AI or Die: Why Healthcare Must Manage AI Risk Before It’s Too Late

Artificial intelligence (AI) is transforming healthcare - from diagnosing diseases with unmatched accuracy to streamlining administrative tasks. But behind the benefits lies a growing risk: flawed algorithms, data breaches, and biased outcomes can harm patients, erode trust, and disrupt operations. Here's why managing AI risks in healthcare is no longer optional:

• Patient Safety: Errors in AI systems, often caused by biased or incomplete data, can lead to incorrect treatments or unequal care.
• Cybersecurity Threats: AI-driven cyberattacks, like phishing and data breaches, are on the rise, with healthcare systems increasingly targeted.
• Regulatory Pressure: Evolving laws demand stricter compliance, and failure to address AI risks could lead to fines and reputational damage.

The solution? A robust AI risk management framework combining constant monitoring, human oversight, and tools like Censinet RiskOps™ to safeguard patients and ensure secure, ethical AI deployment. The stakes are high - acting now can protect lives and prevent costly failures.

Healthcare Cybersecurity: From Digital Risk to AI Governance with Ed Gaudet

Types of AI Risks in Healthcare

Understanding the risks associated with AI in healthcare is essential. These risks can be grouped into three main categories, each with distinct challenges that could have far-reaching effects on patient care and healthcare operations.

Patient Safety Risks

When AI systems falter - whether due to biases, overfitting, or software glitches - they can lead to dangerous outcomes like incorrect dosages or flawed treatment decisions ^[1]. If the data used to train AI models is biased or incomplete, it can perpetuate existing disparities in healthcare. For instance, underrepresentation of certain demographic groups in training data can result in unequal care recommendations for those populations ^[2].

Unlike mistakes made by individual healthcare providers, errors in widely used AI systems can have a much broader impact, potentially harming large numbers of patients simultaneously ^[1]. Poorly designed systems can also create other safety issues, such as overwhelming providers with unnecessary alerts, which may lead to "alert fatigue" and erode trust in the technology ^[2].

"AI prediction models must also be incorporated into broader process engineering programs to ensure that predictions can lead to reasonable, safe, and beneficial actions to improve upon the originally predicted outcome."

• Patrick Tighe, MD, MS; Bryan M. Gale, MA; Sarah E. Mossburg, RN, PhD ^[2]

It's worth noting that high accuracy in AI models doesn’t always translate to clinical effectiveness ^[1]. These safety concerns are further compounded by the evolving landscape of cybersecurity threats.

Cybersecurity Vulnerabilities

While AI has the potential to bolster cybersecurity, it also creates new opportunities for cybercriminals. The emergence of generative AI has significantly increased cyber threats targeting healthcare organizations. Since late 2022, phishing attacks have surged by 456%, coinciding with the growing adoption of generative AI technologies ^[4].

AI-driven malware is particularly concerning because it can adapt in real-time, evade traditional detection methods, and specifically target critical healthcare systems ^[3]. Deepfake technology adds another layer of risk, enabling attackers to impersonate trusted individuals and gain unauthorized access to sensitive health information ^[3]. Additionally, over half of the medical devices connected to hospital networks have known critical vulnerabilities, making them prime targets for exploitation ^[5].

"AI is not the Holy Grail; it's a tool that can be used for and against us. AI's transformative potential in healthcare and security comes from how it is implemented, so leaders must approach its adoption with a balanced perspective. They should be excited yet cautious, knowing full well that attackers are leveraging the very same technology to undermine our systems, data, and trust."

• Claudio Gallo, Lead Security Engineer, C4HCO ^[3]

Despite these challenges, healthcare organizations that have adopted AI-powered cybersecurity tools have seen tangible benefits. For example, such tools have helped reduce the time needed to detect and contain breaches by an average of 21–31% ^[5]. However, beyond technical risks, AI also introduces regulatory challenges that demand careful attention.

Compliance and Regulatory Risks

The integration of AI into healthcare brings about a host of compliance challenges that go beyond traditional regulatory concerns. Organizations must address issues like ethics, data privacy, bias, and transparency while adhering to regulations such as HIPAA ^[6][7]. Key areas impacted by AI include patient safety, data protection, ethical billing, workforce security, and oversight of AI systems ^[7].

