AI: opportunities and risks
The promise of artificial intelligence is huge. In 2023, Microsoft founder Bill Gates said: “The development of AI is as fundamental as the creation of the microprocessor, the personal computer, the Internet, and the mobile phone. It will change the way people work, learn, travel, get health care, and communicate with each other. Entire industries will reorient around it. Businesses will distinguish themselves by how well they use it.”
In the two years since, there has been rapid adoption of AI. In the latest McKinsey Global Survey on AI, 65% of respondents report that their organisations are now regularly using generative AI, double the percentage from the group’s last survey just ten months previously. Three-quarters predict that generative AI will lead to significant or disruptive change in their industries in the years ahead.
Certain sectors have been swifter to adopt AI than others. As might be expected, telecom, high tech and financial services companies are leading the way in overall adoption. For manufacturing, the automotive and pharma industries have been trailblazers. Within companies, McKinsey says management teams are “following the money” on where they are deploying AI. In other words, AI is gaining the most traction in areas of the business that create the most value. It said: “The average organization using gen AI is doing so in two functions, most often in marketing and sales and in product and service development.” Autonomous driving is another area that is gaining ground and makes extensive use of AI. Road deaths are a major problem, with around 100 people killed in road accidents in the US every day. Autonomous vehicles have certain advantages, in that they don’t drive drunk, or angry, or too fast. Driverless taxis are already a feature in San Francisco, now offering a commercial, 24/7 driverless ride-hailing service across the city.
Medicine is also making use of AI, particularly in areas such as cancer detection. In the US, the Food and Drug Administration has authorised the marketing of AI-based software to help pathologists identify areas of prostate biopsy images that may contain cancer. Medical images such as mammograms can also be rapidly processed with the help of AI. Technology has also helped develop an exoskeleton suit used in hospitals and retirement homes to help people gain more mobility and autonomy.
This is just the starting point. It is expected that AI will have relevance for a vast range of industries and use cases that are not yet imagined. It promises to be a disruptive force, reshaping the global economy and workforce.
There has been considerable debate as to whether AI constitutes an existential threat to mankind. Certainly, the US government’s inclusion of a clause in its latest AI regulation that AI should not launch nuclear weapons autonomously may give some pause for thought. The wilder predictions may prove overblown, but there are unquestionably risks to wider AI adoption.
As with all significant technological progress, it is likely to have an impact on the labour market. Estimates vary considerably, but Goldman Sachs suggests “Shifts in workflows triggered by these advances could expose the equivalent of 300 million full-time jobs to automation”. Its economists say that roughly two-thirds of US occupations are exposed to some degree of automation by AI.
While technology innovation has historically impacted blue-collar jobs, AI may have greater implications for white collar jobs. These may disappear as computers learn languages, analyse medical scans or read complex legal documents. Professions such as translators, radiologists or insurance professionals could be at risk. In contrast, jobs where there is high human interaction and/or high complexity should be relatively immune.
There are also significant barriers to adoption. Companies are not necessarily built to incorporate AI, and it will take time to adapt legacy processes. The McKinsey report ‘Notes from the AI Frontier’ says that most organisations have a long way to go to develop the practices that will enable them to realise the potential of AI. Just 17% of respondents stated their companies have mapped out where the potential AI opportunities lie and only 18% say their companies have a clear strategy in place for sourcing the data that enables AI to work effectively.
More digitised firms have a clear advantage, and they report broader adoption of AI. However, the real winners from AI may be businesses that start from scratch and embed AI into their organisational structure as it builds.
For the time being, AI still needs humans to function. Goldman Sachs says: “We still see a lot of potential for AI to automate a lot of the things that workers do on a day-to-day basis, thereby saving a lot of time and generating large productivity gains, the adoption rates are just fairly limited right now. The key step, of course, in automating tasks is that people have to start using it.”
Organisations need skilled people in the right place to push through the adoption of AI. Where there is enthusiasm for AI, proper guardrails need to be implemented around its adoption, but there will also be areas where workers are reluctant to use it for fear of making themselves obsolete. This is a slow process and is why companies may not be able to reduce headcount in the near-term.
Global governments recognise that they missed the window to mitigate some of the harmful effects of social media and are keen not to repeat their mistake with AI. Europe’s AI Act came into effect on 1 August 2024 and provides the first-ever legal framework on AI. The European Commission said: “The AI Act addresses potential risks to citizens’ health, safety, and fundamental rights. It provides developers and deployers with clear requirements and obligations regarding specific uses of AI while reducing administrative and financial burdens for businesses.”
It aims to turn Europe into a global hub for trustworthy AI by laying down harmonised rules governing the development, marketing, and use of AI in the EU. The AI Act aims to ensure that AI systems in the EU are safe and respect fundamental rights and values. It aims to do this while not stifling investment and innovation in AI. It remains to be seen whether this is possible. There are some concerns that AI companies are moving to the US where they have more freedom.
The UK government had been aiming for a ‘light touch’ principles-based approach, as laid out in the AI Regulation White Paper in August 2023 and a written response in February 2024. However, in the King’s Speech in July, the new government proposed a set of binding measures on AI. Specifically, the government plans to establish "appropriate legislation to place requirements on those working to develop the most powerful [AI] models". The Digital Information and Smart Data Bill is now in progress to support the safe development and deployment of new technologies.
The US aims to introduce AI legislation and a federal regulation authority, though this is at risk with the advent of a more laissez-faire, anti-regulation government under Donald Trump. Currently, more than 120 AI-related bills are being considered by the US Congress, covering a wide range of issues such as AI education, copyright disclosure, AI robocalls, biological risks, and AI's role in national security. State legislatures have also introduced a substantial number of bills aimed at regulating AI.
There are other issues that need careful monitoring. For example, data availability and quality will influence how effective AI can become. It may be that AI models hit problems of data usage - copyright problems have been an issue in the entertainment industry, for example. Large language models are energy intensive, and there is a danger that energy availability could stall progress.
At its heart, this may be a problem of trust. People have got to trust the algorithms to operate smoothly and successfully. If the data they are based on is flawed, the outputs will be flawed as well, trust will be eroded, and adoption will slow. AI systems have often lacked transparency in their decision-making processes, and biases and ethical concerns have emerged.
AI is an exciting new technology and has the potential to be as transformative as the Internet. However, as with the adoption of any new technology, its path will not be linear and there will be risks along the way.
Alphabet's Waymo self-driving car in San Francisco. Photo: Jason Doiy
