In the rush to capitalise on AI’s potential, organisations are handing vast amounts of client data to external AI vendors. However, recent data privacy incidents underscore a pressing issue: our traditional security measures are increasingly inadequate. Now is the time for organisations to rethink their approach to data confidentiality in AI-driven partnerships, adopting a more rigorous, data-centric stance.
Beyond Encryption: Rethinking Data Security
Encryption alone no longer suffices in today’s complex AI landscape. Advanced techniques like differential privacy and homomorphic encryption provide a much-needed evolution in data protection. Homomorphic encryption, for instance, allows AI models to perform computations on encrypted data without ever decrypting it, a feat unimaginable just a decade ago. Differential privacy adds statistical noise to datasets, reducing the risk of re-identification—a valuable asset in an era where privacy breaches frequently stem from supposedly “anonymous” data.
Vendor Due Diligence: It’s More Than a Checklist
A report by Ponemon Institute in 2023[i] revealed that over 55% of data breaches stem from third-party vendors. For AI vendors, the risk intensifies due to the sheer volume of sensitive data they handle. Traditional vendor assessments that focus on certifications alone overlook critical aspects such as privacy-by-design practices and response times in the event of a breach. Effective due diligence should include stringent audits, policy enforcement, and provisions for ongoing monitoring, ensuring that vendors actively uphold privacy standards.
Privacy-Enhancing Technologies: An Overlooked Solution
As AI capabilities grow, so does the need for privacy-enhancing technologies (PETs). Federated learning and multi-party computation (MPC) are key techniques that can decentralise data, minimising the risk of breaches. By allowing AI models to train on data without consolidating it on a single server, PETs offer an innovative approach to privacy in AI. Yet, in a survey by Gartner[ii], only 10% of organisations reported using PETs in their data strategies. This gap underscores a disconnect between data privacy aspirations and on-the-ground practices.
The Role of Data Protection Impact Assessments (DPIAs)
DPIAs are mandatory under GDPR when working with high-risk data processing, yet many organisations still see them as a regulatory checkbox. With AI, DPIAs provide a vital function: they pre-emptively address potential risks, documenting them and developing mitigation strategies. For AI initiatives, DPIAs should be non-negotiable, guiding not only how data is shared but why it is shared, with a focus on data minimisation and purpose limitation.
Transparency and Trust: The Final Frontier
Client trust is hard-won and easily lost. Studies show that 87% of consumers would not do business with a company if they had concerns about its data privacy practices. By fostering transparency, organisations can build this trust, even in complex AI partnerships. Informing clients about how their data will be used, processed, and protected builds confidence and safeguards reputational integrity.
AI Privacy as a Competitive Advantage
Privacy in AI is no longer a compliance exercise; it is a competitive advantage. In an era where data breaches can erode billions in market value, privacy-conscious AI strategies are essential for long-term success. By embedding privacy into every stage of AI deployment—from vendor selection to data protection impact assessments—organisations can mitigate risk, safeguard their reputations, and stand out as responsible, forward-thinking leaders.
The companies that prioritise these robust privacy practices will not only comply with evolving regulations but will also gain the trust of clients and stakeholders, positioning themselves as market leaders in responsible AI and data governance. As AI continues to transform industries, a commitment to privacy will prove to be one of the most valuable assets any organisation can hold.
[i] Ponemon Institute Report (2023):
- Cost of a Data Breach Report 2023
- This report, sponsored by IBM Security and conducted by the Ponemon Institute, analyzes data breaches experienced by 553 organizations globally between March 2022 and March 2023. It provides insights into the financial impact of data breaches, including the role of third-party vendors.
[ii] Gartner Survey on Privacy-Enhancing Technologies (PETs):
- Gartner’s Five Trends in Privacy Through 2024
- This article discusses emerging trends in privacy, including the adoption of Privacy-Enhancing Technologies (PETs). It notes that a relatively small percentage of organizations have integrated PETs into their data strategies.
