AI’s governance reckoning: Build trust now or pay later

Upgrade to High-Speed Internet for only ₱1499/month!

Enjoy up to 100 Mbps fiber broadband, perfect for browsing, streaming, and gaming.

Visit Suniway.ph to learn

Artificial intelligence (AI) is no longer a buzzword. It is transforming how organizations operate, make decisions and deliver services. Across sectors, from finance to logistics, health care to education, AI adoption is accelerating at a pace few technologies have ever achieved. Yet amid this rapid uptake, a worrying gap has emerged: AI governance is not keeping pace with adoption.

The global governance gap: A strategic risk

The KPMG Global Tech Report 2026 makes one truth clear: organizations are widely adopting AI, but the maturity of governance frameworks varies significantly. Fully embedding responsible AI practices, aligned with enterprise strategy, grounded in accountability and transparent in operation, remains elusive for many.

KPMG’s research also revealed that while nearly 68 percent of organizations expect to scale AI across their enterprises by the end of 2026, a much smaller proportion reports confidence in governance structures capable of managing ethical, legal and operational risk across these expanded use cases. This gap between ambition and readiness is a leadership issue, not merely a technical one.

In other words, simply deploying AI is not the same as governing it. Without governance, organizations may unlock short-term gains while accumulating long-term liabilities.

Why governance matters more than speed

AI systems increasingly make decisions that affect real people, from loan approvals and hiring to health care recommendations and public service delivery. When these systems operate without effective governance, the potential for harm increases: biased outcomes that disadvantage vulnerable groups, a lack of transparency in decision logic and inadvertent violations of privacy and compliance standards.

The cost of unmanaged AI can be both tangible and intangible:

•Regulatory and legal exposure, as governments around the world introduce AI-specific legislation and data protection frameworks.

•Reputational damage, when decisions made by AI undermine public trust.

•Operational inefficiencies, when unmanaged models produce inconsistent or unexplained outcomes.

•Eroded stakeholder confidence, from customers, employees and investors alike.

Governance is not about slowing innovation. It is about enabling sustainable, trustworthy innovation.

A Philippine perspective: Adoption, gaps and public sector imperatives

In the Philippines, the AI landscape reflects both progress and critical challenges. Adoption is rising, but governance frameworks, particularly in the public sector, are still developing.

Growing adoption, uneven integration

Despite high digital penetration and a rapidly expanding tech ecosystem, the formal adoption of AI in Philippine organizations remains uneven. The nation’s strong growth is limited by a critical imbalance in AI readiness. Filipinos rank among the global top 20 in interest in AI, yet a report from a leading global cloud services provider reveals a significant gap — only 41 percent of large enterprises report using AI and just seven percent have reached the most advanced stage of adoption.

This suggests that while interest in AI is widespread, meaningful enterprise-wide adoption, let alone mature governance, remains limited.

Public sector momentum and governance focus

In the public sector, AI is increasingly seen as a tool for enhancing service delivery and administrative efficiency. The Philippine government has embarked on national digital transformation efforts, highlighted by initiatives such as the eGovPH Super App and the E-Governance Act (Republic Act 12254), which institutionalize digital government services and emphasize transparent, citizen-centered service delivery.

There is also a deliberate movement toward a National AI Strategy, with the Department of Science and Technology (DOST) actively shaping an updated roadmap that places stronger emphasis on ethics, governance and regulation, alongside technological innovation.

Last month, the DOST formally launched the National Artificial Intelligence Center for Research and Innovation (NAICRI), a national hub intended to anchor AI research, infrastructure and cross-sector collaboration. The establishment of NAICRI represents an important institutional milestone. It signals that AI development in the Philippines is no longer confined to isolated pilots or fragmented initiatives, but is moving toward coordinated national capability building.

Public sector implications: Trust and inclusion

For government services, the stakes of AI governance are particularly high. AI can enhance frontline public service delivery, automate administrative processes and enable predictive insights for policy design. However, when governance is weak or absent, citizens may question the fairness and reliability of automated decisions, especially when personal data is involved.

This challenge is magnified in a diverse population with unequal access to technology and digital literacy. Public trust in government services depends on transparent, accountable AI systems that uphold ethical norms and protect citizen rights.

Leadership imperatives for Philippine executives

For leaders in government and the private sector, the AI governance gap presents both a risk and an opportunity.

1. Treat governance as strategic, not technical

AI governance should be embedded in strategic planning, not treated as an afterthought within IT departments. Senior leadership and boards must take ownership of accountability for responsible AI outcomes.

2. Align governance with public purpose

For public sector organizations, governance should focus on citizen value, ensuring that AI systems uphold fairness, transparency and accountability in service delivery.

3. Build capacity, skills and culture

Effective governance requires capable people. Public servants and corporate teams must be equipped with digital literacy, ethical decision-making skills and an understanding of AI risk frameworks.

4. Invest in cross-sector collaboration

Governance frameworks benefit from multi-stakeholder input. Collaboration among government, academia, industry and civil society strengthens shared standards and accountability.

The strategic mandate

AI’s promise is undeniable. It can accelerate innovation, improve decision-making and enhance service delivery in both business and government. But without governance, the same technology that drives growth can also erode trust.

The World Economic Forum’s observation that AI adoption has outpaced governance should serve not only as a warning but as a call to action. The KPMG Global Tech Report 2026 reinforces this, showing that organizations with mature governance frameworks are better positioned to scale AI and extract sustainable value from it.

For Philippine leaders in both the public and private sectors, the message is clear: build governance now — and build trust with it. The cost of delay will not only be lost efficiency, but also diminished confidence, greater legal exposure and strategic disadvantage.

AI’s governance reckoning is here, and trust will determine who thrives and who pays later.

Gilbert Trinchera is a partner from the Technology Consulting Group of R.G. Manabat & Co. (KPMG in the Philippines), a Philippine partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. For more information, you may reach Gilbert Trinchera through [email protected], social media or visit www.home.kpmg/ph.