Latest / The Road to Accountable AI / Walter Haydock, StackAware: In Search Of AI Governance Certification
Transcript
- 0:09Werbach: Hi, I'm Kevin Warbeck, professor of Legal Studies and
- 0:11Business Ethics at the Wharton School of the University of Pennsylvania.
- 0:15For decades, I've studied emerging technologies from broadband to blockchain.
- 0:19Today, AI is promising to transform our world, but AI needs accountability
- 0:26mechanisms to ensure it's developed and deployed in responsible,
- 0:29safe, and trustworthy ways.
- 0:32On this podcast, I speak with the experts leading the charge.
- 0:34For Accountable ai
- 0:38Haydock: Today I'm joined by
- 0:39Werbach: Walter Haydock, founder of Stack Aware, which helps companies
- 0:43manage AI security, compliance, and privacy risks with a particular
- 0:47focus on ISO 40 2001 certification.
- 0:50We talk about his path from the military and cybersecurity to AI governance, the
- 0:54difference between voluntary frameworks and certifiable standards for ai.
- 0:59What ISO 42,000 readiness.
- 1:01Actually entails benefits for firms that make the investment and what the
- 1:06ideal combination of certification audits, insurance and legal safe
- 1:13harbors for AI would look like.
- 1:16Walter, thank you for joining me.
- 1:17Welcome to the Road to Accountable ai.
- 1:20Haydock: Kevin, thanks for having me on.
- 1:23Werbach: First, how did you get into this field of AI governance?
- 1:27Because you, you didn't necessarily have what I would
- 1:29think is the traditional path.
- 1:33Haydock: So I spent the early part of my career in the US military and government.
- 1:38I was a Marine Corps intelligence and reconnaissance officer.
- 1:40I worked on Capitol Hill as a congressional staffer and also
- 1:45was a targeting analyst at the National Counter-Terrorism Center.
- 1:49And in all of those experiences, I thought I understood chaos
- 1:54and how to deal with it.
- 1:56But when I decided to move into the private sector a little bit later in my
- 2:00career, I encountered a whole new level of disorganization and chaos as well.
- 2:08And I initially worked in the cybersecurity field at a bunch of
- 2:14different software companies and developed an understanding of how
- 2:18to apply some of these military risk management techniques to the problem
- 2:23of data protection, of compliance of.
- 2:27Combating attackers and decided to eventually launch my own firm Stack Aware.
- 2:33And after some initial iteration and unfolding as, uh, one of my mentors calls
- 2:39it, we decided to focus on the problem of AI risk management and governance.
- 2:45And I've been working on that for almost three years at this point.
- 2:51Werbach: So obviously in the military and in, you know,
- 2:54cybersecurity counter-terrorism, you, you need to deal with risks.
- 2:57Um, but different kinds of risks than private organizations
- 3:02are, are dealing with largely.
- 3:03So what, what do you take from that experience?
- 3:05What does it actually mean to apply some of those military
- 3:08principles to this kind of domain?
- 3:11Haydock: Well, whether you're in the military or you're in the private
- 3:15sector, there are really only for things you can do with the risk.
- 3:20And those are, you can avoid the risk by not doing the activity that's causing it.
- 3:25You can transfer the risk by buying insurance, by an indemnification,
- 3:31by a contractual term.
- 3:32You can mitigate the risk by applying some sort of control, whether it's
- 3:38a, a safety control in the military, or a technical control in the
- 3:42security or AI governance context.
- 3:44And then fourth and finally, you can accept the risk, which means that you
- 3:47understand something could go wrong along the way, but at the end of the
- 3:51day, the juice is worth the squeeze, so you're gonna press ahead anyway.
- 3:56Werbach: How do you decide which of those to choose in any situation?
- 4:00Haydock: The only way to make an informed decision when it comes
- 4:04to risk management is quantitative analysis, and historically,
- 4:10organizations have done a lot of.
- 4:13What is colloquially known as heat mapping when it comes to risks.
- 4:17So saying we've got a low probability, but high impact risk.
- 4:24And ergo, that is a, a medium overall risk.
- 4:29That's what I describe as doing math with colors, which unfortunately doesn't really
- 4:34make sense and I found myself wrapping.
