AI in Business: What You Need to Know About Compliance (and Where ISO 42001 Fits In)
Artificial Intelligence (AI) is no longer a futuristic concept—it's embedded in the tools we use daily. From email filters and chatbots to customer relationship management systems, AI is streamlining operations across industries. But with great power comes great responsibility.
As AI becomes more prevalent, businesses must navigate a complex landscape of compliance and ethical considerations. Ignoring these can lead to significant risks, including legal penalties and reputational damage.
Understanding the Compliance Landscape
When Must Businesses Disclose AI Use?
Transparency is key. Under regulations like the UK GDPR and the upcoming EU AI Act, businesses are required to inform individuals when:
Automated decisions are made that significantly affect them (e.g., credit approvals, hiring decisions).
Personal data is processed using AI technologies.
Interactions involve AI systems, such as chatbots or virtual assistants.
For instance, the EU AI Act mandates that users must be informed when they are interacting with an AI system, unless it's obvious from the context. This ensures individuals are aware and can make informed decisions about their interactions.
What About the UK?
While the EU is rolling out a formal AI Act, the UK is taking a different route.
There’s no standalone “UK AI Act” — at least not yet. Instead, the government is following a “pro-innovation” approach, relying on existing regulators like the ICO, FCA, and CMA to oversee AI use within their industries.
In early 2024, the UK confirmed it won’t bring in a centralised AI law. Instead, regulators will be expected to apply five key principles to AI systems:
Safety, security and robustness
Transparency
Fairness
Accountability and governance
Contestability and redress
What this means in practice is:
Even without a new law, your use of AI must still comply with rules on data protection, discrimination, and transparency — especially if it’s being used in ways that affect individuals or customers.
And don’t be surprised if sector-specific guidance becomes more formalised over time. The UK is keeping things light-touch for now — but scrutiny is still increasing.
The Importance of Data Protection Impact Assessments (DPIAs)
A DPIA is a structured process that helps you assess the risks of processing personal data — especially when using new or potentially intrusive technology like AI. This assessment helps identify and mitigate potential risks associated with data processing activities, ensuring compliance with data protection laws.
When is one required?
Under UK GDPR (Article 35), businesses must carry out a Data Protection Impact Assessment (DPIA) when using AI in ways that could pose a high risk to individuals' rights or freedoms. This applies when systems make decisions without human input, profile users based on personal data, or process sensitive information like health or ethnicity. Even when not mandatory, DPIAs are strongly encouraged — they help spot risks early, prove your accountability, and build trust with clients and regulators. In an increasingly scrutinised AI landscape, it’s one of the most practical steps a business can take to show responsible use.
Introducing ISO 42001: A Framework for Responsible AI
ISO 42001 is the first international standard focusing on AI management systems. It provides a structured approach for organisations to:
Establish governance over AI systems.
Assess and manage risks associated with AI deployment.
Ensure transparency and accountability in AI operations.
Integrate human oversight into AI decision-making processes.
By aligning with ISO 42001, businesses can demonstrate their commitment to ethical AI practices and compliance with evolving regulations.
Practical Steps for Businesses
To embed responsible AI practices into your business, start with a clear internal audit to understand how AI is currently being used. Then, update your privacy notices so users are informed of any AI involvement in data processing or decision-making.
For higher-risk systems, it's important to conduct DPIAs to evaluate potential impacts.
If you're aiming for more structured governance, adopting the ISO 42001 framework offers a reliable and internationally recognised path forward.
Finally, make sure your team is trained — not just in compliance, but in the broader ethical considerations of AI use in practice.
AI offers immense benefits — but without proper oversight, it can introduce serious risks. By understanding when to disclose AI use, conducting thoughtful assessments, and adopting standards like ISO 42001, businesses can unlock AI’s potential responsibly and compliantly.
If you're unsure where your organisation stands on AI compliance — or need support implementing ISO 42001 — we’re here to help.
Get in touch for a consultation and make sure your business stays ahead in an evolving AI landscape.
