A lack of governance by SMEs is leaving employees using AI tools without clear boundaries on data privacy, acceptable use or quality control, according to new research by Startups.co.uk.
A survey found that 75% of UK businesses operate without a formal written AI governance policy, while 30% have no plans to implement one.
Although 27% of businesses have informal AI guidelines in place, these do not provide the same level of structure, accountability or legal protection of a formal corporate policy.
A startup only needs to have one client inside of the EU for the EU AI Act to apply to them. The research shows nearly half of UK business leaders (46%) admitted they have no idea they could be held legally accountable for the integrity and ethical output of third-party AI models used within their organisation.
Among SMEs that completed an AI audit in the last quarter, 58% spent more than 10 hours on the process, highlighting the challenge many businesses face in balancing rapid AI adoption with the time and resources needed to ensure responsible use of the technology.
In December, UKTN reported that less than a fifth (19%) of organisations in the UK have implemented a comprehensive AI strategy, despite widespread adoption.
Research from the law firm Shoosmiths with FT Longitude found that AI governance is not a top priority for many firms, with less than a quarter (24%) citing regulatory compliance as a top concern, compared with 44% among EU companies.
