Increasingly, artificial intelligence is being adopted by a slew of industries — not as a silver bullet, but as a tool that can help organisations keep their competitive advantage and stave off disruption.
As AI adoption accelerates, with its obvious cost and productivity benefits, decision-making may soon be taken away from humans and guided instead by the application of AI in many stages of deal processes, including those in industries such as real estate, law and private equity.
This eventuality will create both opportunities and risks — the technology can be misused (unethical AI) and an ethical AI practice must be a strategic priority for organisations.
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Removing unethical AI from corporate finance transactions
The use of AI in corporate finance transactions can create substantial risk — unethical AI. But, there are solutions that exist to ensure processes remain ethical and trustworthy, according to a report from Drooms and ICAEW — the Institute of Chartered Accountants in England & Wales.
It suggests that new regulatory measures for AI in corporate advisory are unnecessary, because these already exist in sufficient quantity. Instead, it recommends that professional bodies should include the potential adaptation and/or extension of professional principles to include AI and big data.
David Petrie, head of Corporate Finance, ICAEW, said: “For professional bodies, such as ICAEW, our role is to ensure that members remain at the cutting edge of the application of these new technologies and that they have the expertise, training and qualifications to make the commercial and ethical judgements vital in the brave new world of AI assisted deal-doing and corporate finance.”
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Alexandre Grellier, co-founder and chief executive officer of Drooms, commented: “The development of ethical principles and codes of practice is an important recommendation in the report. AI should be lawful, ethical and robust.
“AI is still at an early stage of development and the importance of the partnerships between industry and technology firms in ensuring it is developed properly cannot be underlined enough, especially in ensuring people and commercial related data is not mis-used.
“Such information must be handled in a transparent and understandable way. The good news is that we are developing algorithms to such a point that they match professional ethical values.”
AI and global M&A
The report also noted that AI-based technologies will have a marked impact on the global M&A market over the next decade.
Experts interviewed for the report rated, on average, the likely significance of AI for corporate transactions as 9/10 — but their own organisations’ current level of AI adoption in corporate advisory as only 4/10, while they rated their clients’ levels of adoption for corporate transactions as just 3/10.
However, given that comprehensive, multi-layered analysis can produce complex results that require careful interpretation, the report concluded that professional judgement would become even more, rather than less, important in the age of AI.
The importance of AI in mergers and acquisitions
