TheCorporateCounsel.net

Last month, I blogged about the DOJ’s new whistleblower program. In February, the DOJ also announced a new AI initiative in which it will seek input from experts in the field of artificial intelligence in order to help DOJ understand and prepare for how AI will affect its mission.  This excerpt recent CLS Blue Sky Blog post by two McDermott Will lawyers says that these two initiatives have significant implications for corporate boards’ oversight responsibilities:

First and foremost, the initiatives are a reminder of DOJ’s continuing commitment to corporate fraud enforcement and especially of is commitments to individual accountability. Among all the strategic and tactical challenges facing a company, the importance attributed to corporate responsibility is a constant. This may affect the board’s allocation of resources to the compliance function and its expectation of coordination between legal, compliance, and executive compensation functions.

Second, officers and directors will be called on to adjust the corporate compliance program to address an entirely new regime of risks arising from potential whistleblowers who are focused on indications of corporate fraud. Internal controls with respect to potential fraud must be sharpened, and overt efforts to demonstrate “tone at the top” should be increased to convince potential whistleblowers of the organization’s commitment to effective compliance. In addition, 24 Hour “hotline” reporting systems should be improved and anti-whistleblower retaliation protections enhanced.

Third, leadership should request a significant increase in the level of coordination between those responsible for internal direction of the company’s AI efforts and appropriate compliance and risk management executives. Until DOJ more clearly defines “disruptive technology risks,” this coordination should extend not only to the known risks and harms that can arise from AI and related technology, but also to the ways in which AI can be used to facilitate corporate fraud. Without further guidance from DOJ, this could require significant time and resources from the company.

The blog says that companies should expect pushback on coordination efforts from their tech leaders, who may not appreciate the need to address compliance issues, and says that the GC, CCO and CTO can be particularly valuable advisers to the board on its oversight efforts.

– John Jenkins