By Ana Paula Assis, Chairman, Europe, Middle East and Africa, IBM.

EXECUTIVE SUMMARY:

From the shop floor to the boardroom, artificial intelligence (AI) has emerged as a transformative force in the business landscape, granting organizations the power to revolutionize processes and ramp up productivity.

The scale and scope of this shift is fundamentally changing the parameters for business leaders in 2024, presenting new opportunities to increase competitiveness and growth.

Alongside these opportunities, the sophistication of AI – and, in particular, generative AI – has brought new threats and risks. Business leaders across all sectors are dealing with new concerns around data security, privacy, ethics and skills – bestowing additional responsibilities to consider.

To explore this in more detail, IBM commissioned a study, Leadership in the Age of AI. This surveyed over 1,600 senior European executives on how the AI revolution is transforming the role of company leaders as they seek to maximize its opportunities while also navigating its potential threats in an evolving regulatory and ethical landscape.

Powering AI growth in Europe

With seven out of ten of the world’s most innovative countries located in Europe, the region is well-positioned to capitalize on the soon-to-be-adopted EU AI Act, which offers the world’s first comprehensive regulatory framework. This regulatory confidence and clarity is expected to attract additional investments and new participants, further benefiting Europe’s AI ecosystem.

Against this promising backdrop, it is no surprise to see generative AI deployment at the top of CEOs’ priorities for 2024, with 82% of the business leaders surveyed having already deployed generative AI or intending to this year. This growing sense of urgency is driven by a desire to improve efficiency by automating routine processes and freeing employees to take on higher-value work, enhancing the customer experience and improving outcomes.

Despite this enthusiasm, concerns around security and privacy are tempering the rate of adoption – while 88% of business leaders were excited about the potential of AI within their business, 44% did not feel ready to deploy the technology yet, with privacy and security of data (43%), impact on workforce (32%) and ethical implications (30%) identified as the top three challenge facing business leaders. Instead of solely focusing on the financial benefits of AI, business leaders are now compelled to actively address the societal costs and risks associated with it.

A new era for leadership

Leadership in the age of AI requires executives to strike a balance between addressing the ethical and security implications of technology and harnessing its competitive advantages. This delicate balance lies at the core of the EU AI Act, endorsed by the European Parliament in March. It aims to promote innovation and competitiveness in Europe while ensuring transparency, accountability and human oversight in the development and implementation of AI.

The Act takes a risk-based approach, ascertaining the level of regulation required by the level of risk each use case poses. This spans from prohibitive, which includes practices such as social scoring; high-risk, which encompasses areas such as infrastructure and credit scoring; medium-risk, which includes chatbots and deep fakes; and low-risk, containing AI-enabled games and spam filters.

With these parameters in place, business leaders must realize regulatory compliance and prepare their operations and workforce for the upcoming shift. They must manage risk and reputation and future-proof their companies for further innovation and regulation, which will inevitably follow in the coming years.

There are two major priorities for business leaders in achieving this. The first is to create effective AI governance strategies built upon five pillars: explainability, fairness, robustness, transparency and privacy. These aim to promote transparency in data usage, equitable treatment, defence against attacks, system transparency and privacy protection.

Underpinned by human oversights, they will serve to mitigate risks and ensure AI systems are trustworthy. This comprehensive governance approach fosters responsible AI adoption, building trust among users and stakeholders while ensuring the ethical and responsible use of AI technologies.

The second, and equally important, action is to establish an AI ethics board. While the Act itself necessitates a certain level of ethical compliance, businesses should use this opportunity to establish their own ethical frameworks.

This will guide implementation now while laying out clear guardrails for future innovation. At IBM, for example, our ethical framework dictates what use cases we pursue, what clients we work with and our trusted approach to copyright. Establishing these foundations early serves to help prevent reputational risks or Act breaches further down the line.

The skills responsibility

There is also a clear responsibility for equipping workforces with the necessary skills to successfully navigate AI transformation. Another recent IBM study around AI in the workplace found that 87% of business leaders expect at least a quarter of their workforce will need to reskill in response to generative AI and automation.

Those who equip themselves with AI skills will have a significant advantage in the digital economy and job market over those who do not. Organizations are responsible for helping their employees upskill or reskill to adapt to this changing ecosystem.

Businesses take this duty seriously, with 95% of executives stating they are already taking steps to ensure they have the right AI skills in their organizations, and 44% actively upskilling themselves in the technology. The incentive comes from a competitive and a societal perspective, ensuring that large portions of the workforce are not excluded from participating in and benefiting from the thriving digital economy.

With legislative frameworks now in place, European CEOs and senior business leaders must navigate the evolving AI landscape with trust and openness, integrating good governance principles into its development and adoption, cementing ethical guardrails and building resilience across the workforce. This new era of leadership demands trust and transparency from the top down and will be a critical component for growth and return on investment.

This article was originally published via the World Economic Forum and has been reprinted with permission.