In less than 3 years, artificial intelligence has moved from science fiction to reality. An excessive number of systems - including ChatGPT, Gemini, Copilot, Claude and Perplexity have emerged to entertain, frustrate and enhance the way we conduct business.

Many businesses have thrown themselves into this world with the “AI” buzzword seemingly attached to any solution that remotely uses some form of machine learning or large language modelling – other businesses have, however, held back – worried about the impact and unsure on how best to benefit from its use. Yet, despite these reservations, the tide is shifting. A recent study by Software AG found that 75% of the users surveyed used AI in the workplace and 46% would continue to use it even if it was banned by the employers.

The reality is clear for businesses: AI is here to stay. it’s evolving fast—within a short space of time, AI has moved from the proverbial toddler to the sulky teenager: prone to mood swings and temperamental, but equally opinionated and sometimes genuinely useful.

But how do employers engage with AI whilst ensuring that they have, at least, mitigated the potential risks?

The Benefits of AI

Without getting into a debate on whether large language models such as ChatGPT really meet the definition of “artificial intelligence”, what is in no doubt, is that we are moving into an environment where systems can rapidly interpret swathes of data in seconds into an intelligible and often succinct format.

AI can analyse, share its opinions and suggest changes or rewrites to your work – all whilst maintaining a more personalised and “chatty” persona.

The benefits of these systems seem clear:

At the low end: Businesses can easily automate tasks to reduce costs and increase efficiency.
At the high end: Complex tasks from coding to analysing large documents can be undertaken in seconds.

Extensive research documents can be produced in minutes and, with a simple prompt, turned into impressive presentations.

Key Legal and Operational Risks

Not surprisingly, all these benefits are met with a range of potential business risks. In particular:

• Confidentiality: Submitting sensitive information to AI tools may result in inadvertent disclosure, especially if using systems that incorporate input data into future training datasets. This can raise serious concerns under data protection and confidentiality obligations.
• Ownership: Ownership of AI-generated content remains a legal grey area, particularly in creative sectors. Ongoing legislative efforts are attempting to reconcile the rights of original creators with the capabilities and claims of AI developers, but the potential for inadvertent breach of third-party rights remains a significant concern.
• Data Protection: With data privacy a central concern for businesses, the way that AI is used exposes businesses to potential fines and claims for data misuse.
• Security: Like all things in the cyber world – the more you embed technology and information into your systems – the greater the security risk.
• Hallucinations: Stories of AI models hallucinating (making things up!) or simply getting it wrong are rife.
• Ethical: The ethical implications of AI in terms of the impact on employees and the significant energy requirements to operate these systems are going to challenge businesses on their ethical approach.

All the above create potential headaches for businesses who are already navigating never-ending regulatory risks.

Whilst the AI legislative framework is starting to form with the EU Artificial Intelligence Act, the updated OECD AI principles and the UK’s current AI consultation – the reality remains that the legislative framework is still at best weak and is often dependent on laws that existed when artificial intelligence was the bastion of science fiction.

It is hardly surprising, then, that some are hesitant to embrace AI while it remains such an unknown area.

Equally, ignoring it or banning its use is unlikely to be effective – and could expose businesses to greater risks without having the necessary protections in place to mitigate them.

How Do You Manage the Risk?

So, what can businesses do to protect themselves whilst embracing and engaging what is undoubtedly going to be transformational for a lot of businesses?

Here are some key things to consider:

• Strategy: Banning AI creates the risk of it being used without your knowledge – having a clear plan and ensuring that this is communicated to staff will help manage its use whilst engaging in the opportunities it can bring.
• Training: Training staff on the benefits of AI whilst also highlighting the risk can help ensure that they are part of the journey and engaged in its development. It also allows businesses to address the inevitable fear that AI jeopardises their job.
• Legal Terms: Consider what AI systems you are going to use and READ the terms and conditions carefully. Many platforms default position allows anything to be submitted to be used as part of its training algorithms and so it is important that you limit use to systems that either restrict this by default or allow you to adjust the settings to ensure that confidential information is not inadvertently incorporated and intellectual capital undermined.
• Policies: Whilst yet another “policy” will probably fill most businesses with despair – a policy that clearly sets out what staff can or cannot do and the potential implications for non-compliance will help encourage engagement in a controlled fashion. In addition, current policies including cyber security and data privacy need to be updated to align with business strategy.
• Processes: Consider implementing processes alongside your AI policy to manage when, how and where AI is used. Requiring AI use to be recorded helps businesses maintain an easy audit trail for validation.
• Validation: Whilst AI has certainly improved – the risk of inaccurate or just plain wrong information exists. Use of AI in sensitive or business critical issues can save time but equally safety checks and independent validation remain important.

Expert Advice from GS Verde Group

In conclusion the question is no longer whether to allow AI in your organisation, but how to do so safely and strategically.

With clear policies, informed choices of tools, and ongoing vigilance, businesses can harness AI’s power while mitigating its risks.

GS Verde Law tech team can assist businesses on identifying, managing and implementing processes to help ensure that your business capitalises on the remarkable opportunities that AI brings whilst minimising the risks and downsides.

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