- 4:38Myself and others in axles trying to figure out exactly
- 4:41how you do that math with color.
- 4:43So my recommendation is to just avoid that entirely and focus
- 4:47on quantitative assessment.
- 4:48Mm-hmm.
- 4:49And when you do quantitative assessment, you can understand
- 4:52what is the dollar value of a given event occur, or the dollar value
- 4:59of a given risk materializing.
- 5:01And if you take.
- 5:02Annual rate of occurrence times, single loss expectancy, and then
- 5:07look at the exposure factor.
- 5:08You can do that math to understand what the value of a given risk is and why
- 5:15that's key is because it lets you compare that to the value that you're gonna obtain
- 5:21from conducting whatever action it is.
- 5:23And then also the cost of the controls, whether that's mitigating
- 5:28the risk or transferring it through insurance or some other method.
- 5:33Werbach: Great.
- 5:33So I wanna get into it more specifically, but, but first,
- 5:36just one more general question.
- 5:37What, what is it that appealed to you about AI governance
- 5:40coming out of cybersecurity?
- 5:41What made you think this was the area to focus on?
- 5:46Haydock: When I was first leaving the public sector and I was in business
- 5:50school, I actually did a lot of, bit a lot of self-education in terms of ai.
- 5:55I was considering pursuing machine learning engineering as a career
- 5:59path and actually did a, a nano degree from a company called Udacity.
- 6:05Taught myself how to code and really loved the subject matter and.
- 6:10Decided that I eventually wanted to wrap that into, you
- 6:14know, my work in the future.
- 6:16I went into the cybersecurity field out of business school and then
- 6:20saw the two fields merging together in terms of their significance.
- 6:25And that led me to pursue the AI governance and risk management field
- 6:31as, uh, as the focus of my company.
- 6:34Werbach: And in general, what do you think is the biggest gap in that area?
- 6:38What is it that most firms are missing when it comes to AI governance?
- 6:45Haydock: The biggest gap for most firms is understanding their exposure
- 6:50versus their actual risk appetite.
- 6:52Werbach: Mm-hmm.
- 6:52Haydock: So on the one hand, you will have.
- 6:55Companies that don't really have a good idea of what AI
- 6:58tools and systems are in use.
- 7:00And on the other hand, they'll have very restrictive and what I would consider
- 7:04to be boilerplate policies mm-hmm.
- 7:06That are very black and white.
- 7:08Say things like, don't create intellectual property risk with
- 7:11ai, or use AI responsibly, which.
- 7:15From a practical perspective, it's not really helpful guidance, and that puts
- 7:20employees in a very tough spot where they need to navigate the pressure of getting
- 7:24their job done with these sometimes draconian and unrealistic requirements.
- 7:29So having a realistic and actionable approach to AI risk
- 7:33management is absolutely key.
- 7:36Werbach: And you've been, uh, something of an advocate for the
- 7:39ISO 40 2001 certification framework.
- 7:43Um, first, for those who aren't familiar, just talk about what that is.
- 7:50Haydock: ISO 40 2001 is the global standard for building an AI management
- 7:56system, and that is a set of policies, procedures, and technical controls
- 8:02to harness AI effectively and manage the risk associated with it.
- 8:07At the same time, it's similar to the ISO 27,001.
- 8:12Information security management system standard.
- 8:14But ISO 40 2001 is even broader in its applicability because it requires
- 8:20you to look outside the organization and look at things like societal and
- 8:24environmental impacts from the use of ai.
- 8:27So it is a comprehensive way to guide your organization's
- 8:32use of artificial intelligence.
- 8:35Werbach: And how is it different from other frameworks or regulations
- 8:38that, that people may be familiar with, like the the NIST framework
- 8:41or some of the European or American laws that deal with AI governance?
- 8:48Haydock: I bucket.
- 8:49Frameworks into three different categories.
- 8:52So the first category would be a piece of legislation like the European
- 8:57Union Artificial Intelligence Act, or Colorado's SB 2 0 5, the Colorado AI Act.
- 9:04For those, it's really a binary.
- 9:07Are you in compliance?
- 9:08Are you not in compliance?
- 9:09And the only way you find out you're not is through an enforcement action.
