AI sparks excitement and concerns. Businesses grapple with AI's impact, seeking regulation for clarity and risk mitigation.
Highlights
- AI can produce text, images, and analysis in seconds, while predictive AI uncovers patterns to guide decisions.
- Governments worldwide, including the EU and the White House, are pursuing AI regulation to manage its risks responsibly.
- Thomson Reuters research finds most legal and tax professionals expect AI to continually reshape their work.
The goal: to keep the impact of AI from causing the kind of disruption that results in destruction—of businesses, of data privacy, or of government programs. Every industry will need to be aware of technological advances, even if it means using AI to safeguard their business.
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Understanding the impact of AI
Why this issue matters
It’s a smart move for just about any business to be prepared for all that AI can do, what challenges it might create, and how AI regulation might address those challenges.
To many AI developers, the risks of AI aren’t significant enough to require rigorous oversight. They argue that AI regulation could stifle innovation and result in vague or overly complex rules that wouldn’t do what they’re intended to do, especially given the high-speed pace of change.
Those arguing for AI regulation counter that if unmanaged, the impact of AI could be profoundly damaging. Business and individual data might also be more easily stolen through “believable” emails and phone messages due to human error and oversight.
Some content creators have engaged in legal action against AI developers, claiming that generative AI is using their words and images without credit or compensation. Because of the risks of AI, many businesses that might embrace the technology in their operations have been slow to fully adopt it. These businesses are looking for clarity from AI regulation so that they’re not liable for any misuse.
Efforts are underway to manage the social impact of AI through regulation. In early December, the European Union passed the AI Act, which seeks to provide governmental management of the risks of AI. Two months earlier, President Biden issued an executive order intended to promote AI development while establishing guidelines for federal agencies to follow when designing, acquiring, deploying, and overseeing AI systems. Among other objectives, the executive order seeks to establish testing standards to minimize the risks of AI to infrastructure and cybersecurity.
The White House isn’t the only federal entity exploring AI regulation. In July 2023, the U.S. Securities and Exchange Commission (SEC) proposed rules regarding data analytics by investment advisers, including the use of AI. These rules would require investment firms to be sure that AI tools don’t put the firm’s interests above those of a client. SEC chair Gary Gensler has also expressed worries that potential industry overreliance on a small number of AI providers might negatively disrupt the U.S. financial system.
At the more local level, New York and other states have established or are considering AI regulation. All this said, AI regulation efforts have really just begun. And that makes sense, given how uncertain its effects will be. Government regulators are seeking to protect the public, the economy, and establish trust with AI without choking off innovative applications of an emerging technology.
Understanding the impact of AI
Of course, the investment advisory industry is by no means the only profession that will be affected by AI and how it is (or is not) regulated. To get a sense of how this technology could benefit and change businesses of all kinds, here are a couple of notable examples.
The impact of AI on the tax profession
One of the most crucial roles that tax professionals play is providing high-quality advice to their clients, especially if it protects them from cybercrime during tax season. AI can automate tedious tasks such as data gathering and analytics, thus allowing these professionals to focus on higher-level advisory work.
This would also allow them to add new skills and deliver more value to those clients, whether they’re internal or external. AI could transform many other aspects of the profession, including talent development and service capabilities. AI could also create opportunities for gains in productivity and internal efficiencies, such as more effective and faster client communications and service.
The impact of AI on the legal profession
For legal professionals, AI could facilitate new opportunities for growth and service. Case in point: the time and capability to identify new markets. Corporate departments could be liberated from many rote tasks and dedicate more of their time and efforts to supporting their company’s growth strategy. Indeed, many firms and departments are already putting AI to work.
Legal professionals will need to become knowledgeable about AI not only as a legal issue but also as a tool for drafting documents and conducting research. And they’ll be required to learn how to use AI ethically as well as effectively.
All the more reason, then, that this powerful technology be properly regulated so that its numerous benefits outweigh its risks.
