Artificial Intelligence (AI) is expanding across industries and markets around the world. But does your company know how to maximize its benefits and minimize its risks? At our recent Cohen Client Conference, our panel of technology leaders provided insights on the current state of AI and practical steps investment companies can take to move forward to gain transformative benefits from this powerful technology.
While traditional AI has been leveraged for many years, the explosion of AI tools and awareness can be attributed to several factors. Recent advances in computational power and the availability of vast amounts of data have underpinned the rapid development of AI models since 2020. With the AI market climbing to over $244 billion and new models showing meaningful practical benefits across a variety of industries, both its hype and continued advancements are likely to continue well into the future.
Integrating AI into business operations presents great opportunity as the technology continues to evolve, but it requires careful management of risks. While data privacy is a critical concern, as AI systems often require access to sensitive information, additional risk areas need attention as well, including security, accuracy, bias and ethical use. Regulatory compliance is another challenge, as businesses must navigate a complex, evolving web of legal frameworks governing AI use. Additionally, consideration must be made for operational risks related to ensuring resources have the capacity and skills to develop and test the organization’s AI models and monitor them once deployed to address drift.
An effective AI governance framework includes several key components:
Firms can implement these components by establishing dedicated AI governance teams to provide oversight and communication of AI policies, business use cases, AI development and ongoing AI use across the business. These committees are most effective when they foster a culture of ethical and effective AI use, acting as catalysts rather than constraints. Ensuring transparency in AI decision-making processes and involving stakeholders in governance discussions are also crucial steps. By prioritizing governance, firms can mitigate risks and maximize the benefits of AI.
Data quality is fundamental to the success of AI initiatives. High-quality data for targeted business use cases helps ensure AI models are accurate, reliable and effective. Poor data quality can lead to incorrect predictions and decisions, undermining the value of AI. Businesses are wise to focus on cleaning their data by resolving existing issues as well as implementing sustainable data hygiene practices. Interestingly, AI tools can help on both fronts, which then makes the AI solutions leveraging that data more effective.
Assessing Readiness for AI Adoption
Businesses can assess their readiness for AI adoption by evaluating several factors:
Conducting a thorough readiness assessment helps identify gaps, areas for improvement and barriers to success. By understanding their current state and preparing accordingly, organizations can help ensure a smoother and more effective AI integration.
To identify and prioritize AI opportunities, organizations should start by identifying business processes that need to be optimized or transformed and management reports that need to deliver more insight. Engaging stakeholders and conducting workshops can help uncover valuable insights but be careful to discuss business problems rather than AI opportunities. Otherwise, AI can become a hammer looking for a nail, rather than a solution to achieve a business objective. Prioritization should be based on factors such as potential impact, feasibility and alignment with strategic business goals. It is also a great approach to leverage smaller pilot projects to learn and build momentum for future, larger AI initiatives.
While predicting the future is difficult, it is clear AI will continue to rapidly evolve in its capabilities and impact across our work and personal lives. With AI moving from simple chatbots to more sophisticated systems, there are significant opportunities to leverage that technology to enhance customer service, improve decision-making and increase automation. Also, with investment in research and innovation within the AI ecosystem continuing to accelerate, further advancements are likely to occur at an even more rapid pace than before. Businesses that take strides to lean into AI can expect to see improvements in efficiency, innovation and competitive advantage over those who are stuck at the starting line.
Contact Kevin Sexton, Jeff Chenevey or a member of your service team to discuss this topic further.
Thank you to our panelists for participating in this session: Jon Vickery, Chief Technology Officer, Paralel Technologies; Jake Vogel, Senior Manager, Cohen & Co.
In this blog Cohen & Co is not rendering legal, accounting, investment, tax or other professional advice. Rather, the information contained in this blog is for general informational purposes only. Any decisions or actions based on the general information contained in this blog should be made or taken only after a detailed review of the specific facts, circumstances and current law with your professional advisers.