UNITED KINGDOM Trends and Developments Contributed by: James Burnie, Chris Elwell-Sutton, Tom Goff and Thomas Hulme, gunnercooke llp
More fundamentally, firms are aware that delegating a process to AI generally does not mean that the firm delegates out of responsibility for the AI’s activity. As a result, it is becoming increasingly common for firms to nominate a particular director as having responsibility for AI (as well as technology in general), and that per - son is tasked therefore with understanding the risks involved in using such technology as well as taking appropriate steps to mitigate them. We are therefore seeing an increasing need for firms to have AI poli - cies in place to govern the use of AI within the firm, as well as increasing requirements for employees to abide by the requirements of those policies. This can also include requirements not to pass certain sensitive information into (for example) LLMs (large language models), in order to prevent such information, such as sensitive intellectual property, from accidentally enter - Lastly, it is worth noting that the above generally assumes a linear pattern towards the evolution of fin - tech, steadily moving from discovering the unknowns in using new technologies, to creating an approach to governing its use. However, as the original Bitcoin showed, developments are not always predictable. In this respect, it is worth keeping a watchful eye on the development of quantum computing. Quantum com - puting is the use of quantum mechanics to poten - tially massively boost processing power. The overall effect is that it effectively supercharges the ability of the computer to solve complex problems as well as, for example, to provide better AI solutions. ing the public domain. Things could get ugly… The problem with this is its ability to undermine tra - ditional mechanisms to preserve security in financial services, such as that used by banks. Quantum com - puting, therefore, has the ability to render ineffec -
tive many of the existing approaches used to ensure security of financial services infrastructure. Whilst countermeasures are possible – for example, lattice- based cryptography, which grounds security in the mathematics of crystalline structures and is consider - ably harder to compromise than existing measures – the extent to which these will prove effective remains uncertain. Also, while the general consensus is that quantum computing will arrive, there is no real con - sensus as to the timing of the innovation, and indeed various global hubs are in competition to be the first, in some respects encouraged by government back - ing given the potential huge advantages that a gov - ernment would have in being at the forefront of this innovation. Growing Up or Just Growing Old? The only long-term certainty, given all of the above, is that innovation itself remains uncertain. From a purely legal and regulatory perspective, regulators have tra - ditionally sought to grapple with new technology by extrapolating from existing frameworks – referred to in the UK as the “same risk, same outcome” approach. However, for entirely new innovations, this is not always feasible and, as a result, we are increasingly seeing legislation having to be tweaked for new ide - as. In the UK, therefore, we can expect an approach heavily influenced by our regulatory history; how - ever, law makers perhaps underestimate the level of inadvertent change which is happening. This is given particular momentum by the UK re-establishing its global position – perhaps more closely aligned with the United States – meaning that it is not only adapt - ing to new innovation, but doing so whilst simultane - ously recalibrating its broader regulatory approach to reflect prevailing political currents. The implication is that volatile times lie ahead; though, of course, where there is volatility, there is also opportunity.
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