- 9:13Of course, there are best practices, there are more specific guidelines
- 9:17you need to follow for those.
- 9:19Requirements.
- 9:20Mm-hmm.
- 9:20But that is one category of framework when it comes to ai or more broadly.
- 9:25Werbach: Mm-hmm.
- 9:26Haydock: The second category are things that are self at
- 9:30testable or voluntary standards.
- 9:33You mentioned the nist, artificial Intelligence Risk Management framework.
- 9:37That's one.
- 9:38The open web application security projects.
- 9:41Top 10 for generative AI is another example of a voluntary framework.
- 9:47And then the third category of framework are those certifiable standards where
- 9:53you can have a third party come in and confirm that you are meeting
- 9:58the requirements of the standard.
- 10:00ISO 40 2001 is one of those, but additional examples include
- 10:05the high trusts AI security certification, and then the AI uc one
- 10:10standard, which is relatively new.
- 10:13Werbach: What's the difference in a standard that's certifiable?
- 10:18Haydock: Can you drill down into that a little bit in terms of
- 10:21difference between the, those standards I mentioned, or between
- 10:25standards that are certifiable and not
- 10:27Werbach: Yeah, E exactly What, what is it that, what is it that would look
- 10:31different in terms of what a firm would've to do, or what the requirements would
- 10:34be of something that can be externally certified versus something that is
- 10:39purely voluntary and self-certified?
- 10:43Haydock: The biggest difference between a self-certified standard and an externally
- 10:47certifiable standard is the credibility that you would bring to customers.
- 10:53So you can claim that you're adhering to ISO 40 2001, that you're adhering to
- 10:59the EU AI Act, and you very well may be.
- 11:02With that said, customers are gonna have far more confidence in that claim.
- 11:08If you have a a third party who is independent, come in and confirm
- 11:14that you are meeting the requirements of that standard according to.
- 11:19Their guidelines for conducting audits.
- 11:21So there's no way you can achieve a certification around the NIST
- 11:26AI risk management framework.
- 11:28There are attestations and there are ways that you can have an auditor come
- 11:32in and say, yeah, you're, you're probably following those guidelines, but there
- 11:35is no true certification for that.
- 11:38ISO 40 2001 is different because it was designed from the beginning to allow.
- 11:43An independent auditor to come in and confirm or deny that you're meeting
- 11:48the requirements of the standard.
- 11:50Werbach: Presumably that means there has to be a standard for the auditor.
- 11:54Haydock: Absolutely.
- 11:55There is a standard for the auditor.
- 11:57The all the certification bodies are.
- 12:01Required to meet specific guidelines when it comes to auditing artificial
- 12:07intelligence management systems.
- 12:08In the case of ai, it's ISO 40 2006 is the auditing standard, which guides how these
- 12:15certification bodies conduct their work.
- 12:18And they are overseen by accreditation bodies, which
- 12:22will review what they're doing.
- 12:24And actually, for last year, stack Aware during its own ISO
- 12:2840 2001 surveillance audit.
- 12:31Our audit was witnessed by the ANSI National Accreditation Board, so we had
- 12:38someone looking over the shoulder of our auditor while we were being audited.
- 12:44Werbach: Is there an ecosystem of auditors that's developing for ISO 40 2001?
- 12:51Haydock: There are a set of.
- 12:54Auditors that are currently accredited to conduct ISO 40 2001 audits,
- 13:00and we work with several of them.
- 13:03We are not necessarily beholden to them.
- 13:05We don't necessarily have to work with them.
- 13:08We will work with any auditor that our customer wants to use.
- 13:12Um, but we are separate from them in that we are a consulting firm, so we help.
- 13:17Organizations get ready for the audit and we necessarily cannot be involved in the
- 13:21certification side of things because Sure.
- 13:24That firm needs to maintain independence from the process
- 13:28of preparing for the audit.
- 13:29So there are, I'd say in the US there are probably a dozen, maybe more
- 13:34firms that are currently accredited.
- 13:36Mm-hmm.
- 13:36To grant ISO 40 2001 certification, and that number is growing.
- 13:40Werbach: Okay.
- 13:41And you mentioned that that Stack Aware went through the process yourself.
