ISO 42001 Explained: The New AI Governance Standard & What It Means for Your Business

Business Focus Podcast

ISO 42001 Explained: The New AI Governance Standard & What It Means for Your Business

As AI adoption skyrockets, businesses face growing risks, regulatory uncertainty, and ethical challenges. Enter ISO 42001, the first AI-specific ISO standard designed to govern risk, data privacy, and ethical AI implementation.

Jason Maricchiolo from ISO 365 breaks down how businesses can align AI usage with compliance, mitigate risks, and prepare for future regulations. If your organisation is using AI—whether for automation, customer interactions, or decision-making—you’ll want to understand this framework.

Episode Highlights: 

• What ISO 42001 & why it matters
• How 42001 connects with ISO 27001 & other cybersecurity frameworks
• How businesses can implement AI governance today

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AI Standards & Risk Management: Why Every Business Should Care About ISO 42001

Artificial intelligence (AI) is now a core part of business operations across industries. Whether it’s automating processes, enhancing customer experiences, or driving efficiencies, businesses are integrating AI at an unprecedented pace. But with this rapid adoption comes an urgent need for governance, accountability, and compliance.

Enter ISO 42001, the newly introduced AI governance standard designed to help businesses manage risks, ensure ethical AI usage, and create a framework for continuous improvement. In this blog post, we’ll break down what ISO 42001 is, why it matters, and how your business can prepare for certification.

What is ISO 42001?

ISO 42001 is an AI management system standard that provides a structured framework for organisations to govern, monitor, and improve their AI implementations. Released in December 2023, the standard is still gaining traction, but it is expected to become the benchmark for AI governance, similar to how ISO 27001 is for information security.

What does ISO 42001 aim to achieve?

• Identify and manage risks associated with AI usage.
• Ensure ethical AI deployment, reducing potential harm to individuals and communities.
• Improve transparency, so AI-driven decisions can be understood and justified.
• Comply with regulations as government policies around AI evolve.
• Continuously improve AI systems through governance and human oversight.

Why is AI Governance Important?

AI is evolving faster than most businesses can keep up with. What started as simple automation has now become complex AI-driven decision-making. But with power comes responsibility, and businesses must ensure AI is being used in ways that are fair, ethical, and aligned with best practices.

Key Risks of Poor AI Governance

• Bias in AI Decisions: AI can reinforce biases present in training data, leading to unfair decisions.
• Privacy and Security Concerns: AI processes vast amounts of data, raising risks of privacy breaches.
• Lack of Transparency: Many AI models work as “black boxes,” making decision-making unclear.
• Regulatory Compliance Issues: As AI regulations evolve, businesses without governance frameworks may struggle to comply.

Key Areas Covered by ISO 42001

ISO 42001 helps businesses establish an AI governance framework by addressing the following:

1. AI Risk Management

Identifying potential risks associated with AI (e.g., biases, errors, security vulnerabilities).
Implementing measures to reduce AI-related business risks.
Ensuring AI models don’t introduce regulatory compliance issues.

2. Ethical AI & Bias Management

• Ensuring AI decisions are fair, explainable, and non-discriminatory.
• Addressing biases in training data to avoid unfair outcomes.
• Preventing unethical AI behaviours that could harm customers or employees.

For example, AI models used in banking and HR have been found to discriminate against certain demographics. ISO 42001 aims to prevent such biases from creeping into AI systems.

3. AI Transparency & Accountability

• Businesses must understand how AI models make decisions.
• AI outputs shouldn’t be a “black box”—companies should be able to explain how and why AI arrived at a specific result.
• Establishing accountability for AI failures—who is responsible if AI makes an incorrect decision?

4. Security & Privacy Considerations

• Protecting customer and business data from misuse or leaks.
• Ensuring AI tools don’t inadvertently expose sensitive data.
• Implementing cybersecurity controls for AI-powered applications.

How Does ISO 42001 Compare to ISO 27001?

ISO 27001 is the gold standard for information security management, and many businesses—especially in IT and SaaS—have already adopted it. But ISO 42001 is specifically designed for AI governance.

That said, if your business is already ISO 27001 certified, adding ISO 42001 as an extension is significantly easier. ISO 27001 already covers data governance, security, and risk management—ISO 42001 builds on these principles but focuses on AI-specific risks and impacts.

For businesses already certified under ISO 27001, adopting ISO 42001 can be a seamless process rather than starting from scratch.

Should Your Business Consider ISO 42001?

Every business is using AI in some form, whether through AI-powered chatbots, automation tools, Copilot, OpenAI models, or machine learning algorithms. Even if your AI use is limited to small internal tools, the risks are real.

The more AI is integrated into business operations, the more critical it becomes to establish proper governance.

Who Needs ISO 42001?

• Businesses using AI for decision-making (e.g., finance, healthcare, HR, customer service).
• Organisations building AI-powered products (SaaS companies, AI vendors).
• Companies handling sensitive data processed by AI models.
• Managed Service Providers (MSPs) providing AI-based services or consulting.

What Does the Certification Process Involve?

1. Establish an AI Governance Framework: Define roles, ethical guidelines, and risk management processes.
2. Assess AI Risks and Impacts: Identify potential biases and privacy concerns.
3. Implement AI Oversight Mechanisms: Assign human reviewers and track AI system performance.
4. Conduct Internal Audits and Reviews: Ensure AI compliance with governance rules.
5. Undergo External Certification Audit: Engage a certification body to assess compliance.

How to Get ISO 42001 Certified

If you’ve decided that ISO 42001 is the right fit for your business, here’s what the certification process looks like:

Step 1: AI Risk Assessment

• Identify how AI is being used in your organisation.
• Assess potential risks, ethical concerns, and security vulnerabilities.

Step 2: Develop AI Policies & Governance Framework

• Define AI roles & responsibilities within your business.
• Establish accountability for AI decision-making.
• Ensure policies align with ISO 42001 guidelines.

Step 3: Implement AI Management System

• Put controls in place to monitor and review AI performance.
• Define procedures for handling AI failures or errors.
• Establish regular AI audits to ensure compliance.

Step 4: Certification Audit

• Once everything is in place, an external certification body will audit your AI governance framework.
• If you pass, you’ll receive ISO 42001 certification.

Currently, ISO 42001 is a non-accredited standard, meaning businesses can implement it voluntarily. However, as accreditation bodies catch up, it is expected to become a fully recognised certification in the near future.

Final Thoughts: Future-Proof Your AI Strategy

AI is here to stay, and governance is no longer optional. Whether you pursue ISO 42001 certification now or adopt its principles, an AI governance framework will protect your business, ensure compliance, and build stakeholder trust.

If you’re interested in exploring ISO 42001 for your business, reach out to an expert like Jason Maricchiolo on LinkedIn to discuss what compliance could look like for your organisation.

Govern AI wisely—because AI isn’t going anywhere, and neither are the risks.