Why Trump’s new executive order may create AI safety challenges for corporate boards

On January 20, 2025, President Trump issued an executive order revoking the AI safety regulations established by the Biden administration, creating significant uncertainty for corporate oversight of artificial intelligence initiatives. This deregulation has sparked debate, with some seeing it as an opportunity to boost innovation, while others warn it could increase risks and slow development in an unregulated environment.

Policy shift impact: The new executive order eliminates the regulatory framework established by Biden’s October 2023 order on AI safety and development, fundamentally changing the landscape for corporate governance of AI technologies.

• The Biden administration’s original order set standards for AI safety and security while promoting American competitiveness in AI research
• Trump’s order aims to reduce federal regulation to “unleash the potential of the American citizen”
• Competing perspectives suggest the deregulation could either enhance American innovation or potentially slow AI development due to increased risk concerns

Market response and implications: The private sector faces uncertainty about whether this signals a complete federal withdrawal from AI regulation or merely a temporary reset of regulatory focus.

• Some industry observers believe reduced regulations will boost commercial benefits
• Others warn that a lack of standards could slow innovation as businesses and consumers become wary of unregulated AI technology
• The cryptocurrency market’s challenges under limited regulation serve as a cautionary example

Board responsibilities: Corporate boards remain ultimately accountable for AI oversight and risk management, regardless of the regulatory environment.

• The National Association of Corporate Directors’ recent report emphasizes technology leadership through three key imperatives: strengthening oversight, deepening insight, and developing foresight
• Boards must balance innovation with risk management in an uncertain regulatory landscape
• The rapid pace of AI development and implementation requires immediate board attention, regardless of future regulatory changes

Recommended actions: Corporate boards should consider implementing several key measures to address the evolving situation.

• Enhance oversight practices specifically focused on AI risks, including algorithmic bias and cybersecurity vulnerabilities
• Increase scrutiny of third-party vendors’ safety and ethical standards
• Strengthen AI-related reporting structures between management and board
• Accelerate efforts to improve board members’ technical proficiency

Looking ahead: While the Trump administration may eventually introduce its own AI regulatory framework, boards must act now to establish robust oversight mechanisms.

• Industries with high regulatory scrutiny or critical AI implementations face particular pressure to maintain strong governance
• The rapid pace of AI advancement requires immediate board action rather than waiting for potential future regulations
• Corporate boards must balance innovation opportunities with responsible governance in this uncertain regulatory environment