AI Supply Chain Governance

AI Supply Chain Governance addresses the risks associated with third-party AI components, services, and tools throughout the organization. As AI capabilities become embedded in countless products and services, organizations face significant challenges in understanding and managing their AI supply chain—including the growing problem of "Shadow AI" where employees use unapproved AI tools.

The EU AI Act establishes a distributed responsibility model where both providers (those developing AI systems) and deployers (those using AI systems in their operations) have compliance obligations. Organizations acting as deployers must ensure their AI vendors meet applicable requirements, conduct appropriate due diligence, and maintain oversight of AI systems in their operations.

Shadow AI represents a particularly acute challenge. Employees may use consumer AI tools (ChatGPT, AI image generators, etc.) for work purposes without organizational awareness or approval. This can introduce data security risks, compliance violations, and operational dependencies that organizations cannot manage.

Effective AI supply chain governance requires: vendor due diligence processes that assess AI governance capabilities, contractual provisions that allocate responsibilities and provide access rights, ongoing monitoring of third-party AI system behavior, and controls to detect and manage unauthorized AI usage.