Warning to South African businesses: AI Policies essential for navigating legal, ethical, and security risks

South Africa currently lacks specific legislation governing AI, leaving businesses vulnerable to potential liabilities and uncertainties. Veldhuizen cautions, “The absence of regulation necessitates a proactive approach from companies to address the potential challenges posed by AI usage in the workplace.”

Gillan and Veldhuizen Inc., a Cape-based legal firm specialising in dispute resolution, has issued a timely warning to businesses in South Africa about the necessity of including AI policies in their company policy documents. In a recent interview, Managing Director, PJ Veldhuizen warned of the significant challenges he foresees arising from the increasing use of AI in the workplace and emphasised the importance of proactive measures to address these concerns. Veldhuizen underlined the potential risks associated with the unregulated usage of AI. “The rapid advancements in artificial intelligence have revolutionised many industries, but without proper policies in place, businesses expose themselves to unforeseen legal, ethical, and security issues,” he warned.

One significant concern highlighted is the impact of AI on research, authenticity, and information sources. With AI increasingly involved in generating and disseminating information, the reliability and accuracy of data can be compromised. Veldhuizen points out, “The Dunning Kruger effect comes into play here. Businesses must recognise that they don’t know what they don’t know. It is crucial to acknowledge that relying on AI, with its limitations, as a watertight source can be dangerous.”

Moreover, digital and data security emerge as crucial areas where AI policies need to be established. Steven Pieterse, CEO of Metisware, a South African IT and digital agency, warns of the rise of cybercrime and the potential for AI tools to be targeted. Corporations face severe risks to their information and intellectual property. Pieterse explains, “AI tools are now powerful enough to impersonate CEOs and other key staff members on video calls, WhatsApp messages, and telephone calls, extorting businesses and individuals alike. Therefore, having proper policies on how to deal with these threats is vital for protecting businesses, not only to safeguard their digital assets and ensure robust data security measures but also to safeguard the financial well-being of your organisation.”

To mitigate these risks, Veldhuizen advises businesses to include specific clauses in their AI policies, such as rules governing data ownership and confidentiality over sensitive information as well as vendor and third-party liability guidelines. The latter should outline responsibilities regarding data protection, security, and compliance with relevant regulations. Veldhuizen also mentions the importance of contracts including clauses that hold vendors accountable in case of data breaches or AI-related incidents.

It is essential for policy makers and compliance officers to recognise and embrace the integration of AI into the workplace, while simultaneously exercising caution. By incorporating comprehensive policies into their company policy documents, businesses can effectively navigate the potential legal, ethical, and security risks associated with AI.

In the ever-evolving landscape of technology, it is crucial to stay one step ahead.

Ends

About PJ Veldhuizen

B PROC (UNISA) CERT. TAX (UNISA) LLM (UCT) MBA (UNISA) F. INST. D OELP (OXFORD)

PJ graduated with a BProc from UNISA in 1997 and went on to achieve an LLM and MBA while building the practice, which he started in 1999 with Joan Gillan. He is a specialist in commercial dispute resolution and corporate law advisory.

PJ has accepted several ministerial appointments including being appointed to the Directorate of Market Abuse a division of the erstwhile Financial Services Board, Chairperson of the Tax Board, Member of the Companies Tribunal, Member of the Financial Services Tribunal, Member of the FICA Appeal Board and a Member of the BBBEE Commission. He is the firm’s Managing Director and an accredited commercial arbitrator and mediator:

Certification in commercial mediation from Conflict Dynamics in South Africa and CEDR in the UK.
Certification in advanced mediation of complex disputes from Harvard Law School.
Certification in commercial mediation from PABASA.
Commercial Arbitration and Mediation Panel – AFSA & Conflict Dynamics (South Africa) and Abu Dhabi Global Markets Arbitration Centre (UAE).

PJ also holds several non-executive directorships (“NED”):

Chair of the Cape Town Stadium SOC.
Vice Chair of the Western Cape Blood Service NPC, Chair of the Social & Ethics Committee, Chair of Risk & Governance Committee.
NED of SAIT, Chair of Audit & Risk Committee.

About Gillan and Veldhuizen

Gillan and Veldhuizen Inc., co-founded by Joan Gillan and PJ Veldhuizen in 1999 is a boutique law firm offering personal and professional, specialised legal services focusing primarily on corporate and commercial law, dispute resolution and conveyancing.

In 2022 Gillan and Veldhuizen Inc. formed an association with the Phatshoane Henney Group (PHG), the largest group of independent law firms in South Africa to expand our corporate and commercial, specialist services to our clients and to position ourselves for growth.

We are fully BBBEE compliant and currently hold a level 4 scorecard. We are 26% black-owned with PHG having taken up a stake in the firm – this scorecard is a work in progress and we strive to reach a level 3 which is evidenced by our current hiring policy with a focus on employment equity.

Website: www.gvinc.law.za

Facebook: https://www.facebook.com/GillanVeldhuizenInc/

Twitter: @GillanVeldhuizenInc

LinkedIn: https://www.linkedin.com/company-beta/2585548/

Instagram: gillanandveldhuizen

Phone: 021 701 1890

Released for Gillan & Veldhuizen by Vanessa Northing at Adverb

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Vanessa Northing

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Amelia Hayes