Artificial intelligence is a tool that streamlines CRE operations, finds and analyzes data, and drives data center development, among other things. Because of AI’s multiple advantages, companies’ largest worry is being left behind.
But not so fast. A recent report from JLL details the risks and challenges of AI implementation and use (outside of falling behind the pack).
Data and Privacy Issues
Concerns over issues like data breaches and violations of data privacy aren’t new. However, JLL analysts point out that “AI introduces complexity to these issues, but it does not alter their nature.” One example introduced is proprietary information (like transaction history) accidentally uploaded into the public domain as part of the training prompts. Breaches could also occur when foundational models are fine-tuned with proprietary data.
The JLL experts suggest that companies might consider a “sandbox” environment when deploying or fine-tuning foundational models. Also important is creating and maintaining responsible data use policies and putting resources toward extensive employee training.
Regulatory and Compliance Factors
Governments are paying attention to AI and, in response, are setting up regulations to help mitigate risk. In the United States, late October 2023 saw the issuance of “Executive Order on the Safe, Secure, and trustworthy Development and Use of Artificial Intelligence.” The order sets up safety requirements for the careful use and development of AI.
The “EU Artificial Intelligence Act” was recently passed by the European Parliament to set a global benchmark similar to that of the EU’s General Data Protection Regulation (GDPR).
Other countries are in the process of advancing their own AI legislative efforts. While the regulations are welcome, the JLL experts point out that it’s also important to “evaluate compliance within the specific context of your use cases” and ensure that AI providers create their tools responsibly. Failure to do this could mean fines, lawsuits or even criminal penalties.
Business and Operational Risks
The JLL report points out that there are two risks when discussing AI. The first is “ineffective applications resulting in cost overruns or diminished returns on investment.” The second is “the possibility of inaccurate AI-generated outputs or misuse of such outputs,” the JLL experts point out. This can lead to problematic decision-making and a lower quality of work, resulting in poor client service.
The JLL report suggests that the best way to deal with business and operational risks of AI is to analyze how these systems work (or don’t, as the case may be). Then, determine how those systems could be used to carry out various tasks or workflows and “build resilience around them with human agency,” the report explained.
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