Governance
AI Due Diligence
Systematic evaluation of AI risks in M&A transactions, vendor selection, and business decisions.
Definition
AI Due Diligence is the process of systematically investigating and evaluating AI-related risks and opportunities in business transactions. This is increasingly critical in:
- M&A transactions: Assessing target company's AI assets, liabilities, and compliance
- Vendor selection: Evaluating AI service providers' practices and risks
- Investment decisions: Understanding AI-related risks in portfolio companies
Key areas of AI due diligence include:
- Intellectual property ownership and licensing of AI models and training data
- Regulatory compliance status and pending requirements
- Data governance practices and privacy compliance
- Model documentation, validation, and performance history
- AI-related litigation, regulatory actions, or complaints
- Technical debt and model maintenance requirements
Sources
- •M&A Best Practices
- •NIST AI RMF
Related Terms
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Framework for assessing and managing risks from third-party AI service providers....
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Materiality Assessment
Risk-based determination of an AI application's significance....