As AI technology evolves rapidly, regulatory frameworks are struggling to keep up. Transparency, cybersecurity, and human oversight have become essential for ensuring successful and compliant AI implementation ^[6]. Healthcare providers must ensure that AI decision-making processes are explainable and that clinicians retain control over AI-generated recommendations. Public skepticism toward AI further highlights the importance of transparent and accountable regulatory practices.

AI Failures in Healthcare: Case Studies

Failures in healthcare-related AI systems show how biases in algorithms and cybersecurity lapses can lead to harmful outcomes for patients and disrupt critical operations. Let's explore two major case studies that highlight these risks and provide lessons for better risk management.

Case Study: Patient Harm from Biased Algorithms

When bias creeps into AI systems, the consequences can be severe. A well-known example involves an algorithm adopted by several U.S. health systems that unintentionally prioritized white patients over Black patients for additional care management. The root of the issue? The algorithm relied on healthcare cost data as a stand-in for assessing care needs. Because systemic barriers often limit healthcare access for Black patients, their care costs were lower, leading the algorithm to underestimate their medical needs ^[11].

This meant Black patients had to be much sicker than white patients to qualify for the same diagnoses, treatments, or resources ^[12]. The impact of these disparities is stark: for example, Black patients face the highest melanoma mortality rates, with a 5-year survival rate of just 70% compared to 94% for white patients ^[14].

Another troubling case involves race-based adjustments in kidney function calculations. Algorithms that factor in race when determining estimated glomerular filtration rate (eGFR) often overestimate kidney function in Black patients, delaying their placement on kidney transplant lists and limiting access to life-saving care ^[13].

"Many health care algorithms are data-driven, but if the data aren't representative of the full population, it can create biases against those who are less represented."

• Lucila Ohno-Machado, MD, PhD, MBA ^[12]

These failures stem from several issues: lack of diversity in training data, insufficient testing across all populations, and minimal oversight during system deployment. The organizations using these systems did not conduct adequate bias assessments or establish accountability measures to ensure fairness in outcomes.

Case Study: AI-Driven Data Breaches

AI systems in healthcare are also vulnerable to cybersecurity threats, which can have devastating consequences. In 2024 alone, over 182.4 million individuals had their health information exposed due to data breaches, according to the U.S. Department of Health and Human Services' Office for Civil Rights ^[8].

One glaring example is DeepSeek, a Chinese AI platform that exposed over 1 million sensitive records because of unsecured system configurations. If a healthcare AI system encountered a similar breach, attackers could access patient queries, diagnostic results, or even recreate interactions between patients and providers. Such incidents lead to severe privacy violations and regulatory non-compliance ^[8].

The financial toll is equally alarming. A global survey found that data breaches cost organizations an average of $6.45 million ^[10]. For healthcare providers, the damage goes beyond monetary losses, including regulatory penalties, legal battles, and long-term harm to their reputation.

AI tools like Microsoft's Copilot AI have also shown vulnerabilities. Researcher Michael Bargury demonstrated how the system could be exploited to carry out malicious activities such as spear-phishing and data theft. By leveraging Copilot's integration with Microsoft 365, attackers could mimic writing styles, send phishing emails, and trick healthcare staff into revealing sensitive information or granting unauthorized access ^[8].

Another example is Clearview AI, a facial recognition company that suffered a data breach, exposing its client list and internal data. If such a breach occurred in a healthcare setting, it could compromise patient identities and grant unauthorized access to medical records, eroding trust in AI-driven tools ^[8].

"We assess AI will enable threat actors to develop increasingly powerful, sophisticated, customizable, and scalable capabilities - and it won't take them long to do it."

• Christopher Wray, FBI Director ^[9]

These incidents share common causes: poor security configurations, weak monitoring of AI systems, inadequate access controls, and a failure to anticipate how bad actors might exploit AI. Many organizations lacked proper AI governance frameworks, including techniques like data de-identification and tokenization, to protect sensitive information.

The fallout from these breaches extends beyond immediate financial losses. When healthcare organizations fail to safeguard patient data, trust erodes, and regulatory scrutiny intensifies. These examples underscore the urgent need for stronger AI governance to mitigate risks before they escalate.

