Artificial Intelligence (AI): Delaying the Inevitable or Forcing Change for Good?

AI Adoption Has Increased Dramatically and Is Expected to Continue Growing

AI adoption is undeniably a top priority on many companies’ agendas. According to a global survey, the use of AI in business functions has more than tripled since 2017. In Singapore, at least 50% of surveyed IT functions reported experimenting with or adopting AI within their organisations. The growth is even more pronounced across ASEAN, where the number of AI projects undertaken in 2023 alone increased by nearly 80%.

Whilst AI has become commonplace among content creators on social media and in various e-commerce applications, its adoption brings both concerns and benefits. AI poses challenges for data security and transaction authenticity, yet it also offers significant workforce advantages.

Commercial Benefits

AI may offer several potential benefits, such as:

Increasing revenue share – AI-infused products and services may provide new growth opportunities (e.g. reduce marketing to conversion time, increase in customer satisfaction)
Optimising development time – AI may shorten time to market by increasing the speed of early-stage testing (e.g. improve product launches and testing cycles)
Generating new insights – Appropriate generative AI use may bolster employee creativity (e.g. reducing inefficient time on mundane processes); and
Improving productivity – AI can help boost productivity, especially in countries with ageing populations (e.g. encourage workforce reskilling toward higher-value functions)

Enterprise Risk

Despite its potential benefits, AI has, in some cases, led to irresponsible usage when left without proper oversight. Poor monitoring has resulted in negative user outcomes, including:

The spread of false information
The presence of bias or inappropriate behaviour; and
Errors from AI engines that lead to undesired outcomes

Often, the root causes of these failures are linked to:

A lack of clear guidelines on AI usage/scenarios
Inadequate robust development and testing protocols before going ‘live’
Insufficient surveilance and intervention; and
Absence of a proper ethical framework and missing transparent and objective communications with end users

What's Next for the Board?

Board members and key executives of the Company should address the following AI-related challenges by leveraging an AI assessment framework:

Challenges	Risk	Suggested Board Actions
Adequacy of Board oversight and expertise	Misalignment with best practices Skills gap	Appoint board members with fluency in AI technology and comfort in overseeing AI projects Assemble a competent AI management team
Costs	ROI not properly evaluated, leading to costs potentially exceeding benefits	Conduct a formal ROI analysis before initiating AI projects
Accuracy of information due to bias and discrimination in AI models	Data bias	Establish an AI audit framework to set objectives, criteria, standards, procedures, and tools to monitor bias
Lack of explainability and transparency in AI models	Difficulty in interpreting and explaining AI models for both developers and users.	Familiarise with Explainable AI (XAI) concepts and their applications Engage with AI experts and stakeholders to understand their perspectives, expectations and concerns.
Cybersecurity and data privacy risk	Increased vulnerability to cyberattacks due to AI democratisation Data privacy risks for individuals and entities whose data is used for training or testing the models	Enhance AI audit skills and invest in training for internal audit teams and external auditors
Intellectual property and legal risks	Ambiguity in accountability when issues arise Difficulty in identifying origin of error Difficulty in identifying IP ownership	Establish a framework that addresses accountability and clarifies IP ownership

Conclusion

Is AI truly exposing organisations to widespread operational risk, or will it ultimately bring broder benefits to the workforce?

As with any transformative technology, the adoption of AI comes with inherent costs. Early adopters, much like those of the personal computer or the internet in the late 1990s, often experience the greatest challenges, particularly in converting skeptics and navigating initial adaption cycles.

While deep AI expertise may not be widely available within a company’s management or board, it is nonetheless important to stay proactive and maintain a forward-looking stance. Boards should recognise that the current technological revolution is already underway. AI is one of many powerful tools available to help address traditional constraints in revenue generation and human capital management.

Speak to our experts to learn more about leveraging AI for your business

Dennis Lee

Partner & Head of Business Consulting

Hoi Wai Khin

Partner