FEDERATED LEARNING MODELS FOR PRIVACY-PRESERVING AI IN ENTERPRISE DECISION SYSTEMS

Abstract

This systematic review examines the role of federated learning (FL) as a privacy-preserving paradigm for enterprise decision systems, synthesizing evidence from 187 peer-reviewed studies. Guided by the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) framework, the review integrates algorithmic, systems, security, sectoral, and governance perspectives to provide a comprehensive account of current knowledge. Findings highlight that foundational algorithms such as FedAvg, FedProx, and SCAFFOLD dominate the methodological landscape, with significant adaptations emerging to address non-IID and unbalanced datasets across distributed organizational silos. Privacy-preserving mechanisms—including differential privacy, secure aggregation, homomorphic encryption, and multiparty computation—were consistently applied as layered defenses, balancing mathematical guarantees with empirical resilience. The synthesis further revealed critical vulnerabilities to model poisoning, backdoor attacks, and gradient leakage, alongside defensive strategies such as robust aggregation, anomaly detection, and differential privacy clipping. Sector-specific implementations demonstrate FL’s practical utility in healthcare, finance, retail, logistics, telecommunications, and public services, where it enables collaborative modeling without violating data residency or confidentiality requirements. Governance and ethical frameworks, particularly GDPR, CCPA, and the NIST Privacy Framework, were found to shape deployment practices, while documentation artifacts such as datasheets, model cards, and privacy budget ledgers ensure accountability and transparency. Comparative surveys position FL as an integrative socio-technical architecture that unites distributed optimization, privacy engineering, adversarial robustness, and AI governance into a coherent enterprise-ready model. The review concludes that federated learning provides enterprises with a scalable, secure, and ethically aligned approach to leveraging distributed data while preserving trust and compliance.