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How to Manage AI Risks in Healthcare

Healthcare organizations must act decisively to avoid major AI-related failures. Ensuring robust AI governance means implementing clear policies, constant monitoring, and maintaining human oversight - all while prioritizing patient safety and data security. Here's a framework to effectively manage and balance AI operations in healthcare.

Building an AI Governance Framework

A solid AI governance framework is the cornerstone for managing risks throughout the lifecycle of AI systems. It includes principles, policies, and tools that guide the responsible use of AI in healthcare settings ^[17]. By tying governance to ethics, healthcare organizations can address risks identified in real-world scenarios.

Start with strong leadership and collaboration. Successful governance begins with committed leadership and cross-functional teamwork. As Maria Axente, PwC's Head of AI Public Policy and Ethics, puts it:

"We need to be thinking, 'What AI do we have in the house, who owns it and who's ultimately accountable?'" ^[15]

Forming an AI ethics committee that includes representatives from technology, legal, risk management, and clinical teams ensures a well-rounded evaluation of AI systems ^[16].

Align governance principles with organizational values. Beyond technical processes, the framework should include ethical guidelines to ensure AI serves patients safely. Dale Waterman, Principal Solution Designer at Diligent, emphasizes:

"Boards are racing to harness AI's potential, but they must also uphold company values and safeguard the hard-earned trust of their customers, partners, and employees" ^[15]

Establish governance policies to mitigate risks like bias, data misuse, and lack of oversight. These policies should include bias audits, reporting mechanisms, and compliance with data protection laws ^[15]. Regular legal and ethical reviews help keep systems aligned with changing regulations ^[16].

Conduct Privacy Impact Assessments (PIAs) before deploying AI tools. These assessments identify privacy risks and clarify how patient data will be handled, ensuring proper safeguards are in place ^[16].

Continuous Risk Monitoring and Assessment

Deploying AI is just the beginning - ongoing monitoring is critical to catch issues before they harm patients or compromise data. A 2023 report revealed that while 65% of U.S. hospitals used AI or predictive models with their EHRs, 56% failed to evaluate these models for bias ^[18].

Focus on testing AI systems with local data to ensure they work effectively for specific patient populations. Hospitals that develop their own models are more likely to perform local evaluations, whereas those using third-party systems often skip this step ^[18].

Regular evaluations are essential to ensure AI systems remain fair, effective, and safe ^[18]. Researchers warn:

"Effective evaluation and governance of predictive models used in health care, particularly those driven by artificial intelligence (AI) and machine learning, are needed to ensure that models are fair, appropriate, valid, effective, and safe" ^[18]

To prevent "model drift", where accuracy declines over time, implement real-time monitoring, set up alerts for unusual activity, and conduct frequent bias checks ^[16]. An internal AI audit team can oversee these assessments ^[19].

Post-implementation surveillance programs allow organizations to share insights and best practices, further enhancing patient safety ^[21].

Combining Human Oversight with Automation

While monitoring systems are essential, human oversight adds an extra layer of protection. The best strategies combine automation with human judgment, ensuring AI supports healthcare decisions without replacing critical human input.

Train staff on AI's capabilities and limitations so they can make informed decisions about when to trust AI recommendations and when to step in ^[16]. This training helps healthcare workers balance AI's strengths with its risks.

Create clear guidelines for AI use that specify oversight requirements and best practices ^[18]. These guidelines should outline when human review is necessary and the level of oversight required for different AI applications.

Ensure transparency and accountability by making AI decisions explainable and reviewable by human experts ^[21]. This is especially important for clinical decisions, where understanding the reasoning behind AI recommendations can directly impact patient safety.

Focus on data quality and accessibility. Reliable data is key to effective AI systems. Using tools to assess data quality and reduce bias ensures that AI models are built on accurate, representative information ^[20].

AI Risk Management Tools: Censinet's Solution

Healthcare organizations face unique challenges when managing AI risks. Generic platforms often fall short, especially when it comes to addressing data protection and regulatory compliance. That’s where Censinet RiskOps™ steps in, offering a solution specifically tailored for the healthcare industry.

Overview of Censinet RiskOps™

Censinet RiskOps™ is purpose-built for healthcare, designed to help organizations continuously address risks ^[23]. One of its standout features is the Digital Risk Catalog™, which includes over 40,000 pre-assessed vendors and products. This allows risk teams to bypass time-consuming research and focus on factors specific to their organization ^[22].

