As artificial intelligence technologies evolve, so do the associated risk exposures for companies and their leadership. Artificial Intelligence washing describes practices such as stating a company is using artificial intelligence when it is not, overemphasising features, misrepresenting capabilities or making unsubstantiated claims. The article warns that such claims may be deliberate or accidental, arising when organisations adopt buzzwords and technical terminology without a clear understanding of the underlying technology.
Directors and officers now face mounting regulatory scrutiny in the uk across multiple fronts. the advertising standards authority has published guidance and upheld complaints about misleading artificial intelligence claims. the competition & markets authority has enhanced enforcement powers under the digital markets, competition and consumers act 2024 and can pursue cases that result in penalties for companies of up to 10% of global turnover and fines for individuals of up to £300,000. regulated firms must also heed the financial conduct authority, which requires communications to clients to be fair, clear and not misleading and which has broad investigatory and enforcement powers applicable to both organisations and individuals.
The article sets out clear steps boards should take to reduce exposure. directors should be precise about the language used in public statements, explain technical terms and avoid broad or unsupported claims. companies should retain supporting evidence for any assertions about artificial intelligence capabilities and review public-facing materials regularly. board-level policies and training focused on how artificial intelligence is described and marketed are recommended. directors and officers are also advised to consider how artificial intelligence washing risks are addressed in directors and officers insurance policy wordings to ensure potential exposures are covered. the piece closes with a governance prompt: do not let artificial intelligence washing become a governance failure and review ai claims and governance frameworks today.
