Lessons from the NewCo Chatbot Example:



a case to support discussion about Implementing Responsible AI in Education





AI RISK MANAGEMENT IN EDUCATION

How to cite this learning scenario

Arantes, J. (2025).Lessons from the NewCo Chatbot Example. www.AI4education.org. Licensed under a Creative Commons Attribution 4.0 International License.
abstract
This case study explores the implementation of a generative AI chatbot by NewCo, a fast-growing B2C company, highlighting the challenges and risks associated with AI deployment without adhering to governance standards. The study contrasts two scenarios: one where NewCo does not follow the Voluntary AI Safety Standard, resulting in discrimination, privacy breaches, and reputational damage, and another where adherence to safety standards ensures a successful and ethical deployment of AI. The findings underscore the importance of risk assessments, stakeholder engagement, and continuous monitoring in AI governance. This case study is particularly relevant for educators in higher education, pre-service teachers, and policymakers interested in integrating AI responsibly within educational settings.

Effective AI governance is not just about preventing risks but also about creating a framework where technology can ethically and sustainably enhance educational and organizational outcomes.

Lessons from the NewCo Chatbot Example


In the initial scenario, NewCo's head of sales decided to quickly implement an off-the-shelf chatbot solution without conducting a risk assessment or engaging stakeholders. The chatbot, named NewChat, was launched alongside the new product. Initially, the chatbot performed well, reducing customer service workload. However, issues soon emerged. NewChat began offering exclusive discounts to customers identifying as male, leading to accusations of gender discrimination. A viral Reddit post amplified the issue, resulting in thousands of complaints, overwhelmed staff, and severe reputational damage. Potential breaches of consumer and privacy laws loomed, showcasing the dangers of a poorly governed AI system. In contrast, the second scenario followed the Voluntary AI Safety Standard. The head of sales engaged with internal and external stakeholders, conducted a risk assessment, and tested the chatbot for biases. When testing revealed unintended gender bias, NewCo modified the system before full deployment. The chatbot was initially used internally to enhance staff efficiency without customer interaction, avoiding external risks. This cautious approach led to a successful product launch, increased customer satisfaction, and higher employee productivity. The comparison between these scenarios highlights how AI governance can transform risks into opportunities. The case study connects these insights to broader systemic issues in education, particularly regarding the integration of AI tools in teaching and learning environments. It emphasizes the need for ethical frameworks and transparent decision-making to avoid unintended consequences and build trust among stakeholders.

Overview

discussion and application

The NewCo case illustrates the critical role of AI governance in mitigating risks and promoting ethical AI deployment. Educational institutions can learn from this example by applying similar governance practices to AI tools in classrooms and administrative settings.
Research Questions
NewCo, a B2C company with 50 employees and a $3.5 million annual turnover, planned to use a generative AI chatbot to handle customer queries during a significant product launch. The chatbot aimed to reduce wait times and increase staff productivity by automating responses to common questions. However, the company faced a critical decision: whether to implement the chatbot following the Voluntary AI Safety Standard or take a fast-track approach without formal governance. This case study examines the outcomes of both approaches, emphasizing the importance of accountability, risk management, and ethical AI practices. The purpose of this analysis is to demonstrate how adherence to AI governance frameworks can prevent harmful consequences and support sustainable and fair AI integration in educational and commercial environments.
Keywords generative AI, education, risk management, chatbot governance, ethical AI, stakeholder engagement Objectives
Who might be interested in this case? This case study can be embedded in professional learning modules for educational researcher, used as a discussion starter in interviews (data collection) in higher education, or surveys researching alignment with curriculum standards in K-12 settings to enhance understanding of responsible AI use.
  • What governance practices could prevent similar issues in educational AI deployments?
  • How can educational leaders balance innovation with ethical responsibilities when integrating AI tools?
  • Understand the risks and challenges of deploying AI systems without robust governance frameworks.
  • Analyze the impact of AI governance on organizational outcomes, including legal, financial, and reputational risks.

supplementary materials

Within the context of your own school or intital teacher educaiton program, consider including: 
Additional resources could include sample risk assessment templates, lesson plans for teaching AI ethics, or case studies on successful AI governance in education.
Websites: https://www.industry.gov.au/sites/default/files/2024-09/voluntary-ai-safety-standard.pdf
Author, Janine Arantes Academic and Researcher at Victoria University
This case study was written by Dr. Janine Arantes after readingExample 1: General-purpose AI Chatbot in the Voluntary AI Safety Standard document, August 2024. This case study is therefore grounded in actual events as reported by these sources.
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Acknowledgement of Country We acknowledge the Ancestors, Elders and families of the Kulin Nation (who are the traditional owners of the land. where this work has bene predominantly completed. As we share our own knowledge practices, we pay respect to the deep knowledge embedded within the Aboriginal community and recognise their ownership of Country. We acknowledge that the land on which we meet, learn, and share knowledge is a place of age-old ceremonies of celebration, initiation and renewal, and that the Traditional Owners' living culture and practices have a unique role in the life of this region.