- 13:44Um, so you know you can speak with some authority and what it
- 13:47means to actually get certified.
- 13:50What, what should an organization understand is required if they
- 13:52want to go down this path?
- 13:56Haydock: ISO 40 2001 certification is a heavy lift for an organization.
- 14:02That's because it requires things like executive buy-in.
- 14:06It requires a full understanding of the scope of your management system,
- 14:11and it's gonna require ongoing resources for maintenance, for doing
- 14:16internal audits, things of that nature.
- 14:18So being fully committed to the process is really important.
- 14:22Upfront.
- 14:23Now, with that said, if you put in the right level of investment, you can
- 14:28use ISO 40 2001 as a way to improve the functioning of your AI systems
- 14:35as a way to accelerate your business objectives through both effective
- 14:39risk management, but also monitoring and measuring of your AI performance,
- 14:44training of your employees, and.
- 14:47Improving trust with customers who have improved confidence that
- 14:51you're using artificial intelligence safely, securely, and responsibly.
- 14:56Werbach: Can it also potentially give you some legal protection
- 14:59under these laws we talked about?
- 15:02Haydock: O 40 2001 is very interesting in that it gives you two different
- 15:08levels of protection when it comes to regulatory compliance.
- 15:13So the first level is that it requires incorporating what the
- 15:16standard calls external issues into your AI management system.
- 15:20So things like laws are certainly external requirements.
- 15:24They can also include things like contractual requirements.
- 15:27The business landscape, things like that.
- 15:29So ISO 40 2001 gives you a system for incorporating these
- 15:34various demands on your business into your AI management system.
- 15:39So that's the first benefit.
- 15:42The second benefit is that in specific cases, for example, Colorado's SB
- 15:472 0 5, that law calls out ISO 40 2001 compliance as providing safe
- 15:53harbor under certain circumstances.
- 15:56Under that law.
- 15:57So it's unique in that it's called out by a specific law as giving you protection
- 16:04if you're meeting other requirements.
- 16:06Mm-hmm.
- 16:07Werbach: And you mentioned a little bit the work that Stack Aware does
- 16:11with companies in terms of, uh, becoming ISO 40 2001 compliant.
- 16:15What, what are the major areas that, that companies need help
- 16:19on to go through this process?
- 16:23Haydock: Stack Aware generally works with companies in three phases.
- 16:27So in the first phase, we'll come in, we will help them do an asset inventory, make
- 16:33sure we understand everything that's in scope, evaluate the risk of those systems.
- 16:38That includes, in some cases, doing ai red teaming to evaluate the security and.
- 16:44Effectiveness of the controls for these AI systems.
- 16:48In the second phase, we will help the company apply administrative
- 16:52controls, including building their AI management system documentation,
- 16:57building the policies and procedures, ensuring management reviews are
- 17:00being conducted on a regular cadence.
- 17:02And then in the third phase, we will help the companies apply technical
- 17:06controls in accordance with Annex A of the ISO 40 2001 standard.
- 17:10And then we can actually perform an internal audit, which is essentially
- 17:14a way of checking prior to the external audit that these controls
- 17:19are functioning effectively.
- 17:22Werbach: As you mentioned, it's a heavy lift.
- 17:23What, what are the, uh, ideal characteristics of an organization
- 17:28that should go down this path?
- 17:32Haydock: There are three broad types of organizations that would benefit
- 17:35most from ISO 40 2001 certification.
- 17:39So the first are AI powered B2B startups because these organizations generally
- 17:46only have the capacity to pursue one standard ISO 40 2001 checks a lot of
- 17:52boxes at the same time, it addresses security, it addresses privacy.
- 17:57It addresses societal impact, and I can speak from personal experience that
- 18:02we've used our certification to build confidence with our customers when we're
- 18:06going through a procurement process.
- 18:10A second type of company that would benefit from ISO 40 2001 certification
- 18:16is one that's training on customer data.
- 18:19And there are many examples out there of companies that have gotten
- 18:24bad press because of the way they've disclosed or not disclosed what
- 18:29they're doing with customer data.
- 18:30Examples include zoom, DocuSign, slack.
