impact assessment
What It Means
Impact assessment is a structured evaluation process that examines all the ways an AI system could affect different groups of people, businesses, or society before you deploy it. It's like doing a comprehensive risk audit that looks beyond technical performance to consider who might be harmed, what unintended consequences could emerge, and whether the benefits justify the potential downsides.
Why Chief AI Officers Care
Impact assessments are becoming mandatory in many jurisdictions and help CAIOs avoid costly regulatory violations, discrimination lawsuits, and reputation damage. They also provide a systematic way to identify business risks early, demonstrate responsible AI governance to stakeholders, and make informed decisions about which AI projects are worth pursuing given their potential consequences.
Real-World Example
A retail company planning to use AI for hiring decisions conducts an impact assessment and discovers their algorithm could discriminate against older applicants and candidates from certain neighborhoods, potentially violating age discrimination laws and creating PR backlash. The assessment reveals these risks before deployment, allowing them to either fix the bias or choose a different approach entirely.
Common Confusion
People often think impact assessments are just technical audits focused on AI accuracy and performance metrics. In reality, they're broader business and social evaluations that examine fairness, legal compliance, societal effects, and ethical implications across all affected stakeholder groups.
Industry-Specific Applications
See how this term applies to healthcare, finance, manufacturing, government, tech, and insurance.
Healthcare: In healthcare, impact assessment evaluates how AI systems could affect patient safety, clinical workflows, health equity...
Finance: In finance, impact assessment evaluates how AI systems affect market fairness, customer outcomes, and systemic risk befo...
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Includes:
- 6 industry-specific applications
- Relevant regulations by sector
- Real compliance scenarios
- Implementation guidance
Technical Definitions
NISTNational Institute of Standards and Technology
"a risk management tool that seeks to ensure an organization has sufficiently considered a system's relative benefits and costs before implementation. In the context of AI, an impact assessment helps to answer a simple question: alongside this system’s intended use, for whom could it fail?"Source: Bipartisan_Policy_Center_impact_assessments
"An evaluation process designed to identify, understand, document and mitigate the potential ethical, legal, economic and societal implications of an AI system in a specific use case."Source: IAPP_Governance_Terms
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