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DeepSeek’s AI boom raises security risks for companies

The rapid rise of DeepSeek, a Chinese artificial intelligence startup, has sparked concerns across corporate finance departments as security and regulatory risks mount.

Within weeks of launching its AI-powered assistant, DeepSeek became the most-downloaded free app on the U.S. iOS App Store, surpassing OpenAI’s ChatGPT.

The company’s surge in popularity, however, has drawn scrutiny from cybersecurity experts and regulators, raising alarms about data security, intellectual property risks, and regulatory compliance.

Data Privacy and Corporate Security Risks

DeepSeek’s AI assistant enables users to input queries and receive AI-generated responses, much like ChatGPT and Google Gemini. However, experts warn that employees may inadvertently expose sensitive corporate information—ranging from financial reports to proprietary algorithms—when using the tool.

Security analysts point to DeepSeek’s privacy policy, which indicates that collected data may be stored on servers in China, fueling fears over potential government access and surveillance risks.

The concern is particularly acute for finance leaders handling confidential data. A single unintentional upload of sensitive financial projections or client records to an AI model could result in an irreversible breach.

The Australian government has cited similar concerns in its decision to ban DeepSeek from all government devices due to “unacceptable security risks.”

Regulatory Backlash and Global Restrictions

Governments have taken swift action to mitigate potential risks. Australia recently banned DeepSeek from all government devices, citing security concerns that it could be exploited for data collection and cyber espionage. Italy followed suit, blocking the chatbot after its data protection authority found DeepSeek’s responses regarding privacy policies insufficient.

For CFOs operating in regulated industries, compliance risks loom large. The evolving regulatory landscape surrounding AI tools underscores the importance of rigorous vendor assessments before permitting their use within enterprise environments.

Security Vulnerabilities and Cyberattacks

DeepSeek’s explosive growth has also made it a prime target for cyberattacks. The company recently reported large-scale malicious attempts to breach its platform, resulting in temporary service disruptions.

These attacks highlight the vulnerabilities of third-party AI services. A cyberattack on an AI provider with weak security protocols could expose sensitive data stored within its models.

The concerns surrounding DeepSeek are not limited to security. OpenAI has accused the startup of leveraging its proprietary technology to develop a competing AI model, raising questions about potential intellectual property theft.

If proven, such allegations could set a precedent for future AI-related disputes and impact the AI industry’s competitive landscape.

Navigating AI Adoption in Corporate Finance

As AI adoption accelerates in finance departments, CFOs must balance innovation with risk management. Companies can take several steps to mitigate risks associated with AI tools:

  • Enforce Data Governance Policies: Prohibit employees from inputting sensitive corporate data into public AI models.
  • Assess Vendor Compliance: Conduct due diligence on AI providers to ensure they meet security and regulatory standards.
  • Monitor Emerging Regulations: Stay ahead of evolving laws that may impact AI usage in financial operations.
  • Implement AI Security Training: Educate employees on the risks associated with AI tools and establish internal usage guidelines.

The promise of AI in corporate finance is undeniable, offering efficiencies in forecasting, automation, and decision-making. However, as the DeepSeek case illustrates, rapid adoption without proper safeguards can expose companies to significant risks.

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