and compliance

Key Provisions

At its core, this executive order aims to balance two complementary goals:

  1. Maximize AI’s benefits: Promoting innovation, commercialization and beneficial AI applications
  2. Manage AI’s risks: Ensuring safety, preventing harms, and mitigating issues of bias, equity, propaganda etc.

To achieve these goals, there is heavy emphasis on public-private partnership throughout the order, signaling that businesses have an important role to play.

Your strategic response here should focus both on aligning your AI programs and practices to the new regulatory environment, while also seizing fresh opportunities to innovate with AI across your business.

Key aspects of the order that will compel a strategic response include:

Data Reporting for Dual Use AI Models

Section 4.2 mandates new reporting rules around the development of large AI models that the government deems as ‘dual use’ – meaning having potential for both commercial and military benefits.

Specifically, any entity developing dual use models (as defined by a high level of computing power) has to file regular reports with the Secretary of Commerce detailing:

  • Activities related to training, developing or producing the model
  • Physical and cybersecurity controls
  • Ownership statements and access controls for model weights
  • Results of red team testing to identify model vulnerabilities and risks

What this signals is far greater scrutiny and transparency requirements around powerful AI models that may have national security implications.

If your business is investing significantly in space and developing models that meet the technical thresholds described, your strategy will need to adapt to meet these disclosure rules and proper protocols.

New Opportunities for Public-Private Partnerships

Conversely, businesses focused on the commercial application of AI may find exciting new partnership opportunities created from the order.

Section 5 on promoting innovation calls for major new investments into AI education, workforce training programs, grants and incentives – especially targeted at advancing privacy enhancing tools.

Specific actions outlined include:

  • Launching a National AI Research Resource (NAIRR) pilot program
  • Funding four new National AI Research Institutes
  • 500 new AI scholarships for experts by 2025

For many companies, these initiatives open promising channels to collaborate with agencies like NSF, DoE and others to further develop and take AI innovation to market responsibly.

Prioritizing equity and inclusion is also front and center, meaning taking steps to increase access and representation may be considered in applications for grants and partnerships.

In totality – between new reporting requirements and doors for innovation – the order mandates business strategy evolves to meet the new environment. Let’s now discuss some functional areas more in depth.

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Cybersecurity and Privacy Protection

Given AI’s reliance on data to function, the order takes clear aim at not only ensuring data privacy but also securing AI supply chains through enhanced cyber protections.

These specific measures warrant immediate business attention:

Limiting Data Collection

The order calls for agencies to carry out Privacy Impact Assessments on use of personal data and Commercial Information – specially related to AI systems. Stronger constraints may be introduced around agencies sharing or acquiring such data from private partners.

As you evaluate AI applications to invest in, scrutinize what data is actually required to fulfill the intended purpose. Seek guidance from privacy professionals on recording and sharing protocols given regulatory uncertainty. Build systems limiting data use to only what is essential for the AI model’s efficacy.

Emphasis on PETs

There are also clear signals that Privacy Enhancing Technologies (PETs) such as homomorphic encryption, zero knowledge proofs and federated learning will become far more industry standard.

Section 9 specifically tasks NSF with funding PETs research and creating incentives to accelerate technology transfer into real systems. It also calls for NIST to develop PETs guidelines for federal agencies within a year.

Again – partnership opportunities clearly exist here for commercial entities focused on PETs. Even otherwise, evaluate how you may incorporate techniques like differential privacy or synthetic data creation across AI efforts to limit exposure of sensitive personal information.

Combating Cyber Threats

Fragmented access to data alone cannot guarantee protection in today’s threat landscape. Sophisticated cyber attacks can combine anonymous and unprotected data leaks to devastating effect.

Hence the order places focus also on enhanced cyber protections when handling dual use AI models. Agencies have to implement physical and network security with access controls and external penetration testing.

For companies training powerful models, this is a reminder to treat your AI IP as critical assets requiring maximum security. Monitor access, implement principle of least privilege, maintain meticulous access logs, and mandate rigorous penetration testing to uncover gaps.

Additionally, Section 4.2 introduces strict regulations compelling disclosure if ANY foreign entity accesses US cloud infrastructure to run AI workloads. This data can be used by law enforcement in investigations against foreign threats.

If your development teams employ overseas talent or outsourced vendors, be aware of this visibility mandate coming into effect across all major cloud platforms.

Fairness and Transparency

A core theme across Biden’s executive order is emphasis on not just avoiding harm from AI systems, but maximizing societal benefit with intentionality.

Unlike previous administrations focused narrowly on increasing AI leadership or capabilities, there are consistent provisions here to make equity, accessibility, accountability and transparency design objectives for any government backed initiative.

Below are two crucial areas for businesses to focus on from an ethical AI perspective:

Fairness Safeguards and Risk Assessments

The guidance in Section 10 makes it compulsory for agencies to carry out external audits checking for algorithmic bias or discrimination in AI systems impacting people’s rights. This includes documentation, continuous monitoring in production via equity guardrails, and human oversight processes providing recourse against solely automated decisions.

For business applications as well, instituting checks in training data, rigorous pre-deployment testing, ongoing performance tracking on segments, and keeping a “human in the loop” are all best practices you should be implementing to ensure standards of fairness and accountability in AI systems. Consult policy experts on CURRENT regulation landscape (not just this order!) to confirm obligations.

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Verifying and Labeling AI Output

Given the rise of generative AI like DALL-E 2 for synthetic image creation and GPT-3 for natural language generation, the order also focuses on standards for content authentication and attribution.

Agencies have to institute mechanisms for labeling and signaling content created or modified by AI systems, so provenance is protected and downstream misuse can be contested. Having robust data lineage itself acts as a transparency safeguard.

