AI Governance for the Finance Function: A Practical Guide

As organisations increasingly use artificial intelligence (AI) in their finance functions, the question of how to govern that use — AI governance — has become important. Good governance helps ensure AI is used responsibly, safely and effectively. This guide takes an even-handed look at AI governance for the finance function: what it is, why it matters, and what good governance involves. Note that this is a developing area and approaches are evolving, so always follow your organisation's policies, relevant regulations and current guidance. For related material, see our guide on corporate governance.

What is AI governance?

AI governance refers to the framework of policies, processes, controls and oversight through which an organisation manages how AI is used — ensuring it's used responsibly, appropriately and in line with relevant requirements. For the finance function, AI governance is about putting in place the structures to manage the risks and ensure the responsible use of AI in finance-related activities. Just as organisations govern other important matters, governing AI use helps ensure it's done well rather than haphazardly. AI governance covers questions such as how AI may and may not be used, how risks (like accuracy, data security and bias) are managed, who is accountable, and how use is overseen. It connects to broader corporate governance, risk management and control. As AI use grows, having appropriate governance becomes increasingly important to using it safely and effectively. AI governance is, in essence, about ensuring that the organisation remains in control of how AI is used and that it's used responsibly.

Why AI governance matters

AI governance matters for several reasons. AI use carries risks — including around accuracy, data security and confidentiality, bias, and appropriate use — that need to be managed; governance provides the means to do so. Without governance, AI might be used inconsistently, inappropriately or unsafely, creating risks for the organisation. Good governance helps ensure accountability, clarifying who is responsible for what. It supports compliance with relevant regulations and standards. And it helps the organisation use AI effectively as well as safely, getting the benefits while managing the downsides. For the finance function in particular — where accuracy, confidentiality, control and accountability are so important — governing AI use is essential to doing it responsibly. As regulatory and professional attention to AI grows, having sound governance also helps organisations meet expectations. In short, AI governance is what allows an organisation to use AI with confidence that it's being done responsibly and under control, rather than in a risky, ungoverned way.

What good AI governance involves

Good AI governance for the finance function typically involves several elements:

• Clear policies — setting out how AI may and may not be used, including any restrictions.
• Risk management — identifying and managing the risks of AI use, such as accuracy, data security and bias.
• Accountability and oversight — clarifying who is responsible, and providing appropriate oversight of AI use.
• Data governance — managing what data can be used with AI and how, in line with confidentiality and data protection requirements.
• Controls and processes — including the verification of AI outputs and appropriate checks.
• Compliance — ensuring use aligns with relevant regulations and standards.
• Training and awareness — helping people understand how to use AI responsibly.

Together, these help ensure AI is used responsibly, safely and effectively. The specific approach depends on the organisation and should follow current guidance and regulations.

How finance professionals can contribute

Finance professionals can play a valuable role in AI governance within the finance function. Their grounding in control, risk and accountability is directly relevant to governing AI use responsibly. They can help identify and manage risks associated with AI in finance activities. They can support the development and application of policies and controls, including the verification of outputs. They can bring professional judgement and ethics to questions of appropriate use. And they can help ensure accountability is maintained. As the people responsible for so much that depends on accuracy and control, finance professionals are well-placed to contribute to governing AI use sensibly. Engaging with AI governance — understanding the policies, applying the controls, and bringing professional judgement — is increasingly part of finance professionals' role as AI use grows. By contributing their characteristic rigour and control mindset, finance professionals help their organisations use AI responsibly. Always follow your organisation's current governance framework, policies and relevant regulations.

Frequently asked questions

What is AI governance?

The framework of policies, processes, controls and oversight through which an organisation manages how AI is used — ensuring it's used responsibly, appropriately and in line with relevant requirements.

Why does AI governance matter?

Because AI use carries risks that need managing, ungoverned use can be inconsistent or unsafe, and good governance supports accountability, compliance and using AI effectively as well as safely.

What does good AI governance involve?

Clear policies, risk management, accountability and oversight, data governance, controls and processes (including verifying outputs), compliance, and training and awareness.

How can finance professionals contribute?

Through their grounding in control, risk and accountability — identifying and managing risks, supporting policies and controls, bringing judgement and ethics, and helping maintain accountability.

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