The platform also provides real-time risk dashboards, offering a centralized view of all AI-related risks. These dashboards pull data from multiple sources, giving leadership a clear understanding of their organization's risk exposure. From third-party vendor assessments to internal AI system performance metrics, everything is tracked in one place.

By enabling collaborative governance, the platform brings together diverse teams - clinical staff, IT security, legal, and compliance departments - into a unified system. Everyone works with the same risk data, ensuring informed and coordinated decision-making.

Another key feature is streamlined risk assessments, which replace manual processes with automated workflows. These workflows handle the detailed evaluations required for healthcare compliance, reducing effort while maintaining thorough oversight.

Building on this foundation, Censinet AITM enhances and accelerates the risk management process even further.

How Censinet AITM Improves AI Risk Management

Censinet AITM takes efficiency to the next level by speeding up third-party risk assessments and helping vendors complete security questionnaires faster ^[24]. Traditional assessments can take weeks or even months, causing delays in AI implementation. With Censinet AITM, these bottlenecks are significantly reduced.

The platform introduces human-guided automation to key steps like evidence validation, policy drafting, and risk mitigation ^[24]. This blend of automation and human oversight ensures routine tasks are completed quickly without compromising accuracy.

One standout feature is Delta-Based Reassessments, which focus only on changes made by vendors. Instead of redoing entire assessments, the platform identifies updates and evaluates those areas specifically. This targeted approach cuts reassessment times to less than a day, on average ^[22].

By balancing automation with expert review, the platform improves operational efficiency while maintaining the critical human touch needed to manage complex AI risks ^[24].

Ed Gaudet, CEO and founder of Censinet, highlights the platform’s value:

"Our collaboration with AWS enables us to deliver Censinet AI to streamline risk management while ensuring responsible, secure AI deployment and use. With Censinet RiskOps, we're enabling healthcare leaders to manage cyber risks at scale to ensure safe, uninterrupted care." ^[24]

To simplify governance further, the platform uses advanced routing and orchestration. Acting like an "air traffic control" system for AI governance, it automatically assigns tasks and findings to the right stakeholders, including AI governance committees. This ensures critical risks are addressed promptly while maintaining proper oversight.

Together, these collaborative and automated features create a unified framework for managing AI risks.

Benefits of an Integrated Risk Management Approach

Fragmented risk management systems often lead to inefficiencies and blind spots. Censinet addresses these issues by centralizing all AI risk management activities into a single platform.

This centralized approach eliminates the problem of scattered risk information. AI governance committees can access complete, up-to-date risk profiles, allowing them to make informed decisions without delays.

Continuous risk monitoring replaces outdated periodic assessments. As AI systems evolve or new threats emerge, the platform updates risk scores automatically and alerts relevant teams. This proactive approach helps prevent issues before they affect patient care or compromise data security.

Standardized processes ensure that every AI project, whether it’s a diagnostic tool or a clinical decision support system, undergoes the same rigorous evaluation. This consistency not only improves the quality of assessments but also makes it easier to compare risks across different initiatives.

Finally, the platform’s healthcare focus ensures compliance with regulations like HIPAA and FDA requirements for medical devices. Risk teams don’t need to adapt generic frameworks or worry about overlooking critical healthcare-specific factors. Everything they need is built into the system.

Conclusion: Act Now to Protect Healthcare with AI

The healthcare industry is at a pivotal moment. AI holds the promise of transforming patient care, but without addressing its risks, it could lead to far-reaching consequences that extend beyond financial losses.

The Cost of Doing Nothing

The price of inaction isn't just monetary - it’s measured in lives. In 2020, over 40% of all data breaches occurred in the healthcare sector ^[26]. When AI systems fail, the fallout can be catastrophic.

Let’s talk numbers. In 2019, insecure storage systems at hundreds of hospitals, medical offices, and imaging centers exposed over 1 billion medical images ^[27]. These incidents highlight the dangers of neglecting security in the rush to adopt new technology.

The human stakes are just as alarming. Flawed AI algorithms can perpetuate healthcare inequities or lead to unjust outcomes ^[25][26]. System failures might result in misdiagnoses, treatment errors, or delays in care ^[26]. When patients lose trust in providers because of AI-related issues, the damage doesn’t stop at individuals - it can undermine entire healthcare institutions.

