Companies that use AI in hiring are trying to determine how to comply with a New York law that mandates they test their systems for potential biases. Businesses and their service providers are grappling with how to comply with New York City's mandate for audits of artificial intelligence systems used in hiring. A New York City law that comes into effect in January will require companies to conduct audits to assess biases, including along race and gender lines, in the AI systems they use in hiring. Under New York's law, the hiring company is ultimately liable--and can face fines--for violations. But the requirement has posed some compliance challenges.

But the requirement has posed some compliance challenges. Unlike familiar financial audits, refined over decades of accounting experience, the AI audit process is new and without clearly established guidelines. Our Morning Risk Report features insights and news on governance, risk and compliance. "There is a major concern, which is it's not clear exactly what constitutes an AI audit," said Andrew Burt, managing partner at AI-focused law firm BNH. "If you are an organization that's using some type of these tools…it can be pretty confusing."