- 18:36I'm not saying whether or not these were valid responses to what these
- 18:39companies were doing, but nonetheless, there was a public outcry based on some
- 18:44disclosures about what they were doing.
- 18:47If you have an ISO 40 2001 Certified AI Management System, you can say
- 18:54we are following these principles and we have external verification
- 18:58that we are taking these measures.
- 19:02Finally, I would recommend that heavily regulated companies,
- 19:05especially in healthcare and finance, would also benefit from ISO 40
- 19:102001 readiness and Certification.
- 19:13That's because of things like the Colorado AI Act providing safe harbor under certain
- 19:18circumstances, but more broadly, it gives you a comprehensive way to evaluate
- 19:23all of the requirements levied upon the organization and filter them through
- 19:28the lens of artificial intelligence to ensure that you're checking all your
- 19:33boxes, that you have all your ducks in a row, and at the same time, you're
- 19:37actually managing the risk of using ai.
- 19:42Werbach: You painted a, a picture of, uh, firms that are willing to invest
- 19:47more seriously in AI governance, being rewarded and, and market forces actually
- 19:53reinforcing that kind of behavior.
- 19:54That's, that's a, a vision that I also really share.
- 19:57But are we really seeing that in the market?
- 19:59Do we have evidence to suggest that the firms that are most serious, whether,
- 20:03whether it's ISO 40 2001 or not, are actually getting that kind of benefit?
- 20:11Haydock: I think there's a timely example where there's certainly
- 20:14been a bump to affirm that.
- 20:18At least appears to be applying a more stringent set of controls when it comes to
- 20:23AI governance, and that's Anthropic, which recently was designated by the Department
- 20:28of War as a supply chain risk, which has a specific definition under US code.
- 20:35I won't necessarily weigh in on the merits of that designation or not, or whether
- 20:40Anthropic was acting in a more upright manner than their competitor open ai.
- 20:47But what matters is that people are reacting to the perception that
- 20:52Anthropic is behaving in a more responsible and ethical manner.
- 20:56And as a result, I saw today looks like installations of Anthropic were
- 21:02up something like 300% or their clawed AI tool was up 300% as a result.
- 21:08You know, whether that's causation, correlation, maybe Anthropics,
- 21:12just really good AI tool.
- 21:13They've certainly been getting a lot of.
- 21:15Press for just being good.
- 21:17You know, it's unclear, but there's certainly some benefit to the perception
- 21:24that you're using artificial intelligence responsibly from a commercial perspective.
- 21:28Werbach: Mm-hmm.
- 21:29I mean, it's certainly.
- 21:30True of the Frontier Labs and they, they've taken different approaches, uh,
- 21:35in terms of governance and and so forth.
- 21:37With regard to enterprises, though, at least my perception of what happened
- 21:43in cyber is even though there's, you know, there, there's a really clear
- 21:47imperative given the, the losses that can happen and, and, and the threats.
- 21:52You know, that, that broadly speaking, even though there are all these
- 21:55notification requirements and so forth, the market has a hard time perceiving.
- 22:00If there's, you have a big, um, uh, incident, then you may take some loss.
- 22:04But, but we don't really see, at least in my perception, that the companies that
- 22:09are, that are doing the work overall or are getting that kind of halo effect, um.
- 22:14You know, and, and you, you've spent more time in that field than I have,
- 22:17so, so tell me if I'm wrong there, but, but are, are we going to see that kind
- 22:21of dynamic, uh, in the AI world, or, or will it be something like what you
- 22:24described with anthropic more broadly?
- 22:26For Deployers?
- 22:29Haydock: There's certainly something to be said about the market not
- 22:33actually caring about cybersecurity.
- 22:35And there is good evidence that stock prices are only
- 22:39temporarily impacted mm-hmm.
- 22:40As a result of data breaches.
- 22:43And related incidents.
- 22:46With that said, I think we're still in the early days when it comes to
- 22:50cybersecurity and AI governance, and I think organizations are only beginning
- 22:57to understand the impacts of mishandling customer data, of using AI systems.
- 23:04Unethically or in a, a careless manner because the costs are going to
- 23:10be born over large periods of time.
