Whether most people realise it or not, artificial intelligence (AI) and machine learning (ML) are fast becoming an intrinsic part of our personal and professional lives. Once seen as potential disruptors, they’ve since become strategic cornerstones for many businesses seeking to deliver enhanced services 24/7, achieve huge efficiency savings or obtain a host of other potentially game-changing benefits.
With the power to optimise and transform, this continuously self-improving technology is rapidly growing in popularity across many areas of business. In online retail and tech, AI is commonly deployed via machine learning or deep learning by software developers and business managers eager to understand and predict sales trends and patterns. However, these powerful adaptive and predictive capabilities have not gone unnoticed by fraudsters, which commonly employ AI to spread fake news across social media, but increasingly to distribute malware or launch network intrusions.
Many businesses worldwide are ill equipped to protect themselves from a ransomware attack or customer-data breach deployed with such sophisticated methods. Specialist cyber-security experts Carbon Black recently reported that in the last 12 months, 88% of UK companies suffered breaches; 92% in Germany; 94% in France and 90% in Italy. Worldwide, technology specialist Cisco estimates that 53% of small and medium size enterprises (SMEs) were victim to a network security breach in 2018.
Unsurprisingly, SMEs are increasingly looking to fight fire with fire by employing AI and ML to thwart such attacks and prevent potentially significant financial losses. Selecting the right AI solution can be complex and daunting and it is important to understand first how the algorithms behind the technology work and how they are tailored to a particular form of security.
AI is proven to be a potent tool in combatting cyber threats by reducing the number of areas where network infiltrations can occur. The capacity for AI to learn and ultimately update network security infrastructure can reduce not only the frequency of breaches but also the severity. Often breaches follow patterns, e.g. by timescale or manner of intrusion, which ML can predict and adjust a system’s security accordingly. In such ways AI is achieving more secure cyber environments for businesses, hospitals, schools and universities to operate in and is crucial for any organisation in managing its cyber exposures.
While insurance lags behind other areas of financial services in embracing the benefits of AI, some good progress is being made. One in five carriers has implemented some form of AI to ease manual data entry or document production according to McKinsey.
In the London market there are more than 50 examples of AI operating effectively, providing quicker and more reliable customer service and freeing underwriters from time-consuming tasks. AI can support insurers’ aspiration to be more customer-centric through the huge labour automation and cost-saving benefits it offers. Optio’s own use of AI and ML through its partnership with Guidewire Cyence in the Cyber division and Luminance in the Transactional Risk space has enhanced and streamlined the business across back-office and client facing functions.
With the ability to transform long-standing processes in insurance, there are already a number of AI success stories:
- Claims: AI has proven highly effective in combatting claims fraud – a growing cost to insurers and, in turn, insureds – by using algorithms to identify and highlight inconsistencies.
- Marketing: By learning sales trends, AI has helped insurers to adapt and exploit new opportunities.
- Actuarial: Employing algorithms and trace patterns in large datasets, AI has helped inform claims forecasting and pricing decisions.
With a vast capability to enhance the operational performance and effectiveness of many different types of organisations, AI is also highly effective in combatting those that abuse its power for malicious purposes. With continued rapid adoption by scammers and competitors alike, that in itself will further significantly drive the proliferation of AI. Yet, as we venture further into the Covid-19 era, AI’s ability to optimise and protect organisations will come into even sharper focus, pushing demand higher still. Consequently, for many management teams, deciding which AI solution to choose in the short-term could be the decision with the most far-reaching implications for the long-term future of their organisation.