Operational disruptions are another major risk. AI malfunctions can throw a wrench into essential functions like coding, billing, medical records, and scheduling ^[27]. Data breaches, meanwhile, can expose patients to medical insurance fraud ^[27]. The absence of clear regulations governing AI in healthcare only adds to the uncertainty, raising ethical concerns and questions about accountability for AI-related errors ^[26]. Waiting to act leaves organizations vulnerable and unprepared for the regulatory changes that are sure to come.

The costs - both human and financial - are too high to ignore. Action is needed now.

Moving Forward with Risk Management

To avoid these risks, healthcare organizations must adopt AI responsibly, with a strong focus on risk management.

Consider the growing workforce challenges. The American Hospital Association projects a shortage of up to 124,000 physicians by 2033 ^[28], while healthcare systems will need to hire at least 200,000 nurses each year to meet increasing demands ^[28]. AI can play a crucial role in addressing these gaps, but only if it is implemented securely and thoughtfully.

Organizations that take proactive steps are already seeing results. Those that integrated AI into their cybersecurity programs reduced the time needed to detect and contain breaches by 21–31% ^[5]. They also saved significantly on data breach costs, with reductions ranging from $800,000 to $1.77 million ^[5].

As Matt Christensen, Sr. Director GRC at Intermountain Health, explains:

"Healthcare is the most complex industry... You can't just take a tool and apply it to healthcare if it wasn't built specifically for healthcare." ^[23]

Tools designed specifically for healthcare, like Censinet RiskOps™, address these unique challenges. By combining continuous monitoring with strong governance and human oversight, these platforms help healthcare organizations manage AI risks effectively. Leaders who adopt such tools and establish robust governance frameworks will be better equipped to protect both patients and operations.

Unchecked AI in healthcare is a safety risk ^[28]. The path forward is clear: embrace comprehensive AI risk management now, or risk facing devastating consequences later. The technology and frameworks are already available. Healthcare leaders who act decisively today will not only safeguard their organizations but also help shape the future of healthcare for generations to come.

FAQs

What are the biggest risks of using AI in healthcare, and how do they affect patient safety?

AI's role in healthcare brings undeniable potential, but it also carries some serious risks. Issues like data privacy breaches, algorithmic bias, and system errors can have severe consequences, including incorrect diagnoses, inappropriate treatments, or even harm to patients. For instance, an AI system with built-in bias might misread data, leading to unequal care for certain groups. Similarly, technical glitches could delay or mislead critical medical decisions when time is of the essence.

These kinds of failures don't just put patient safety at risk - they can also undermine trust in healthcare systems as a whole. To tackle these challenges, healthcare organizations need to put strong AI governance frameworks in place. Regular monitoring of AI systems and actively working to identify and remove biases are also key steps. Without these measures, the promise of AI improving patient care could quickly turn into a liability.

How can healthcare organizations manage AI risks to ensure compliance, patient safety, and data security?

To address AI-related risks in healthcare, organizations should adopt a structured approach like the NIST AI Risk Management Framework. This framework offers a systematic way to identify, evaluate, and address risks at every stage of an AI system's lifecycle.

Key steps include ongoing monitoring of AI systems, ensuring transparency and explainability in their processes, and conducting regular audits to detect and address any irregularities.

By applying these practices, healthcare organizations can bolster their cybersecurity measures, protect sensitive patient information, and stay aligned with federal regulations. This proactive approach not only safeguards operations but also ensures better outcomes for patients.

How important is human oversight in using AI for healthcare, and how can it work alongside automation?

Human involvement plays a critical role in healthcare AI, ensuring ethical decisions, patient safety, and accountability remain at the forefront. It builds trust by tackling concerns like bias, transparency, and fairness in AI systems. Without proper oversight, automated systems risk producing harmful or unethical outcomes.

To strike the right balance between human oversight and automation, healthcare organizations can implement a hybrid model. This approach brings together interdisciplinary experts to evaluate AI systems before they’re put into use, identifying risks and ensuring they align with core human values. Ongoing monitoring and regular updates to these tools also help maintain safety and adaptability. By blending human judgment with automation, healthcare providers can enhance efficiency while staying committed to ethical practices and patient care.

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