Artificial Intelligence (AI) presents fresh opportunities for the broad spectrum of professional services, allowing arduous and time-consuming tasks to be completed more effectively and efficiently. However, while it’s widely predicted that some AI models, such as ChatGPT, have the potential to deliver fundamental efficiencies across almost every area of our lives, this change would not come without risk.
What is AI?
Artificial intelligence – or AI – refers to technologies that can be programmed to simulate how humans think or act. The programs can be used to analyse and interpret data, make decisions, solve problems, and perform tasks – even complex ones – quite efficiently.
Where is the business value?
Undoubtedly one of the key benefits of AI centres around boosting workforce productivity. It has the potential to add trillions of dollars in value to the global economy, according to global research group McKinsey. And rather than replacing workers, AI would be seen more as enhancing the capabilities of workers, by automating or absorbing up to 70% of the existing workload.¹
According to McKinsey’s research, AI can also help eliminate inefficiencies within real estate where they have observed that some real estate companies increased their net operating income by more than 10% by using AI to improve their operations, customer experience, client retention, new revenues and make better choices when it comes to selecting assets.² Some of the potential tasks that AI could be used for include conducting market research and property valuations, analysing and predicting future trends, matching clients to properties, providing virtual tours, conducting risk assessments, and managing routine property management tasks.
Of course, the application of AI in business is relatively new and developing at such a rapid pace and many businesses have difficulties understanding it. Before exploring the opportunities it presents for your business, it’s important to first consider some of the key challenges presented by AI, and ways to manage the associated risks.
Employee resistance
An increasing reliance upon AI technology could lead to some employees feeling redundant, thereby impacting their enthusiasm for adopting the technology. To manage this, consider ways for roles to shift towards higher-level tasks such as data analysis, strategy development or advising clients. Offer opportunities for employees to undergo training to acquire new skills, especially around proficiency in using AI tools for tasks such as AI-driven data analysis.
Cyber threats
AI systems require access to large volumes of data, and protecting sensitive data is crucial. There's a risk of data breaches or unauthorised access to financial information, which can have severe legal and financial consequences. As your team prepares for greater adoption of AI, bear in mind that cyber criminals are also likely building their expertise around breaking through AI defences.
Accuracy and accountability
Errors in AI models or data inputs can lead to incorrect outputs and reports. It’s important to remember that the responsibility ultimately sits with you and your team to verify and validate data and maintain accuracy – especially if clients are basing decisions on AI-generated content or data.
Regulatory compliance
Using AI in accounting may raise regulatory concerns, particularly regarding financial reporting and auditing standards. Keeping informed about evolving regulations related to AI in accounting practices will be essential for users.
Privacy concerns
AI systems can be used to process personal and sensitive financial information, raising privacy concerns. It’s important you adhere to data protection regulations and implement robust security measures to protect your client and company data.
Does professional indemnity insurance cover AI risks?
Professional indemnity insurance helps cover you for negligence, breaches or errors and omissions in the services or advice you provide. So as a real estate professional, you are ultimately responsible for the advice you provide – regardless of the tools you use to generate your opinions.
However, professional indemnity does not cover you for cyber security incidents. For this reason, if you plan to use AI to process confidential information or client data, then you should seek advice from a business insurance broker on taking out a separate cyber security policy.
Cyber insurance can help strengthen your digital defences, covering expenses related to data breaches, cyber-attacks, and data loss, ensuring comprehensive protection for your clients and peace of mind for you.
To find out more about Realcover’s professional indemnity and cyber insurance solutions arranged by Marsh, contact Realcover today on 1800 990 312.
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¹ McKinsey, 14 June 2023, The economic potential of generative AI: The next productivity frontier, www.mckinsey.com/capabilities/mckinsey-digital/our-insights/the-economic-potential-of-generative-ai-the-next-productivity-frontier#introduction
² McKinsey, 14 November 2023, Generative AI can change real estate, but the industry must change to reap the benefits, www.mckinsey.com/industries/real-estate/our-insights/generative-ai-can-change-real-estate-but-the-industry-must-change-to-reap-the-benefits