Where will AI take your business?
AI has moved from buzzword to boardroom reality. Whether the issue is cost savings, competitive advantage, or risk mitigation, UK and European businesses now face a rapidly evolving landscape of AI related market pressures and regulation. Below, we dive deeper into key questions and considerations every leadership team should have on their radar, writes John Mawhood and Guy Peters, Commercial Lawyers at Purpose Law.
The “Humanoids” are already here
Robotic process automation, AI-powered chatbots, predictive analytics—these are all parts of the “humanoid” wave. As ever, a new wave calls for nuanced analysis: not just thinking about what AI can do for your business; but also what it could do for your competitors. For example: how might competitors use AI to reduce headcount and how will you respond?
Due Diligence
Traditional due diligence often focuses on financials, contractual liabilities and rights, regulatory compliance.
Today, AI usage must be added to that list. In a corporate transaction this could mean determining: how does the target company or key business partners use AI tools that might undermine the current model, even if only in posing privacy or intellectual property risks?
In many cases the need will be to eliminate a broader potential exposure: has AI been integrated into operations without fully understanding regulatory obligations (e.g. securing licences, data sharing agreements)?
Warranties & Contracts
Contracts and contract implementation must keep pace with new AI-driven liabilities. Whether you’re a buyer or supplier, explicitly addressing AI usage, calling out and controlling warranties around data sharing, use and retention, as well as responsibility for any AI based decision-making is crucial.
Questions will arise around good practice but also business risk mitigation: will you require counter-parties to commit to ethical and lawful AI usage; have you identified what “AI misuse” is – do you need to ensure termination of contract at will, or on failure to remedy, can follow? Where will you require indemnities for AI-related data breach or IP infringement?
Safeguard your proprietary data and Intellectual Property
AI thrives on data – and other businesses will be keen to leverage valuable insights and training data from all sources, including your business. That can mean anything from production metrics to personal data (even so-called “psuedonymised” personal data), from in-house research to customer insights. If your systems feed external platforms, could your proprietary data end up training someone else’s AI?
How to make actionable, resource appropriate responses in your business: can you restrict or clearly manage data use and access by AI vendors; can you update internal policies on how staff can use external AI tools; will you create and implement data governance policy to identify, maintain ownership of and confidentiality over the data that counts?
Bolster business resilience – meeting AI Risk
It’s not enough to do a one-off policy update. Leadership teams need a dynamic approach to evaluating and mitigating AI-related risks in the business. These likely must be digested so that the right alerts are reaching the right people, actionably and in timely fashion.
A dashboard approach enables this in a way that can be made fit for purpose in the business, whether for: Legal & Regulatory Monitoring (tracking relevant impacts of upcoming AI legislation); Key data assets (mapping sensitive data, where it resides, how AI tools access it); or Employee & Contractor Usage: (understanding and achievement of best practices; existence and verified use of protocols to prevent misuse); or Supply Chain & Outsourcing (updating business partner risk and compliance; refresh of contract terms, to ensure liability is contained).
Sector specific implications
AI can (re)shape your entire business model and give a different perspective to an entire business sector. Maybe that requires divestment – in certain lines of business threatened by AI disruption—or acquisition of businesses that own potentially valuable data or AI capabilities. Assessing departments or services that must be reshaped with AI.
Opportunities to be identified, where AI adoption could create inflection points, new revenue streams. These are challenges that could require you to develop a workforce strategy balancing short-term cost savings with long-term skill retention.
Time to act
Maintaining your choice of a dashboard to bind up your response and your tracking efforts – my favourite is “Valuation Exposure Dashboard – AI” – is no longer just a technology team concern; it’s a board-level issue, it involves legal guidance. Yours may touch on identifying data assets, workforce planning, contractual and partner frameworks, even maintaining brand reputation.
The key will be how you chart your course to thriving in a new, AI powered era.
Embracing Artificial Intelligence
Proactively embracing AI—while protecting against the business and legal risks—has the potential to transform your organisation into a resilient, future-ready leader. Consult an expert with insight and experience of AI in actionable use, data assets for AI and the legal aspects of becoming AI agile.