· Connectors · 3 min read
Common Solutions for AI Cloud Risks: Executive Summary
Understanding cloud safety for AI solutions is crucial for effective board oversight across all industries. Key considerations include:
- Cloud vs. on-premises hosting: Balance control with innovation and scalability
- Shared responsibility in SaaS: Understand vendor and cloud provider roles in compliance
- Industry-specific requirements: Ensure solutions meet applicable regulatory standards
- Risk management strategies: Implement standardized contracts, policies, and audits
- Private/hybrid cloud solutions: Address conflicting global requirements
- Future-proofing: Adapt to evolving AI and cloud regulations
Board members should focus on verifying compliance, overseeing risk management strategies, and maintaining flexibility in technology decisions to future-proof against changing requirements across various sectors.
As organizations adopt AI to improve efficiency and drive innovation, the choice of how to safely host solutions becomes a critical governance issue.
I wrote a blog post over at 273 Ventures (my legal AI company) where I explored common solutions for addressing procurement requirements for and risks related to SaaS AI products. While that post explores the details comprehensively, here are the elements that I feel are most relevant to board members:
Key Takeaways for Board Members
Cloud vs. On-Premises Hosting
- “The cloud” generally refers to public clouds - third-party managed computing resources (e.g., AWS, Azure, GCP).
- On-premises hosting provides more control but may limit access to some AI solutions.
Board Consideration: What approach aligns with strategic, financial, operational, and compliance objectives? The board should help strike the right balance between security and control with innovation and flexibility.
Shared Responsibility Model
- In SaaS solutions, compliance is shared between the vendor and cloud provider.
Board Consideration: Failure of either party can result in downstream risk for your company; the board should not only have a clear understanding of the division of responsibility in vendor contracts, but also the related risks.
Industry-Specific Requirements
- Various regulations govern data handling, privacy, and security across different sectors.
Board Consideration: Verify that chosen solutions can meet all applicable regulatory and client requirements for your industry. Some vendors may be great for other industries, but ill-suited for yours.
Risk Management Strategies
- Standardize contracting to ensure vendor compliance
- Develop comprehensive policies and procedures and ensure that obligations flow to the vendor
- Undertake regular audits and assessments
Board Consideration: Oversee implementation of these strategies and ensure their effectiveness.
Private/Hybrid Cloud Solutions
- May be necessary to address conflicting global requirements
- Allows for greater control while leveraging cloud benefits
Board Consideration: Evaluate if private/hybrid cloud approach is necessary for your organization’s needs.
Future-Proofing
- Regulatory landscape and economics around AI and cloud continue to evolve across industries
Board Consideration: Ensure flexibility in technology strategy to adapt to changing requirements.
By understanding these key points, board members can better navigate the complex landscape of cloud hosting for AI solutions, ensuring robust oversight and informed decision-making in this critical area of technological transformation, regardless of their specific industry.