Tech Transformation – from code to cognition

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Tech Transformation – from code to cognition

Organisations are facing a balancing act of maximising the benefits that artificial intelligence (AI) offers with the need to ensure the appropriate safeguards are in place to mitigate known and unknown risks.

AI optimism

We have already seen how the digital technology transformation is revolutionising the healthcare, finance, and manufacturing sectors. On the flip side the integration of AI is bringing risks relating to job losses, ethical considerations, cyber security and intellectual property (IP) and data privacy issues.

Our survey reveals a growing sense of optimism amongst businesses about AI.

This trend is reflected in an Amazon Web services report that showed that AI adoption in Europe is on a swift upward trajectory, with an average of five businesses integrating the technology every minute[12]. In the span of just one year, the proportion of European firms consistently using AI has jumped by 27%, from approximately 33% in 2023 to 42% in 2024. Such growth is unprecedented, even outpacing the adoption rates of previous transformative technologies like mobile phones, which saw a peak growth of 18% between 2007 and 2008[13].

Larger organisations are at the forefront of adopting and scaling AI[14]. It has also been shown that these entities are more likely to follow best practice AI risk management for general AI adoption, compared to their smaller counterparts. This disparity suggests that the capacity to leverage AI to its full potential is still correlated with organisational size and resources.

Risk and reward

As businesses embed AI into their operations there is ongoing discussion about the associated risks it creates. Given that AI is still in its infancy it is important to approach its integration into systems with caution, as it can produce inaccurate or misleading results, making human oversight essential to mitigate unexpected outcomes.

"Generative AI introduces variability into the equation, frequently producing good results but occasionally creating poor results. Organisations must not become complacent and expect that what worked once will always work in the future. Implementing guard rails, conducting thorough testing, and educating users on responsible AI usage are essential to mitigate the new risks that AI presents."

Craig Linton
Head of US Underwriting Management – Cyber

Significant advancements in AI over the past year, including the rapid development of AI agents with enhanced capabilities[15], mean this transformational technology is now able to perform complex tasks based on prompts. Up until recently there has been more chat than action with AI agents, but that is likely to change soon.

AI is also being successfully used in patient diagnostics and patient care, as well as in scientific research, where it is helping to solve complex problems and facilitate new innovations.
Additionally, it is augmenting human capabilities and enhancing end-to-end automation in sectors like logistics, customer support, improving efficiency and responsiveness.

AI plays a key role in detecting and preventing cyber threats, making it essential for protecting digital assets and gaining a strategic edge in a digital world.

AI-related legal and regulatory challenges are evolving, necessitating compliance with a host of new and existing laws. Data privacy and security and IP risk concerns are also paramount, with the need to protect sensitive data and copyright. Organisations need to be sure that they use AI tools responsibly, as a support tool rather than a replacement for human judgement, and AI-generated results need to be verified and validated.

“We are seeing an uptick in AI-related IP and copyright infringement claims arising out of the training of large language models. We are also seeing defamation claims, where AI tools are being used to vet experts and not formulating accurate reports of individuals.”

Melissa Collins
Claims Focus Group Leader – Third Party Liability Cyber & Tech

Outdated tech

Adopting a digital transformation strategy based on AI can create concern over tech obsolescence risk and the potential for disruption, reduced efficiency, and competitiveness. However, as technology evolves at a breakneck pace, firms appear to be more confident in their perceived resilience to tech obsolescence risk, with just 15% of the businesses surveyed this year feeling ‘unprepared’[ii] to counter this threat, a notable decrease from 24% in 2024.

Despite growing confidence around the implementation and investment in new tech such as AI, firms must not be complacent. Tech investment needs careful planning, as with the pace of change and new technologies such as Deep Seek emerging on the market, firms need to consider the longevity of their investments.

Reshaping employment

AI in healthcare, robotics and natural language processing are all examples of where technological advancements are poised to reshape the employment landscape, with certain jobs more susceptible to automation than others. 66% of business leaders surveyed agreed that AI will displace jobs within their companies over the next 18 months, a sentiment that has remained steady since 2024.

Many governments are actively addressing the ethical and social risks associated with AI, and businesses should ensure these considerations are integrated into their ongoing risk management and digital transformation strategies. Additionally, organisations need to acknowledge the growing employer related risks, as AI is likely to contribute to workforce displacement and significant changes in employee roles.
As AI continues to advance, it is imperative for businesses to manage their digital transition responsibly, balancing the benefits of increased efficiency with the duty to support and retrain their workforce for the jobs of tomorrow.

"Businesses should conduct independent bias audits of all AI systems used to evaluate job applicants, employee performance and/or to displace employees to mitigate discrimination and misinformation risks, on an annual basis.”

Letoyia Horton
Claims Focus Group Leader – Employment Practices Liability

AI optimism

Tech obsolescence risk is a diminishing threat

Risk and reward

Risk and reward

As businesses embed AI into their operations there is ongoing discussion about the associated risks it creates. Given that AI is still in its infancy it is important to approach its integration into systems with caution, as it can produce inaccurate or misleading results, making human oversight essential to mitigate unexpected outcomes.

"Generative AI introduces variability into the equation, frequently producing good results but occasionally creating poor results. Organisations must not become complacent and expect that what worked once will always work in the future. Implementing guard rails, conducting thorough testing, and educating users on responsible AI usage are essential to mitigate the new risks that AI presents."

Craig Linton
Head of US Underwriting Management – Cyber

Significant advancements in AI over the past year, including the rapid development of AI agents with enhanced capabilities[15], mean this transformational technology is now able to perform complex tasks based on prompts. Up until recently there has been more chat than action with AI agents, but that is likely to change soon.

AI is also being successfully used in patient diagnostics and patient care, as well as in scientific research, where it is helping to solve complex problems and facilitate new innovations.
Additionally, it is augmenting human capabilities and enhancing end-to-end automation in sectors like logistics, customer support, improving efficiency and responsiveness.

AI plays a key role in detecting and preventing cyber threats, making it essential for protecting digital assets and gaining a strategic edge in a digital world.

AI-related legal and regulatory challenges are evolving, necessitating compliance with a host of new and existing laws. Data privacy and security and IP risk concerns are also paramount, with the need to protect sensitive data and copyright. Organisations need to be sure that they use AI tools responsibly, as a support tool rather than a replacement for human judgement, and AI-generated results need to be verified and validated.

“We are seeing an uptick in AI-related IP and copyright infringement claims arising out of the training of large language models. We are also seeing defamation claims, where AI tools are being used to vet experts and not formulating accurate reports of individuals.”

Melissa Collins
Claims Focus Group Leader – Third Party Liability Cyber & Tech

Outdated tech

Reshaping employment

Spotlight snapshots

AI use has significantly increased with larger organisations leading the way in implementing and scaling AI technologies. However, enthusiasm for AI needs to be tempered with caution around the risks it can create, and tailored risk management strategies need to be developed.
The risk of underinvestment in AI far outweighs the risk of overinvestment. Despite the complexity of picking the right technology to go with, the rewards could be substantial.
Human oversight is essential to mitigate risks such as copyright infringement, IP violations and defamation. AI can lead to unexpected outcomes and firms need to educate employees about AI’s limitations and ensure that AI tools are used responsibly and effectively.