Transparency used to be something businesses would do periodically by publishing annual reports, quarterly disclosures, and prepared updates, which seemed ample until now, this model has appeared to be no longer adequate and is therefore outdated.
Stakeholders now want to see more frequent and extensive disclosures than previously provided regarding financial performance and how decisions are made and risks are managed, along with the technology aspect of each process.
The drastic increase in companies publishing transparency reports clearly shows the shift from businesses keeping information private to disclosing how much AI they are using, their data management practices, and ethical considerations regarding these areas.
As more businesses share information about transparency with stakeholders, the idea of the transparency report will continue to evolve, along with the struggle for businesses to know if they are being too transparent or not enough.
If a company discloses too much information, it can become confusing; if not, it raises questions. So determining how much transparency is necessary is hard.
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I have witnessed numerous businesses have difficulty “doing it right.” One organization published a very detailed AI report; however, most stakeholders never got beyond the first few pages. On the other hand, one organization provided very little information about AI and received no positive responses regarding their lack of detail.In addition to these issues, transparency may also show flaws in an organization. That is, all processes are not perfect, and all decisions are not just yes/no. This can be especially disturbing for companies in highly regulated businesses and industries.
However, there is a general agreement that, moving forward, keeping quiet does not give a business a neutral image. Oftentimes, silence gives the impression of being evasive..
At JAMS Advisory, we consider implementing transparency to be a decision of the business and not a requirement by regulators. By successfully implementing the concept of transparency report, companies will build trust among all stakeholders; otherwise, they are generating noise.
Nonetheless, the concept of selective transparency continues to decline in the business community.
