Why AI literacy is the new compliance frontier
AI literacy is fast becoming the new frontier of compliance law, thanks to Article 4 of the EU AI Act - but what does this actually mean for your business?
In Jonathan Armstrong’s recent article for Governance and Compliance, he makes the case that AI literacy has now become “as essential to compliance as GDPR awareness became in 2018.” Article 4 of the EU AI Act has introduced “a new kind of accountability: ensuring boards, executives, and employees are sufficiently AI literate to identify risks, meet transparency obligations, and apply controls effectively.”
The European Commission’s definition of AI literacy does not require technical mastery, but rather the ability to:
Understand how AI systems work and what data they use.
Recognise risks - like bias, discrimination, and hallucination.
Know when and how to apply human oversight.
Be aware of legal obligations under the EU AI Act, and other relevant frameworks.
The scope of Article 4 is broad, and affects any organisation using AI in the EU - including non-EU businesses. Organisations must go beyond simply deploying AI — they have to ensure everyone using or impacted by it have the “skills, knowledge and understanding” to to make informed decisions.
Jonathan advises legal compliance teams to consider the following steps:
A complete audit of all AI systems in use.
Developing and delivering specific and targeted AI literacy training.
A full review of the use of AI amongst vendors and third-party relationships.
The creation of clear policies governing AI use.
Board-level training to ensure the board has proper knowledge of AI risks and opportunities.
With AI now embedded in daily business operations, the legal duty of organisations to ensure AI literacy is clear - those that act early will be able to prepare thesmselves for the compliance challenge and build trust with regulators, investors, and customers. Get in touch with us to learn more about what we can do to help you prepare.
Make sure to read the full text of Jonathan’s article at:
https://www.govcompmag.com/2025/10/15/ai-literacy-next-big-compliance-challenge