AI Governance in Canada

AI Governance in Canada: What Your Business Needs to Know

Like it or not, artificial intelligence has become a staple ingredient in 2025’s daily business operations. Organizations everywhere use these tools, from customer service chatbots to marketing content and predictive analytics.

But this growth comes with real responsibility. Without AI governance, users are exposed to the risk of misusing data or generating legally or ethically questionable outputs. Internal AI governance allows businesses to manage these dangers and prepare for new Canadian regulations.

What AI Governance Means

AI governance refers to the internal policies, processes, and accountability structures that guide the use of artificial intelligence. It ensures that AI tools are applied safely and ethically while complying with existing and future laws.

Governance practices often focus on the following:

Data handling and privacy
Human oversight of automated decisions
Fairness and bias mitigation
Intellectual property and output rights
System monitoring and documentation
Transparency with users and clients

Strong governance supports innovation while reducing legal, operational, and reputational risk.

The Canadian Legal Landscape

Canada is on track to become one of the first countries with dedicated AI legislation. The proposed Artificial Intelligence and Data Act (AIDA), introduced as part of Bill C-27, will regulate high-impact AI systems that could affect human rights, access to services, and public safety.

If passed, AIDA will require businesses to:

Conduct impact assessments
Monitor systems for misuse or harm.
Inform users when AI is involved in decision-making.
Appoint someone accountable for AI compliance.
Keep records related to how systems function and evolve.

Existing laws also apply in addition to AIDA. Under PIPEDA, companies must protect personal data, including data used in AI training or outputs. Quebec’s Law 25 requires companies to disclose when decisions are automated and explain the logic behind them. Federally, the Directive on Automated Decision-Making already applies to public institutions and includes tools like the Algorithmic Impact Assessment.

As Field Law highlights in their recent AI Governance presentation, businesses should not wait for final legislation to act. Preparing now allows organizations to build flexible frameworks that can adapt as regulation evolves.

Global Frameworks and Best Practices

Internationally, other jurisdictions are shaping how Canada approaches governance. The EU AI Act requires companies to categorize AI tools by risk and comply with strict obligations for high-risk systems. In the United States, the NIST AI Risk Management Framework outlines voluntary but influential guidance around fairness, accountability, and transparency.

The OECD AI Principles are also widely recognized. They emphasize human-centred values, robustness, and inclusive governance.

What You Can Do Now

Governance does not need to be complex. Start with small, precise steps:

1. List your AI tools
Identify all systems that use artificial intelligence, including third-party platforms. Know what data they use and what decisions they influence.
2. Review risks
Assess whether any system could cause harm, introduce bias, or operate without human review. If applicable, use tools like Canada’s Algorithmic Impact Assessment.
3. Draft internal guidelines
Document expectations for tool approval, data privacy, and content review. Define which outputs require human editing or approval.
4. Train your team
Ensure staff understand the capabilities and limits of the tools they use. Include ethical considerations in onboarding and workflow design.

Why It Matters

AI, a potent business tool, can introduce uncertainty without proper governance. As Canadian regulations evolve and public expectations heighten, companies that take proactive steps now will be better prepared to comply with new laws, reduce risk, and instill confidence in clients and communities, thereby reducing uncertainty and fostering a sense of security.

Governance is a legal safeguard, but also helps clearly demonstrate leadership, empowering businesses to take responsibility for their AI systems and their impact on society.