Artificial intelligence is no longer a futuristic idea. From customer service chatbots to software that screens job applicants, AI already shapes how Wisconsin businesses operate. The benefits — speed, efficiency, and insight — are clear. But so are the risks. A single AI misstep could cost you money, damage your reputation, or trigger legal problems.
An AI risk assessment helps you avoid those pitfalls.
What is an AI risk assessment?
Think of it as a checkup for your AI systems. Instead of waiting for a problem to surface, an assessment examines where and how your business uses AI, identifies potential risks, and recommends safeguards. It’s about being proactive — making sure your systems are fair, secure, and compliant before something goes wrong.
The risks businesses face
AI brings opportunity, but also risk. One of the biggest challenges is bias. If your training data is skewed, the outcomes will be too — sometimes leading to discrimination in hiring or lending. That can put you at odds with laws enforced by Wisconsin’s Department of Workforce Development or federal regulators like the EEOC.
Privacy is another concern. Many AI tools rely on sensitive data. Mishandling that information could violate HIPAA, consumer protection laws, or oversight by the Wisconsin Department of Agriculture, Trade and Consumer Protection.
Then there’s security. Hackers increasingly target AI systems to steal data or manipulate results. Even a small breach can create lasting reputational damage.
Finally, regulation is tightening. While Wisconsin hasn’t yet passed AI-specific laws, existing privacy and consumer protection rules already apply. On top of that, the EU’s new AI Act and new state-level laws in places like Colorado mean businesses with customers outside Wisconsin must stay alert.
A real-world lesson
These risks aren’t just hypothetical. A few years ago, Amazon developed an AI hiring tool to help sift through resumes. The system ended up favoring male candidates over female ones because it was trained on past data from a male-dominated tech workforce. Amazon eventually scrapped the tool, but not before it made headlines worldwide. The case highlighted how quickly biased AI can damage a company’s reputation and expose it to legal risk.
The high cost of getting AI wrong
The fallout from an AI misstep can be costly. A biased hiring tool could lead to lawsuits. A breach of customer data could push clients to competitors. Even a simple chatbot error could erode trust in your brand. An AI risk assessment brings these issues to light before they harm your business.
How to conduct an AI risk assessment
Start by mapping out where AI appears in your operations — customer service, HR, marketing, or finance. For each system, ask tough questions: What could go wrong? Could the system be hacked? Could it produce biased results? Could it run afoul of Wisconsin or federal laws?
Next, evaluate the potential impact. Which risks would cause the most financial, reputational, or legal damage? Focus on those first. Then build safeguards — whether that’s stronger cybersecurity, better training data, regular audits, or clear internal policies. And don’t forget documentation. If regulators or auditors come knocking, written records of your process will help.
Putting your assessment into action
The value of an assessment is in what you do next. Create an action plan, assign responsibility, and train staff on safe, ethical use of AI. Because technology changes quickly, make reassessment part of your routine.
Staying ahead of AI risks
AI has the power to help your business grow — but only if it’s managed wisely. An AI risk assessment keeps your systems compliant, secure, and trustworthy. Think of it as good business hygiene: a simple step that protects your operations today and prepares you for the evolving regulations and risks of tomorrow.
