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S&P Global — 18 October 2024

Daily Update: October 18, 2024

AI Governance Can Unveil Risks and Opportunities

Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy

The adoption of AI products and services requires businesses to consider the trustworthiness of AI, alongside strategy, safety and integrity. This trust is important for the future of the industry and can only be accomplished by robust governance procedures.

In a recent S&P Global “Artificial Intelligence Insights” podcast, AI Strategist Kjell Carlsson of Domino Data Lab drew parallels between the need for strong governance in commercial AI and air travel.

“Why is it that I am willing to get on a plane? It is because I trust the pilots. I trust the flight attendants. I trust the mechanics. I trust the air traffic controllers,” Carlsson said. “It really is this multilevel people, processes and technology approach that enables that kind of trust.”

While AI governance can enable trust, it cannot exist only at the company level. Investors need to take an active approach to mitigate risks and create transparency across the ecosystem. It will take an industrywide approach from investors, commercial AI model developers and users to develop self-governance that can be a model for nuanced AI regulation.

AI governance is challenging to put into practice because it involves a range of ethical, legal, operational and regulatory considerations. Every company is unique and needs to build its own capabilities, even if it might prefer to outsource to third-party foundation models. The organizations that are managing AI governance the best have mature data science teams and have invested in capabilities, avoiding ad hoc solutions. This is a function of the maturity curve. Proper AI governance must be applied and understood from board to operational level.

Naturally, business risk is important and often the focus of AI governance. But businesses that commit to understanding people, processes and technologies, and their role in governance, can make responsible AI use valuable, profitable and a source of efficiency.

There are different challenges when it comes to AI governance for open-source and commercial AI models. Open source has advantages in that you can use your own data to train the model to fine-tune your use cases. But it’s also the most likely to be abused by bad actors. Commercial models from companies such as OpenAI are robust and tested, but they may not be fit for purpose. From a governance perspective, it is best to think about open-source and proprietary models in the same way.

Good AI governance is all about mapping out stakeholders to evaluate the processes, strategies and impacts of AI decisions both within and outside the business. Governance must be agile and flexible as technology evolves as well as informed by a deep knowledge of data science. Done well, AI governance can create value for the industry, investors, companies and customers.

Today is Friday, October 18, 2024, and here is today’s essential intelligence.

Fitting Decarbonization Into The Power Sector Priorities Of Emerging Economies

Emerging markets must fit decarbonization into the policy and market priorities that have governed their power sectors’ development to date, such as energy access and affordability, leveraging local resources and supporting primary domestic industries. Renewable project competitiveness, power demand growth, nearshoring policies, corporate renewables procurement and clean hydrogen prospects offer substantial opportunities for clean energy investments in emerging markets.

—Read the latest research in the Look Forward Journal: Emerging Markets

Economic Research: What Other Cases Say About The Potential Effects Of Dollarization In Argentina

The Argentine government has indicated that it may pursue dollarization to some degree. It could help curb inflation there and stabilize the economy, but its long-term success would depend on the implementation of economic and institutional reforms. In addition, dollarization by itself doesn't address the underlying economic problems that undermined the domestic currency in the first place.

—Read the article from S&P Global Ratings

Global IPO Activity Picking Up But Continues To Lag Other Post-COVID Years

Global IPO activity is slowly recovering from the lows of early this year, but transactions are well behind the pace of recent years. There were 326 IPOs worldwide in the third quarter, the most since the fourth quarter of 2023. However, those offerings only came to an aggregate of $23.32 billion, the lowest since the first quarter of 2019, according to the latest S&P Global Market Intelligence data. Through the first three quarters of 2024 there were 946 IPOs launched with $76.44 billion offered, below the first three quarters of 2023 when 1,061 IPOs were launched offering an aggregate $95.76 billion.

—Read the article from S&P Global Market Intelligence

Sep Crude Imports Edge Down 0.6% On Year

China's crude imports narrowed the monthly year-on-year reduction to 0.6% in September, the lowest since May, data from the General Administration of Customs showed Oct.14, suggesting a slight improvement in the typical peak demand season. The country's crude inflow has registered year-on-year declines since May, with the deepest drop by 10.8% in June, as demand for clean oil products likely peaked.

—Read the article from S&P Global Commodity Insights

India Looks To Tap Brazil In Push Toward Crude Diversification, Equity Oil

India has intensified efforts to expand crude oil purchases from Brazil amid escalating Middle East tensions, but analysts and sources said plentiful availability of discounted Russian crude and logistical hurdles could pose challenges in boosting purchases from the South American supplier. Indian petroleum minister Hardeep Singh Puri recently visited Brazil to discuss how India could expand crude oil purchases from Brazil, as well as look for opportunities to collaborate on offshore deep and ultra-deepwater exploration and production projects.

—Read the article from S&P Global Commodity Insights

Next In Tech | Ep. 189: Human Resources Technology

If your view of the technology that drives the human resources end of business is mostly hiring, firing and time off management, your head would have been spinning at the HR Tech conference that just wrapped up. Analyst Conner Forrest was there and joined host Eric Hanselman to look at not only the highlights of the conference, but also his recent research and market explorations.

—Read the article from S&P Global Market Intelligence

Washington, DC: Datacenter And Energy Innovation Summit 2024 (Oct. 30, 2024)

Join Datacenter and energy analysts from 451 Research, S&P Global, and expert guests to discuss the latest trends and developments in the Datacenter industry, with a specific focus on the impact of AI on energy consumption. Don't miss this opportunity to gain valuable knowledge and network with industry professionals.

—Register for the in-person event from S&P Global Market Intelligence