- 23:13If you look at, for example, data breaches, the consequences will only
- 23:16be felt down the road and I think with artificial intelligence in some
- 23:23circum, in some areas or some manners.
- 23:27The impacts are gonna be felt more rapidly than with a data breach,
- 23:31because if you have an autonomous system that goes outta control, it deletes
- 23:35a bunch of data or knocks the system offline, you're gonna see impacts that
- 23:40are much more readily apparent and they're gonna happen much more quickly.
- 23:44So I think you're going to see more market concern with
- 23:49respect to cybersecurity, but.
- 23:52Even more so with AI governance because the potential for impacts is, is greater.
- 24:01Werbach: So many firms now are in this environment where they're pushing
- 24:04to go fast with ai and that's often intention with risk and legal and,
- 24:10and the groups that are, you know, overseeing those control functions.
- 24:14And again, I make this argument myself that it's similar to the
- 24:18one that, that you made earlier.
- 24:20Doing the investment in governance we're downs to all sorts of
- 24:24other benefits for the firm.
- 24:26But I find that, that that argument doesn't always go over well with, you
- 24:31know, management that just says, I, I know it all sounds good, but you know,
- 24:35we've gotta, you know, keep ahead of our competitors or catch up to our competitors
- 24:39and just deploy as fast as possible.
- 24:40Then we'll figure it out.
- 24:41So what have you found actually works?
- 24:45In, uh, getting traction with organizations that it's worth
- 24:49making this investment, including in, in something like ISO 40
- 24:532001, which is not trivial to do.
- 24:57Haydock: ISO 40 2001 is definitely a risk management framework, but it
- 25:02is much more than that, and I think there are lots of companies that
- 25:07are going out there and have no idea what they're doing from a business
- 25:11perspective with artificial intelligence.
- 25:13They're seeing their competitors do things and deciding that they
- 25:17need to go out and use AI as well.
- 25:19They don't even know what they're doing though.
- 25:22They're not tracking metrics, they're not understanding effectiveness.
- 25:25And in organizations that are kind of rushing out there to deploy ai,
- 25:30they may be buying duplicative tools.
- 25:32They're wasting money on these resources.
- 25:34They're bringing in consultants, even though the organization doesn't
- 25:38even know what they're trying to do.
- 25:40Werbach: Mm-hmm.
- 25:40Haydock: So you definitely need a. Effective business strategy before
- 25:45you start worrying about governance.
- 25:46But the two go hand in hand because if you don't understand what you're doing
- 25:51from a business perspective, there's no real point in talking about AI governance.
- 25:55But AI governance can help you clarify your objectives when it
- 25:59comes to how you're deploying and purchasing these systems.
- 26:03Werbach: Does, does ISO four 2001 provide that kind of quantitative assessment of
- 26:07risks that you were talking about before?
- 26:09Or is it more general framework for management and
- 26:13they're still more specific?
- 26:13That has to be done.
- 26:17Haydock: ISO 40 2001 is incredibly high level.
- 26:20That's with respect to risk assessment and treatment.
- 26:22It's with respect to measurement and monitoring.
- 26:26With that said, it gives you a framework for how to conduct these types of
- 26:31assessments, and I can tell you from personal experience that Stack Aware
- 26:35has made it through certification using a quantitative approach to AI risk
- 26:39management, so it doesn't dictate that you need to do your risk assessment.
- 26:44Assessments in a certain way only that they are repeatable and that you achieve
- 26:48the same results given the same inputs.
- 26:51So it gives you a, a backbone for building a risk management
- 26:55and an AI evaluation program.
- 26:59Werbach: The, uh, standard is, I think two and a half years
- 27:02old now, which is not that long.
- 27:03But a AI moves so fast.
- 27:06How can any standard keep up with the way the technology's advancing?
- 27:15Haydock: Having a standard that is flexible and high level is a benefit
- 27:21when technology is advancing rapidly because it doesn't necessarily need
- 27:26to change that quickly with the times.
- 27:29So.
- 27:30I think ISO 40 2001 can use an overhaul already at this point, mainly because of
- 27:35the way that it's structured, and there are some elements that, in my opinion,
- 27:40are duplicative and overlapping, so cleaning those up would certainly help.
- 27:44However, that's less of an issue when it comes to the pace of technology
- 27:48and more of one when it comes to.
