Governance Framework

AI without governance is a liability waiting to happen. In this lab, you'll design a governance framework that enables AI innovation while protecting your organization from risks.

What you'll create:

• A complete AI governance structure
• Practical policies ready for implementation
• Assessment tools and checklists

Define Your Organization

Choose one:

• Your actual organization
• A hypothetical company in your industry
• A provided scenario

Complete the Context Template

ORGANIZATIONAL CONTEXT
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Organization: [Name/Type]
Industry: [Industry]
Size: [Employees, revenue]
AI Maturity: [None/Emerging/Established/Advanced]

Current AI Usage:
□ Consumer AI tools (ChatGPT, etc.)
□ Departmental AI solutions
□ Enterprise AI platforms
□ Custom AI development
□ AI embedded in purchased software

Key Stakeholders:
• Executive sponsor: [Role]
• Primary user groups: [List]
• IT/Security: [Role]
• Legal/Compliance: [Role]
• HR: [Role]

Regulatory Environment:
• Industry regulations: [List]
• Geographic regulations: [List]
• Internal policies: [List]

Risk Tolerance:
[Low / Medium / High] - Because [reason]
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Design the Organizational Structure

AI GOVERNANCE STRUCTURE
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EXECUTIVE OVERSIGHT
Role: AI Executive Sponsor
Responsibilities:
• [Responsibility 1]
• [Responsibility 2]
• [Responsibility 3]
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AI GOVERNANCE COMMITTEE
Members: [List roles]
Meeting Frequency: [Monthly/Quarterly]
Responsibilities:
• [Responsibility 1]
• [Responsibility 2]
• [Responsibility 3]
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AI CENTER OF EXCELLENCE (if applicable)
Lead: [Role]
Functions:
• [Function 1]
• [Function 2]
• [Function 3]
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OPERATIONAL ROLES
AI Product Owners: [Where they sit]
AI Analysts: [Where they sit]
End Users: [How they're supported]
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Define Decision Rights

Policy 1: Acceptable Use

AI ACCEPTABLE USE POLICY
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PURPOSE
This policy defines acceptable and prohibited uses of AI tools
within [Organization].

SCOPE
Applies to all employees, contractors, and partners using
AI tools for business purposes.

ACCEPTABLE USES
✓ [Approved use 1]
✓ [Approved use 2]
✓ [Approved use 3]
✓ [Approved use 4]
✓ [Approved use 5]

PROHIBITED USES
✗ [Prohibited use 1]
✗ [Prohibited use 2]
✗ [Prohibited use 3]
✗ [Prohibited use 4]
✗ [Prohibited use 5]

DATA HANDLING REQUIREMENTS
• Never input: [List sensitive data types]
• Always anonymize: [Data requiring anonymization]
• Approved data: [Data types OK to use]

HUMAN OVERSIGHT REQUIREMENTS
• [When human review is required]
• [When human approval is required]
• [When human must remain in loop]

QUALITY REQUIREMENTS
• [Quality standard 1]
• [Quality standard 2]
• [Quality standard 3]

VIOLATIONS
Violations of this policy may result in [consequences].
Report violations to [contact].

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Policy 2: AI Procurement/Development

AI PROCUREMENT & DEVELOPMENT POLICY
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APPROVAL REQUIREMENTS

Tier 1: Departmental Authority
• Consumer AI tools (free tiers)
• Experimental/pilot use only
• No sensitive data
• Requires: Manager approval

Tier 2: IT/Governance Review
• Paid AI subscriptions
• Production use cases
• May handle business data
• Requires: IT Security review, Data Privacy review

Tier 3: Executive Approval
• Enterprise AI platforms
• Custom AI development
• Handles sensitive/regulated data
• Requires: Full governance committee review

EVALUATION CRITERIA
All AI solutions must be evaluated against:
□ Business justification
□ Data privacy compliance
□ Security requirements
□ Bias and fairness considerations
□ Integration requirements
□ Total cost of ownership
□ Vendor stability

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Policy 3: Incident Response

AI INCIDENT RESPONSE POLICY
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INCIDENT DEFINITION
An AI incident is any event where AI systems:
• Produce harmful or inappropriate output
• Expose sensitive data
• Make decisions that cause harm
• Fail in a way that impacts business operations
• Violate regulatory requirements