For commercially released generative models, build capabilities to tag or watermark outputs as AI generated, establish notices to users on scope of permissible usage, and implement access controls or audit logs allowing traceability if needed.

Taken together, these provisions compel businesses to make ethical AI frameworks centered on fairness and transparency integral to strategy rather than an afterthought.

Critical Infrastructure

Modern critical infrastructure sectors like finance, energy and transportation are increasingly incorporating AI capabilities in operations for efficiency gains.

However from a cybersecurity lens, increasing autonomy and integration also expands potential attack surfaces for malicious actors. Recognizing this, Biden’s order calls attention to tailored guidelines and oversight programs needed as AI assurance in national critical infrastructure.

Two specific areas warranting business focus are:

Mandatory AI Guidelines

Through section 4.3, within 180 days the Secretary of Homeland Security has to formalize sector specific guidelines for safe AI usage tailored to critical infrastructure systems. These are MEANT to integrate with existing protocols like the NIST AI Risk Framework.

Subsequently, heads of other federal agencies have to mandate these same guidelines or portions within their jurisdictions and programs. Independent regulators are also urged to enforce the guidelines on industries they oversee.

What this translates to is mandatory AI safety practices becoming integrated into certification processes for critical infrastructure vendors. From smart powergrid components to autonomous vehicles, if your technologies serve CI end use purposes – strict assessment against new criteria will take effect through 2023.

Generative Models

Explicit attention is also directed at Generative AI’s potential to exponentially enhance disinformation, cyberattacks and infrastructure disruption risks.

Through section 4.6, recommendations have to be formulated within 9 months on managing threats from models where core weights are publicly accessible. Stricter constraints on accessing services platforms offering large language models may be introduced.

For vendors building on open source models, or using repositories like HuggingFace, be prepared for much more scrutiny in reliability standards and access protocols before critical infrastructure integration. Regulatory discussions in 2023 are likely on this front.

Regulatory Compliance

While presidential executive orders represent policy vision rather than actual law, agencies have latitude interpreting guidance into new certification policies or compliance burdens on contractors. This order seeds several such possibilities for AI over the coming year that businesses should monitor closely.

Federal Acquisition Regulation (FAR) Changes

With translated NIST documents on assessing AI trustworthiness and safety already planned, relevant security process sections like CMMC will inevitably need to integrate AI specific criteria as well. The order calls for FAR council to take this into account, signalling future code of federal regulation changes placing AI requirements onto contractors.

Start building understanding across your firm regarding standards like NIST AI Trustworthiness Framework draft, as well as best practices suggested from the AI Risk Management Framework. Identify gaps against eventual compliance controls listed once changes take effect to procurement protocols.

Chief AI Officers at Every Agency

By far, the most impactful development is a government wide mandate for every federal agency to appoint a Chief AI Officer within months after order passage. This central leadership is meant to govern and facilitate access to AI tools across all departments.

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With over $600 billion in annual contract spending, agencies adopting AI solutions tailored to their mission will compel private sector partners to demonstrate adherence with the evolving standards as a prime eligibility criteria.

The formation of agency level AI governance boards also provides a primary contact point for airing compliance concerns related to new provisions. Maintain engagement channels with their office as they setup.

Vetting AI Service Providers

New guidance shall also advise procurement bodies on evaluating vendor claims around:

  • Effectiveness of AI tools accuracy
  • Risk mitigation capabilities
  • Fairness, bias and safety standard compliance

Independent audits of proprietary models or benchmarks on representative data might be mandated to substantiate promises during acquisition.

For commercial AI teams this introduces need to have client accessible validation reports clearing quantitative thresholds ready – specially across sensitive category use cases like healthcare, finance etc.

Start compiling empirical evidence on salient parameters now itself to streamline adoption cycles later.

In totality – businesses must ingest that AI oversight responsibilities will permeate across the sprawling federal bureaucracy. Interpreting needs and compliances early is essential.

Building Out Internal AI Expertise a Key Priority

Common across nearly all the measures described in Biden’s executive order is the necessity for massively scaling specialized AI talent within government. And by corollary – the private sector as well.

Agencies are exhorted to expand direct hiring programs, connect with technical trade groups for recruitment help and increase professional training to existing employees on paradigm shifts ushered by AI adoption at scale.

In truth, ambitious policy visions contained here mean little without capable hands to judiciously put them into practice across contexts.

For executives, this talent crunch puts all the more emphasis on guarding any internal AI experts jealously and investing continuously into their augmentation.

Here are some tips:

  • Cross-train software developers on understanding unintended consequences from narrowly focused models.
  • Incentivize data scientists rotating into domain specific oversight roles analyzing model risk or bias issues.
  • Grow a compliance bench able to reliably audit AI systems on safety parameters.
  • Ensure representation from communities likely disadvantaged by existing societal asymmetries rather than teams disconnected from grounded reality.

Cultivating a holistic AI talent strategy – spanning technical build to oversight – is the surest lever for sustainable commercial success even as regulatory undertones shift.

Conclusion

Biden’s wide sweeping executive order sets ambitious agenda for responsible AI spanning security, privacy, ethics and innovation.

For business leaders and technology strategists, it signals both new obligations in governance as well as openings for public private collaboration.

Key action items include:

  • Expect greater transparency requirements on dual use AI models
  • Seize opportunities for research partnerships and incentives
  • Enhance data protection and cyber vigilance
  • Make ethical AI an organizational priority
  • Prepare for tighter integration mandates between agency guidelines and critical infrastructure AI controls
  • Closely track chief AI officers positions and reporting structures setup by agencies
  • Start compiling validation materials to ease compliance burdens

This order undoubtedly kickstarts a new era of transformation in how AI governance takes shape. Stay tuned as the public comment periods give further shape over 2023!

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