- 27:51Design and how you're architecting the standard.
- 27:55So I think a key benefit of ISO 40 2001 is that it is high level.
- 28:00The alternative approach would be something like the high Trusts AI
- 28:05security certification or AI UC one, which affirmatively attempts to keep
- 28:11up with the pace of change and releases quarterly adjustments that incorporate.
- 28:18Threat environment and technological developments.
- 28:22Werbach: Mm-hmm.
- 28:23And can you talk about how um, certification ties in with
- 28:27insurance for AI liability?
- 28:34Haydock: There are already programs in place when it comes to
- 28:39certification frameworks and insurance
- 28:45discounts.
- 28:47Additional coverages, things like that.
- 28:49Stack wear recently entered into a partnership with ARM ai,
- 28:53which is a firm specifically focused on, um, on AI insurance.
- 28:59And they also partner with aline, which is, which is a, a firm that
- 29:04we work with on the auditing side.
- 29:05To verify the effectiveness of ISO 40 2001 Controls and Arm Miller has
- 29:13said that they will incorporate the fact of ISO 40 2001 certification
- 29:17into their underwriting process.
- 29:19So I think as we move forward, the future is going to be.
- 29:24A firm will have an auditor verify how it's operating.
- 29:29Its AI systems in a very machine readable way.
- 29:33There will be data pipelines that the auditors will be able to connect to,
- 29:37and then the auditors will confirm that everything's in order, that there are no,
- 29:41you know, funny business so to speak when it comes to the presentation of the data.
- 29:45Then an insurance firm or an underwriter can come in and look at that data and
- 29:50make very educated decisions about what sort of risk they're assuming, and
- 29:55if the company's doing a good job at managing the risk, they can get discounts
- 30:00because of exactly those types of controls that they've implemented under
- 30:04ice, O 40 2001 or a similar standard,
- 30:07Werbach: what do you think are the biggest factors that will influence how quickly
- 30:11and how successfully that model develops?
- 30:16Haydock: Even in 2026, I think we're unfortunately a long ways off from
- 30:22a truly machine readable way to evaluate the total risk provi posed
- 30:28by a company or its use of AI systems.
- 30:31And unfortunately.
- 30:34Audit practices are still a little bit old school in that
- 30:37they rely on visual observation.
- 30:41They rely on interview, which of course has its purposes.
- 30:44You can understand if there are gaps in knowledge when
- 30:48you're speaking with people.
- 30:52I would love to see over the next five to 10 years, a much greater focus
- 30:56on machine data on reproducibility when it comes to auditing, so that.
- 31:0390% of an audit is just pushing a button to fire a bunch of APIs
- 31:09that test whether certain systems are functioning as intended.
- 31:13And then the other 10% is the human element, focusing on scoping, making
- 31:17sure that there's no evasion on the, on the part of the audited company,
- 31:22and then, you know, interviews with, with key leaders at the organization
- 31:26to evaluate their level of competence.
- 31:28So I think we're unfortunately.
- 31:31On the other side of that spectrum right now where it's 10% automated,
- 31:3590% manual, but would love to see that flip over the next decade or so.
- 31:40Werbach: Great.
- 31:40Well, we have to wrap up, but uh, Walter, thank you so much
- 31:43for sharing all this with us.
- 31:45Haydock: Kevin, thank you so much for having me on.
- 31:50Werbach: This has been the Road to Accountable ai.
- 31:52If you like what you're hearing, please give us a good review and check out
- 31:55my substack for more insights on AI
- 31:57Haydock: accountability.
- 31:58Thank you for listening.
- 32:03Werbach: If you want to go deeper on AI governance, trust
- 32:05and responsibility with me.
- 32:07Another distinguished faculty of the world's top business school.
- 32:11Sign up for the next cohort of Wharton's Strategies for Accountable
- 32:14AI Online Executive education program, featuring live interaction
- 32:18with faculty expert interviews and custom designed asynchronous content.
- 32:23Join fellow business leaders to learn valuable skills you can
- 32:26put to work in your organiz.
- 32:28Visit exec ed.warden.upen.edu/acai for full details.
- 32:35I hope to see you there.