SEVERITY LEVELS
Critical: [Definition, examples]
High: [Definition, examples]
Medium: [Definition, examples]
Low: [Definition, examples]

RESPONSE PROCEDURES

Immediate (< 1 hour):
1. [Step 1: Contain]
2. [Step 2: Assess]
3. [Step 3: Notify]

Short-term (< 24 hours):
4. [Step 4: Investigate]
5. [Step 5: Communicate]
6. [Step 6: Remediate]

Long-term (< 1 week):
7. [Step 7: Root cause]
8. [Step 8: Prevent]
9. [Step 9: Document]

ESCALATION CONTACTS
• Primary: [Role, contact]
• Backup: [Role, contact]
• Executive: [Role, contact]
• Legal: [Role, contact]

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AI Use Case Assessment Checklist

AI USE CASE ASSESSMENT
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Use Case: ____________________
Requested by: ____________________
Date: ____________________

BUSINESS JUSTIFICATION
□ Problem clearly defined
□ AI is appropriate solution (not overcomplicated)
□ Success metrics defined
□ ROI documented

DATA ASSESSMENT
□ Data sources identified
□ Data classification completed
□ No prohibited data types
□ Privacy impact assessment (if needed)
□ Data retention plan defined

TECHNICAL ASSESSMENT
□ Integration requirements documented
□ Security review completed
□ Performance requirements defined
□ Disaster recovery plan

OPERATIONAL ASSESSMENT
□ Human oversight model defined
□ Quality controls documented
□ Feedback mechanism in place
□ Training plan for users

RISK ASSESSMENT
□ Risks identified and rated
□ Mitigation plans documented
□ Residual risk acceptable

COMPLIANCE ASSESSMENT
□ Regulatory requirements reviewed
□ Policy compliance verified
□ Legal review (if needed)

APPROVAL
□ Tier 1 □ Tier 2 □ Tier 3

Approved by: _____________ Date: _______
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AI Risk Assessment Matrix

RISK ASSESSMENT MATRIX
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Risk Categories: Rate each 1-5 (1=Low, 5=High)

LIKELIHOOD FACTORS
___ Volume of AI interactions
___ Complexity of AI tasks
___ Data sensitivity level
___ User sophistication variance
___ Integration complexity
LIKELIHOOD SCORE: ___ / 25

IMPACT FACTORS
___ Financial exposure
___ Reputational risk
___ Regulatory consequences
___ Operational disruption
___ Safety implications
IMPACT SCORE: ___ / 25

RISK LEVEL
Low: Combined < 20
Medium: Combined 20-35
High: Combined > 35

COMBINED SCORE: ___
RISK LEVEL: ___________

REQUIRED CONTROLS
Low: Standard monitoring
Medium: Enhanced oversight, periodic review
High: Full governance review, continuous monitoring
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Define Key Metrics

AI GOVERNANCE DASHBOARD
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USAGE METRICS (Monthly)
• Active AI use cases: ___
• Users accessing AI: ___
• Queries/interactions: ___
• Token/API usage: $___

QUALITY METRICS
• Average quality score: ___
• Human override rate: ___%
• Escalation rate: ___%
• User satisfaction: ___

COMPLIANCE METRICS
• Policy violations: ___
• Incidents (by severity): ___
• Pending assessments: ___
• Training completion: ___%

RISK INDICATORS
• High-risk use cases: ___
• Open issues: ___
• Overdue reviews: ___

TRENDS
[Include month-over-month changes]

ACTION ITEMS
1. [Priority item]
2. [Priority item]
3. [Priority item]
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Create a complete AI Governance Package:

1. Governance Structure Document

   • Organizational chart
   • Roles and responsibilities
   • Decision rights matrix

2. Policy Documents

   • Acceptable Use Policy
   • Procurement/Development Policy
   • Incident Response Policy

3. Assessment Tools

   • Use Case Assessment Checklist
   • Risk Assessment Matrix

4. Monitoring Framework

   • Dashboard template
   • Key metrics definitions
   • Reporting schedule

5. Implementation Roadmap

   • Priority order for rollout
   • Quick wins vs. long-term items
   • Success criteria

Socialize the Framework

1. Create a 5-slide presentation summarizing the framework
2. Identify the top 3 objections stakeholders might have
3. Prepare responses to each objection
4. Practice presenting with AI playing devil's advocate

Document how you would roll this out in your organization.