AT A GLANCE…..
This article looks at the impact of AI and its potential values and risks. We also consider practical risks that businesses need to take when engaging and using AI.
Artificial intelligence is rapidly transforming how organisations operate, creating both significant advantages and serious challenges. Understanding the AI risks and opportunities for businesses is now essential for any organisation considering or already using these tools. From improving efficiency and automating routine tasks to raising complex legal, data protection and ethical concerns, AI is no longer a future concept – it is a present reality in everyday business activity.
For many organisations, the issue is no longer whether AI will be used, but how it can be adopted responsibly, transparently and in a way that protects commercial interests, employees and customers.
Why Businesses Are Turning to AI
Leaving aside debates about whether current large language models truly meet the technical definition of “artificial intelligence”, their practical capability is undeniable. These tools can process large volumes of information in seconds, summarise complex material, generate alternative drafts, highlight risks and even suggest strategic options – often in a tone that feels intuitive and conversational.
At a basic level, this creates opportunities to automate repetitive tasks, reduce administrative burden and improve efficiency. At the more advanced end of the spectrum, AI can assist with sophisticated work such as software development, document analysis, research synthesis and presentation design. Used appropriately, this can deliver significant time savings and productivity gains.
The Legal and Operational Risks
The benefits of AI adoption are accompanied by material risks that businesses need to understand and manage.
- Confidentiality and sensitive information
Many AI tools operate in ways that may involve user inputs being retained or used to improve underlying models. Submitting confidential, commercially sensitive or personal data into these systems can therefore result in unintended disclosure, raising serious concerns around confidentiality obligations and contractual commitments.
- Ownership and intellectual property
The legal status of AI-generated content remains uncertain in several jurisdictions, particularly in creative and content-driven industries. Questions continue to arise around authorship, ownership and potential infringement of third-party rights, especially where outputs are derived from vast and opaque training datasets.
- Data protection and privacy compliance
The use of AI frequently involves the processing of personal data, sometimes at scale. Without careful controls, this can expose organisations to regulatory scrutiny, enforcement action and claims for misuse – particularly where transparency and lawful processing requirements are not adequately addressed.
- Cyber and information security
As with any technology that introduces new data flows and integrations, AI increases the overall potential for a cyber-attack. Poorly governed tools can become entry points for data leakage, unauthorised access or malicious exploitation.
- Accuracy and reliability
Despite impressive capabilities, AI systems are not infallible. Well-publicised examples of fabricated citations, incorrect analysis or misleading outputs underline the need for human oversight – especially where outputs are used for decision-making or customer-facing purposes.
Ethical and workforce considerations
AI adoption also raises broader questions around workforce impact, skills loss, transparency and environmental cost. These issues are increasingly relevant to corporate governance, ESG commitments and organisational culture.
Although regulatory frameworks are beginning to emerge – particularly at an international level – the legal landscape remains fragmented and, in many areas, reliant on laws drafted long before modern AI was conceivable. This uncertainty understandably makes some organisations hesitant. That said, disengagement or prohibition rarely removes risk and can, in practice, make it harder to control how AI is actually used.
Practical Steps to Managing AI Risk
Organisations looking to embrace AI in a controlled and defensible way should consider a number of practical measures:
- Develop a clear strategy
A defined approach to AI use – aligned with business objectives – reduces the likelihood of unsanctioned or inappropriate adoption. Clarity helps staff understand where AI adds value and where its use is restricted. - Educate and involve employees
Training should focus not only on how AI can support productivity, but also on its limitations and risks. Open engagement helps address concerns around job security and encourages responsible use. - Review contractual terms carefully
The terms governing AI platforms vary significantly. Businesses should understand how data is handled, whether inputs are retained or reused, and what rights apply to generated outputs. Tool selection should reflect the organisation’s risk appetite and confidentiality requirements. - Implement clear internal policies
An AI use policy can set boundaries, establish accountability and reinforce expectations. Existing policies – particularly those covering data protection, information security and acceptable use – should also be reviewed to ensure alignment. - Introduce governance processes
Recording and monitoring AI use helps maintain oversight and provides an audit trail. This is particularly important where outputs influence key decisions or external communications. - Maintain validation and human oversight
AI can accelerate workflows, but it should not replace critical review. Independent checks remain essential, especially for high-risk, regulated or business-critical activities.
Looking Ahead
AI is not a passing trend. Its capabilities will continue to develop, and its integration into business operations will deepen. The real question for organisations is not whether AI should be permitted, but how it can be adopted safely, transparently and strategically.
With informed decision-making, appropriate safeguards and ongoing oversight, businesses can unlock the advantages of AI while keeping legal, operational and reputational risks firmly under control.
How We Can Help
Kidwells dedicated Technology and Commercial team can help businesses understand and plan their AI requirements. From assisting businesses to assess and implement AI solutions, to putting in place the necessary processes and procedures to not only help protect your business but also maximise the opportunity that AI can bring.
For further information, get in touch.