AI Literacy: mandatory

AI Literacy: using AI responsibly across your organization


AI Literacy makes AI safe and valuable. Discover EU AI Act requirements and how to get started in five practical steps.


In brief:

  • AI Literacy is essential for responsible AI use and a legal requirement under the EU AI Act, with enforcement increasing from 2026.
  • Organizations with strong AI Literacy make better decisions, manage risk more effectively, and unlock greater value.
  • A structured five-step approach helps build skills, leadership, and organization-wide AI capability.

AI Literacy is the foundation for responsible and informed use of AI within organizations. It determines how AI-systems are understood, highlights their capabilities and limitations, and builds awareness of risks such as bias, privacy, security, and unintended consequences. It is therefore a core skill for anyone working with AI—from executives and management to IT, compliance, and end users.

With the introduction of the EU AI Act, organizations are legally required to ensure sufficient AI Literacy among employees and stakeholders. This is essential for responsible governance, effective riskmanagement, and informed decision-making. As AI-adoption accelerates and its impact deepens, AI Literacy becomes a prerequisite for compliance, resilience, and future readiness.

What does the EU AI Act require?

AI literacy is a formal requirement under the EU AI Act. Organizations must ensure that anyone developing, using, or interacting with AI-systems, internally or externally, has the necessary knowledge, skills, and understanding of both the technology and its broader implications.

As such, AI literacy is not optional—it is a prerequisite for responsible AI use and deployment. Organizations that build these capabilities are better positioned to capture value, manage risk, and make informed decisions about the impact of AI-systems.

Under Article 4, organizations developing or using AI must ensure sufficient AI Literacy—skills, knowledge, and understanding to make informed decisions and recognize risks and potential harm.

  • Legal requirement since February 2025
  • Supervision and enforcement starting August 2026
  • Increased risk of fines, reputational damage, and governance failure
  • At the same time: strategic upside through better decision-making and innovation

EY has developed the AI Act Maturity Assessment to help organizations navigate regulatory requirements.

AI Literacy starts in the boardroom

AI is transforming how organizations operate, decide, and create value. Yet uncertainty at the executive level is often driven not by risk itself, but by lack of understanding. Those who understand AI can assess risks more effectively and steer with confidence.

Three strategic domains are critical:

  • Businessmodel: Understanding how AI reshapes value creation
  • Operating model: Anticipating changes in roles, skills, and workforce
  • Risk & governance: Navigating ethical and regulatory complexity

AI Literacy starts at the top—but only delivers value when embedded organization-wide.

AI literacy means that as a leader, you understand what you are signing up for — and have the confidence to set direction in a constantly evolving landscape.

From governance to behavior: AI Literacy as a capability

AI is not just a technology issue: it is an organizational and skills challenge.

EY-research shows:

  • 90% of leaders encourage AI use
  • Over half report insufficient skills and confidence
  • Only 57% feel comfortable using AI
  • 51% struggle to implement AI governance

Without AI Literacy, value is lost and risks increase. Leading organizations treat it as a strategic capability.

Best practices include:

• Governance-driven learning tied to risk and accountability
• Role-based development across functions
• Embedded ethics: fairness, transparency, accountability
• Continuous learning through labs, demos, and real cases

How to become an AI-literate organization?

EY works with five interconnected building blocks:

1. Start at the top
Leaders define the vision and set a clear direction.
2. Work multidisciplinary
Bring together technology, ethics, strategy, risk, and HR.
3. Embed AI in strategy
Move from add-on to built-in.
4. Differentiate by role
What leadership needs differs from what teams need.
5. Activate the entire organization
Experiment within clear frameworks for responsible use.

Don’t try to reinvent the wheel: focus on how AI can help optimize your operating model.

How AI-literate is your organization?

Discover why AI literacy matters, why leadership sets the tone, and why the biggest risks often start with a misunderstanding of the technology. Use this five-step plan to get started:

 

1. Map your AI usage
Identify which AI-systems are used, by whom, and for what purpose. Include generative AI, chatbots, and decision-support tools, along with risklevels.
2. Define the required level of AI literacy
Determine the level of knowledge needed per role. Ensure everyone understands the basics: what AI is, how it works, where it is used, and what the risks are.
3. Move from hype to targeted application
Align AI initiatives with clear business goals. Avoid fragmented experimentation and focus on value creation within processes and strategy.
4. Embed leadership and risk awareness
Make AI part of the strategic agenda. Define responsibilities and actively address risks such as bias, privacy, and compliance through governance frameworks.
5. Build capability at scale
Invest in training, guidelines, and a clear AI-code of conduct. Continuously evaluate and evolve from isolated pilots to organization-wide capability.
 

The gap in AI literacy is widening. Now is the time to act.

While regulations differ globally, attention to AI literacy at the executive level is increasing everywhere. AI is not just another IT-tool: it is a powerful technology with both significant opportunities and risks. AI-systems are probabilistic and can hallucinate, which may have far-reaching consequences, particularly in sectors such as finance where bias, operational vulnerabilities, and concentration risks play a role.
Responsible use therefore requires understanding across all layers of the organization—from professionals to board members.
 

Uncertainty in the boardroom is understandable, but rarely stems from the risks themselves. It originates from a lack of understanding. Once it becomes clear what AI is and what it can do, risks become easier to assess—and AI often proves to be less complex and less threatening than anticipated.
 

The real question is not whether you use AI, but whether you understand what you are doing with it.


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Summary

AI Literacy is a foundational capability for organizations aiming to use AI responsibly and effectively. Under the EU AI Act, it is also a legal requirement: employees and leaders must understand AI, including its risks and opportunities. In practice, AI Literacy starts in the boardroom but only creates value when embedded across the organization. Organizations that treat AI Literacy as a strategic capability—supported by governance, training, and clear direction—are better positioned to manage risk and scale AI sustainably.


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