Business bosses underestimate the risks of AI

As business leaders and government officials prepare to gather in London for the inaugural AI safety summit, new research reveals that employers are failing to consider the risks AI poses in their rush to adopt new technology.

According to data, published today by Herbert Smith Freehills, 88 percent of business leaders have already implemented, or are in the final planning stages to introduce, a range of AI-driven business solutions. Yet 1 in 5 employers admit to not having consulted employee representatives about upcoming changes and nearly 1 in 3 also fail to consult external advisers.

"As the digital revolution accelerates, employers are eager to adopt new technology with significant impacts on the workforce. They accept that doing so will shake up the way employees are used to working, but a surprising number are rushing ahead without consultation or consideration of the impact that these changes might have for their employees, including their morale," says Emma Rohsler, partner and regional head (EMEA) of Herbert Smith Freehills' employment practice.

In exploring the type of AI technologies now in the workplace, the data reveals that more than half of those questioned have already introduced employee monitoring in the workplace (58%).  Over half now use or plan to adopt in the future AI for customer service (53%). Some are also already implementing, or planning to implement, AI solutions for clerical tasks (44%) or information gathering (42%).

The findings form part of a new report called 'Balancing Acts', which explores the future of work. The latest report is the third in the series, with the first released before the Covid pandemic. It is based on research amongst the C-suite in global organisations, with an annual revenue of at least £250 million. Key findings include:

• remote control: as regulators, investors and consumers increase scrutiny on organisations, employers are increasingly determined to use AI for tasks previously undertaken by workers. 44% claim they automate allocation of tasks and just over one-third use AI for creative tasks such as copy writing or design (38%)

• AI activism: asked whether employees are likely to react to the changes driven by AI over the next 5 years, just 34% suggested emerging technologies may be a trigger. The figure represents a fall from 41% when the question was asked in 2021

• artificial, not emotional, intelligence: just 28% of employers always give employees, or their representatives, a say in implementation of AI technologies and just over half (52%) actively test employee reactions before full implementation.

The report suggests that just 38% of employers always consult external counsel on the employment law implications of AI. This is despite 60% saying AI adoption will significantly impact the composition of their workforce and a similar proportion (61%) recognising the need to substantially change workforce policies over the next three years to address the challenges of automation.

Rohsler concludes: "Employers may be underestimating the risk as implementing ambitious technological changes without consultation may expose organisations to legal and financial risks. It can be hard to resist the promises of AI, especially when competitors seem to be active, but there are benefits to holding back. Being first to market may be exciting, but being right, recognising risks and preparing for them increases the chances that companies who adopt a considered approach are more likely to reap the benefits in the long term."

Notes to Editors

'Balancing Acts' is based on research conducted via telephone interviews and web-based surveys amongst 500 Board members and senior executives who are part of the strategic leadership teams in organisations employing 1,000+ staff and with more than £250m in annual sales. You can access the 2019 and 2021 reports via these embedded URLs.