Key takeaways
AI expectations for business transformation are high
71% of UK business leaders expect generative AI to transform their organisation in the next three years.
Perceived expertise in generative AI is low
Only 34% of UK business leaders rate their organisation’s generative AI expertise as high.
AI brings opportunities but also risks to businesses
Build in contractual protections and be aware of issues such as data, copyright, product liability and regulatory oversight.
The rise of Generative AI (Gen AI) since the launch of ChatGPT in late 2022 has been extraordinary. It offers huge opportunities for businesses, with countless potential use cases. Confidence in AI is growing, and its adoption is widespread - Gen AI is a tech shift as significant as email.
A recent Deloitte UK survey found that 71% of UK business leaders expect Gen AI to transform their organisation within three years, and 75% anticipate increased AI investment next year. Yet only 34% rate their organisation’s Gen AI expertise as high. Opportunity brings risk -here are some key areas to consider:
Contractual provisions - When procuring or deploying Gen AI systems, ensure contracts allocate risk clearly. Define requirements, deliverables, testing, data use, performance monitoring, escrow and audit rights. Consider who is liable for errors - the supplier or the user? With complex integrated systems this can be tricky. Use warranties and indemnities, and implement strong contract governance with regular reviews to catch issues early.
Copyright - AI outputs may infringe third-party rights. Recent cases, such as Getty Images vs Stability AI, highlight the uncertainty. Businesses must assess how models are trained and whether outputs risk infringement.
Confidentiality and data protection - Inputs could risk misuse of confidential information or personal data. GDPR obligations apply - risks include lack of consent, lack of transparency in decision-making, or unlawful data processing. Automated decisions (for example in recruitment or credit scoring) require transparency and human oversight. Breaches can lead to fines and reputational harm.
Bias and discrimination - Gen AI models may be biased, creating liability under laws like the Equality Act 2010. This is critical in HR or customer profiling contexts.
Regulatory landscape - No single UK law governs Gen AI, but a variety of laws including GDPR and sector-specific rules may apply. The EU AI Act imposes strict obligations on businesses operating in Europe for example for high-risk systems, with significant penalties for non-compliance. Employers may also be held vicariously liable for employees’ AI use.
Product liability - AI systems that evolve post-deployment pose safety challenges. Businesses must monitor performance and adapt as needed to meet product liability obligations.
The way forward - Gen AI is reshaping business, but risk management is essential. Put in place robust contracts, governance, and compliance processes - and stay alert as regulation evolves.
Hill Dickinson’s award-winning Commercial Dispute Resolution team can help you navigate these issues. Get in touch - we’d love to assist.
