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Artificial Intelligence in Professional Services: Exploring Benefits and Managing Risks

Artificial intelligence (AI) can benefit professional services significantly, allowing arduous and time-consuming tasks to be completed effectively and more efficiently.

Research by Thomson Reuters explored the views of generative AI amongst professionals across legal, tax, and accounting firms in the United States, United Kingdom, and Canada. Among those surveyed, AI's potential is undeniably recognised; 78% of respondents believe AI tools such as ChatGPT can enhance legal or accounting work. Around half (52%) of all respondents believe that generative AI should be used for legal and tax work.1

But this technology is developing at a rapid pace. It’s widely predicted that generative language models like ChatGPT could deliver fundamental change across almost every area of our lives. This change is not without risk.

Take the field of accounting, for example; automating repetitive tasks, improving accuracy, and providing valuable insights are potentially some of the benefits AI can offer. However, there are also several risks and challenges that accountants should be aware of when it comes to adopting AI:

  • Staff resistance and new skill sets: While some tasks may become automated, the role of accountants is likely to shift towards higher-level tasks such as data analysis, strategy development, and advising clients. Accountants will need to acquire new skills, including proficiency in using AI tools and understanding AI-driven financial analysis.2
  • Cyber security: AI systems require access to large volumes of data, and protecting sensitive financial data is crucial. There's a risk of data breaches or unauthorised access to financial information, which can have severe legal and financial consequences. Just as accountancy firms and their clients prepare for greater adoption of AI in cyber security, so too are cyber criminals who can use AI to get around AI defences.2
  • Accuracy and Accountability: Errors in AI models or data inputs can lead to incorrect financial statements and reports. Therefore, AI systems should be correctly calibrated and validated to maintain accuracy and accountability.2
  • Ethical Considerations: The use of AI in accounting raises ethical questions about the responsibility and accountability for financial decisions made by AI systems. These ethical challenges will need to be navigated carefully to ensure AI is used responsibly.
  • 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 may process personal and sensitive financial information, raising privacy concerns. Accountants must adhere to data protection regulations and implement robust security measures to protect client and company data.

Are the risks of providing these services covered by professional indemnity insurance?

For accountancy firms that are members of The Institute of Chartered Accountants in England and Wales (ICAEW) and law firms regulated by the Solicitors Regulation Authority (SRA), professional indemnity claims arising out of reliance on such advice are likely to fall to the broad terms of cover provided by the Minimum Terms and Conditions. The terms of this compulsory minimum cover are considered the broadest of any professional indemnity insurance (although even more comprehensive cover can be negotiated).

Requirements of professional regulators and the Information Commissioners Office (ICO) will also need to be heeded. Accounting and surveying bodies are at various stages of considering this, but the ICO has issued specific guidance in the meantime.3

In conclusion, while AI can offer numerous benefits to accountants, it also comes with risks and challenges that must be carefully managed. Accountants should proactively address these issues by staying informed, upskilling, ensuring data security, and navigating ethical and regulatory considerations to maximise the advantages of AI in their profession.

Protection with the right insurance 

Enhance your business’s AI resilience and safeguard it with professional indemnity insurance, shielding against financial losses due to errors, omissions, or negligence in services. Cyber insurance will strengthen your digital defences, covering expenses related to data breaches, cyberattacks, and data loss, ensuring comprehensive protection for your clients and peace of mind for you.

Our team of PI and cyber insurance experts are here to help you assess your exposure - contact a specialist adviser today.

Not sure what to do next?

Many of our clients didn’t know where to start either. We work with our insurer partners to arrange a cyber insurance policy that is truly right for you. Simply call us or get in touch and we’ll call you.