Malaysia – Artificial Intelligence Transparency And Corporate Liability.

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The integration of Artificial Intelligence (AI) into corporate operations offers efficiency gains but creates a significant legal risk for boards of directors, who remain ultimately responsible for all decisions. The core dilemma stems from AI's "black box" nature, where inherent data bias or flawed algorithmic outcomes can lead to detrimental financial or reputational losses. Existing legal standards of reasonable care and diligence mean directors cannot use "the algorithm told us to do it" as a defense; therefore, adequate supervision and understanding of AI limitations are crucial for mitigating liability. Boards must focus on liability and transparency, mandating robust AI risk assessments, implementing clear governance policies, and ensuring proper oversight of all AI deployment, as failure to do so can lead to regulatory sanctions and complex litigation based on existing fiduciary duties. Ultimately, AI transforms how decisions are made, but it does not change who is accountable, making AI risk a core management issue being addressed by emerging regulations like the EU's AI Act.

https://conventuslaw.com/featured-content/malaysia-artificial-intelligence-transparency-and-corporate-liability/