Member Article

Some experts have described the rise of AI as the next industrial revolution. Generative AI is a powerful tool that can transform how your business operates. However, businesses intending to make use of AI solutions need to understand the benefits and risks of implementing generative AI.¹

What is Generative AI?

• Artificial Intelligence – Generative AI is a branch of AI that uses pre-trained AI models to generate new data including text, images, videos, music, and even computer code.
• Machine Learning – It works by learning patterns and information from large amounts of data and then is trained to generate new data based on that learning.
• Applications – Generative AI has many applications, from creating realistic gaming graphics to writing articles and marketing materials, creating presentations and websites, to generating new scientific hypotheses.

The Potential Benefits of Generative AI

• Automated Processes – Generative AI can improve efficiency by making use of natural language processing capabilities of AI to streamline repetitive tasks, analyse data, reduce errors in manual processes and lower operational costs.
• Better Customer Service – Generative AI can improve customer experience through chatbots by providing round the clock customer service, faster response times and better customer engagement and personalised interactions.
• New Content Creation – Generative AI can quickly generate creative content and new ideas.
• Innovative Problem Solving – Generative AI can help solve complex problems and find new solutions across all industries through automation, providing insights from data and simulations.

Legal and Ethical Risks Associated with Generative AI

• Legal Issues – Regulations governing data privacy, intellectual property, and the use of AI are still evolving, and businesses canface legal risks and ethical dilemmaswhen using generative AI.
• Privacy Risks – Generative AI works by collecting vast amounts of data available online as well as data inputted by users, raising concerns about data privacy and security.
• Intellectual Property – Generative AI can create content that may infringe on existing copyright works, trade marks, and image rights.
• Unreliable data – Depending on the dataset used, the training, and instructions given, generative AI can produce unreliable results, or results not based on reality, which can lead to damaging real world consequences and legal liability.
• Ethical Dilemmas – Generative AI can produce realistic content including images, videos, and audio recordings that can be used to manipulate public opinion, or to deceive and harm people. Generative AI can perpetuate or amplify existing biases and discrimination, so that algorithm-driven decisions in areas such as in hiring or loan applications, can have undesirable consequences.

Tips for Implementing Generative AI in Your Business

Therefore, although generative AI can bring great benefits and opportunities, it should be used with care. Businesses should ensure that they understand the practical and legal risks.

• Define Objectives – Start by defining your business objectives and think about how generative AI can help you achieve them.
• Choose Wisely – Choose the right tools and software to ensure you get the most out of generative AI. Make sure you understand how the different AI platforms operate including how they are trained. Read their terms of service, which should cover issues such as rights in the input and output and permitted uses of the output, as well as the choice to opt out of your input (prompts) being used for further training. Unfortunately, many AI platforms do not currently offer representations and warranties that their output will not infringe third party rights, so use of AI-generated content may be at the user’s own risk.
• Tailored AI Solution – It may reduce risk and be beneficial to develop a tailored private AI solution for your business. This can help ensure that the data generated and used is of good quality and is suitable for the business objectives you have set out. However, care and due diligence is required in the selection and licensing of pre-trained models, the use and licensing of AI training datasets, the engagement of AI solution vendors, and the licensing of AI generated content and the management of ownership of the output of developed solutions.
• Collaborate – Work with experts in AI and your lawyers to learn how to mitigate the potential risks and to develop and implement generative AI solutions that meet your business needs. This may include developing a private AI solution to ensure better control of data and risks.

Going forward

Governments around the world are considering regulations to address the concerns and potentials risks raised by the use of generative AI. Inevitably, the legal framework is likely to take some time to catch up but increased compliance obligations are expected. In the meantime, businesses should follow developments closely and, if in doubt, seek legal advice.

¹ This article was written with the assistance of generative AI.