From risks to opportunity, AI is set to drive a whole new way of doing business, and the way CEOs interact with technology is about to change in so many new ways. Below Tim Pullan, CEO and Founder of ThoughtRiver, explains to CEO Today the unlikely yet inevitable relationship between leaders and AI.
CEOs are under tremendous pressure to deliver results quickly, ethically and in accordance with an ever-increasing range of complex compliance and regulatory requirements. Added to the operational pressures, CEOs will also be held responsible for compliance relating to the European Union General Data Protection Regulation (GDPR), which comes into force in May. Fines for non-compliance are up to 20 million Euros or 4% of the company’s global revenue. Artificial Intelligence may well be the answer to reducing the compliance burden.
A business is built with contracts. Currently, for many large businesses, the customary practice is to focus legal resources on reviewing high-value contracts or on contracts dealing with direct consumers and suppliers. This creates a dangerous lack of visibility of the broader commercial obligations and risks for these businesses. During mergers or acquisitions, due diligence processes that look for commercial risks within not just contracts but also in other types of unstructured documents are tedious, requiring copious resources. Often, businesses encounter rude surprises because of undiscovered commercial obligations or risks and the CEO is held accountable.
Moreover, most regulatory obligations (especially those involving data and privacy) require some form of visibility of the unstructured data that is collected over the course of business operations. There are also many ‘unknown unknowns’ that CEOs will have to react to whenever new regulatory obligations arise. CEOs can and should use AI tools, not just to gain visibility of unstructured data but also to seize the initiative and spot business opportunities.
AI tools offer portfolio-level analytics across all commercial contracts, providing insights as to potential risk areas, as well as commercial anomalies. These insights come at a fraction of the time and cost of traditional legal resources. AI can take the strain of contract review freeing up valuable senior legal expertise (and time) to be spent on higher-value contracts – without losing important data that may be buried in the huge mass of apparently more mundane contracts.
AI technology is not limited to offering visibility into contracts. In fact, it can peel back the shroud covering most types of unstructured data generated during the operation of a business. For instance, major banks with trading desks now employ AI that analyses behavioural and market data to spot patterns that identify, and stop, potentially ‘rogue’ traders.
Additionally, AI tools that run on supervised machine learning are also intelligent enough for the CEO to ‘teach’ them specific risk areas or issues to look for. For example, an insurance company may use an AI extraction tool to fulfil GDPR data obligations. It might then reconfigure the same tool, with some training, to discover and disclose insurance policies regarding cyber risks as mandated by the Prudential Regulation Authority. This enables the CEO to take a more proactive role in pre-empting possible market developments or risks and taking necessary measures way ahead of competitors.
Finally, CEOs can employ AI to improve internal firm governance and reduce personal risk. Increasingly, traditional ‘chain-of-command’ reporting has been inadequate in providing the CEO with visibility of what is happening ‘on the ground’. The CEO can be held accountable for business problems stemming from issues that are mispresented or omitted in reports from middle management. While CEOs need to trust their chain of command, AI generated insights can offer an additional layer of protection to flag up risks and anomalies that might potentially be missed.
Successful adoption of AI in an organisation requires vision from the CEO. After the CEO has brought important stakeholders onboard with the vision, it is usually better to begin with pilot projects with realistic goals and room for experimentation. General Counsels should assist their CEOs to find candidates for these pilot projects. Contractual obligations that are potentially risky and are founded upon low visibility contracts are good places to start.
The organisation can then take incremental steps to expand the application of AI until eventually it is supporting major business decisions using insights from AI-analysed data. As AI tools start delivering improved governance and oversight, CEOs need to keep themselves up-to-date with the latest tools. When problems arise or if regulatory requirements are not met, stakeholders may question CEOs who do not take up precautionary AI measures that are readily available.
The Smart CEO
CEOs need more support and AI can deliver that. The affordances of AI may well lead to the emergence of the ‘Smart CEO’. The Smart CEO employs AI tools to gain deep insights into business performance and to become more efficient. Once AI has unlocked the treasure trove of insights from unstructured data, previously hidden away, CEOs will be in an advantageous position to identify transformational opportunities.
With AI technology in place, insights into where value and risks lie in the business will be at the CEO’s fingertips. AI tools then are no longer simply a shield in the smart CEO’s arsenal against regulatory and security challenges, but the intelligent software becomes a sword that will help CEOs do battle in a competitive global marketplace. Armed with insights that gain initiative and competitive advantage. CEOs can deliver much more effectively on objectives of growth, innovation or profitability.