There was monumental news yesterday with significant business risk implications that I’m staggered have flown almost completely under the radar with limited to no-coverage in the mainstream or business press.

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OpenAI has launched an Application Programming Interface (API) that enables integration of ChatGPT directly into business apps, websites, products and services, with companies like Shopify and Snap already on board. It comes a few weeks after Microsoft launched its own AI-powered Bing, Edge and Skype products.

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Generative AI has now officially moved from the loungeroom to the boardroom, but leaders need to be aware of the risks.

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This simple API integration means businesses are not only opening the door to generative AI, they’re rolling out the red carpet and directly introducing it to their most valuable asset: their customers.

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While many companies like Westpac are already singing the technology's praises, leaders need to understand that "when you invent the ship, you also invent the shipwreck".

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The risks associated with the authorised and unauthorised use of generative AI by workers are already increasing business risks and having implications on their insurance policies.

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There are a range of legal and insurance policy implications corporate leaders need to understand:

• Copyright and intellectual property. Who owns the generated content? Can businesses use content generated from a corpus of created works derived from the IP of others? What are the legal risks of copyright infringement, and are insurers wary?
• Professional indemnity. For errors caused by employee use of generative AI, are businesses protected under their current indemnity policy?
• Cyber security. Do current cyber insurance policies cover businesses if sensitive data becomes public through its use?
• Policy coverage: Are insurance underwriters asking questions relating to the use of AI tools? If a business says yes, what are the ramifications?

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Take for example the scenario of using AI in a legal setting:

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If a lawyer uses generative AI as part of their work duties, such as summarising annual financial reports and provides a client with the wrong advice, who is to blame? Microsoft for giving the lawyer the tool? OpenAI for providing the tech to Microsoft? The lawyer for passing on the wrong summary? The client for not agreeing that the summary was a reflection of the business? While there is no definitive answer yet, these conversations are already a topic of policy placement.

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While the release of ChatGPT's API for developers is undoubtedly a significant development for businesses looking for seamless integration of generative AI into their ecosystem, it is essential to consider the potential risks and implications carefully.

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We've come a long way from Y2K and the dot.com bubble, however, if you’re an executive or director and not yet aware of the legal and insurance policy implications associated with this new technology, then it’s time to do your homework to ensure you’re adequately covered. And until you’ve mitigated those risks, it might be better to keep the door closed to OpenAI.

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Prepared by Laurence Basell