As artificial intelligence rapidly integrates into customer service, marketing, HR, and beyond, businesses are eager to harness its full potential. Yet amid the excitement, many leaders feel uneasy. Are we seeing real ROI or just riding a hype wave?
This is where an AI impact assessment comes in. It’s the compass that can guide your company through the AI revolution with eyes wide open.
Just as you wouldn’t implement a major new process or technology without analysis, an AI impact assessment is a formal evaluation of how an AI system might affect your business and its stakeholders.
An AI impact assessment typically asks questions like: What is this AI system intended to do, and is it necessary? Who could be affected by its decisions or errors (customers, employees, the public)? What could go wrong – could it introduce bias, security vulnerabilities, or legal issues? And how will we mitigate those risks?
The best practice is to conduct the first AI impact assessment early – ideally before you fully deploy a new AI system or integrate it into critical operations. Don’t treat it as a retroactive checkbox after the AI is already live; by then, much of the benefit is lost.
Conducting an AI impact assessment is quickly moving from a nice-to-have to a must-have for any business that uses AI. Here’s why:
1. The stakes are high and AI is everywhere. AI isn’t a niche experiment anymore – it’s mainstream in business. As of 2024, 78% of organizations report using AI in at least one business function, up from just 55% the year before. This explosive adoption means AI is likely touching your customers or employees in some way.
2. It uncovers hidden risks before they become disasters. AI systems can introduce risks that traditional software or processes might not. Amazon famously had to scrap an AI recruiting tool after it was found to be biased against women. And in 2023, Samsung had to ban employees from using ChatGPT at work after an engineer accidentally leaked sensitive code into the AI system. Without an impact assessment, such issues might only come to light after deployment, when damage is already done.
3. It keeps regulators and lawyers off your back. Across the globe, regulators are circling AI with a watchful eye. The last thing you want is to deploy an AI system only to find out it violates a law or triggers a lawsuit. An AI impact assessment includes checking compliance with any relevant laws, regulations, or industry guidelines.
Let’s zero in on the payback. What do you stand to gain by investing time and effort into an AI impact assessment? It turns out quite a lot. Here are some of the key benefits for your business:
In short, an AI impact assessment pays dividends by helping you derive more value from AI, avoid pitfalls, stay compliant with regulations, and build trust. It’s an investment in doing AI well, not just for the sake of doing AI.
While the exact process can vary depending on the framework you follow or the complexity of the AI system, here’s a practical step-by-step approach that covers the bases. Think of it as a checklist to ensure you’re thorough:
1. Define the AI system and its purpose
Start by clearly describing the AI application or tool in question. What is it intended to do, and why is your business considering it? Document the scope of the system of the AI Agent:
For example, is this AI making autonomous decisions or just assisting a human? Which business process or decision is it meant to enhance? This step sets the stage for everyone to understand what we’re evaluating.
2. Identify impacted stakeholders and parties
Next, ask who could be affected by this AI system. Stakeholders include the obvious ones (your company and your customers), but also think broadly: employees who will work with or alongside the AI, end-users, and even broader society if relevant. Will the AI’s decisions impact certain groups of people? For instance, an AI in hiring affects job applicants; a loan approval AI affects borrowers. Make a list of these parties because you’ll want to consider their perspectives and rights in the assessment.
3. Map out relevant laws, regulations, and policies
Determine what rules apply to this AI use case. Are there data privacy laws (like GDPR or HIPAA) to comply with? Sector-specific regulations (e.g. finance or healthcare) about automated decision-making?
Additionally, review your internal policies – including those related to security, data usage, and ethics – as well as any relevant industry standards or guidelines. An AI impact assessment should explicitly check the AI system against these requirements.
This ensures you don’t overlook a compliance obligation. If the AI crosses borders, consider laws in all affected jurisdictions.
4. Assess potential benefits
Gather information on what positive outcomes you expect. Will AI speed up a workflow, reduce errors, increase sales, and improve customer satisfaction?
Try to quantify the benefits if possible (e.g., “We expect 20% faster customer query resolution” or “10% cost savings in processing”). This will later help in weighing the benefits against the risks and in setting up metrics to monitor success. It also helps get buy-in – seeing tangible benefits documented makes it clear why the AI is worth pursuing.
5. Assess potential risks and harms. This is the core of the impact assessment. Systematically go through various risk categories and identify what could go wrong. Key areas to examine include:
At this stage, it’s helpful to involve a diverse team – technical experts to understand the AI’s workings, legal/compliance officers, HR or PR for ethical lenses, and business owners. They can contribute to a well-rounded risk picture. Document all identified risks in detail.
6. Evaluate alignment with business objectives and make a go/no-go decision
Do the expected benefits outweigh the residual risks (risks after mitigations)? Sometimes, an assessment reveals that an AI project just isn’t worth it or isn’t the right solution to the problem. Use the findings to either green-light the project with a clear implementation plan (including all those safeguards) or recommend not proceeding if the case doesn’t hold up. Essentially, the impact assessment report becomes the basis for an informed decision by leadership.
7. Implement and monitor
Deploy the AI system with the mitigation measures in place. But don’t stop there. Set up metrics and monitoring to track the AI’s impact against what you predicted. Schedule a follow-up review (maybe in 6 months or after a major update to the AI) to revisit the assumptions and see if new risks emerged or if the benefits are on track.
By following these steps, you’ll have a solid handle on performing an AI impact assessment. It might feel extensive, but each step is there to save you headaches later.
Worklytics can track how AI is being used across your organization and tie that usage to key productivity and efficiency metrics. It provides valuable data, such as which teams are utilizing these tools and how frequently, the types of tasks the AI is assisting with, and whether performance indicators are changing as a result.
Why is this so valuable? Because it closes the loop on your AI impact assessment:
In today’s competitive environment, where falling behind on AI is a real risk, Worklytics ensures you’re not flying blind. It helps you turn lofty AI promises into tangible, monitored outcomes, giving you confidence and proof that your AI investments are paying off.
Artificial intelligence is opening exciting new frontiers in business. From automating routine tasks to uncovering insights in mountains of data, the potential benefits are enormous.
Every business will need to answer: How do we make sure AI is helping, not hurting? An AI impact assessment – followed by diligent measurement and adjustment – is the answer. It’s how you embrace AI confidently, knowing you’ve checked your blind spots. So, as you plan your next AI initiative, take that extra step to assess its impact. Your future self (and your customers, employees, and regulators) will thank you for it. With the right approach, you can ride the AI wave and steer it too, driving your business forward responsibly and profitably in the age of intelligence.
