As European lawmakers reach provisional agreement on the final text of the EU Artificial Intelligence Act, Jackie Hennessy and Dani Michaux delve into the potential risks businesses may face In December 2023, European lawmakers announced a provisional agreement on the final text of a new Artificial Intelligence Act (AI Act), giving developers and users of AI systems the first chance to consider in detail what the proposed new framework could mean for them. Businesses are now in a position to consider the role AI plays in their organisation and how to mitigate potential risks that may arise as a result of this new legislative advancement. What is an AI system? According to the Act, an AI system is a “machine-based system designed to operate with varying levels of autonomy and that may exhibit adaptiveness after deployment and that, for explicit or implicit objectives, infers, from the input it receives, how to generate outputs such as content, predictions, recommendations, or decisions that can influence physical or virtual environments”. Why do we need this Act? The AI Act classifies AI systems into three risk categories: Unacceptable risk AI systems are considered to pose an unacceptable risk and are prohibited by the Act. These practices include systems that target vulnerable people or groups of persons, systems that materially distort a person’s behaviour, the use of biometric categorisation and identification systems and systems that classify natural persons that lead to unjustifiable detrimental treatment. High-risk AI systems are those that, based on their intended purpose, pose a high risk of harm to the health and safety or the fundamental rights of persons, taking into account both the severity of the possible harm and its probability of occurrence.    A General Purpose AI (GPAI) system displays significant generality and competently performs a wide range of distinct tasks regardless of the way the model is placed on the market. It can be integrated into a variety of downstream systems or applications. The Act is intended to ensure better conditions for the development and use of AI and is a pillar of the EU’s digital strategy. Furthermore, the Act takes aim at the emerging issue of ‘deepfake’ technology. Deepfakes are defined as “AI-generated or manipulated image, audio or video content that resembles existing persons, objects, places or other entities or events and would falsely appear to a person to be authentic or truthful”.  The Act places a requirement on deployers of this technology to disclose that the content has been artificially generated or manipulated. Who will the Act affect? The Act will impact both developers and deployers of AI systems and will legislate the following: Human oversight measures for high-risk AI systems; Effective employer obligations for organisations planning to deploy AI in the workplace; Testing of AI systems in real-world conditions; and Implementation of codes of practice for proper compliance with the obligations of the regulation for providers of General Purpose AI systems. The Act represents a major overhaul for businesses developing or deploying AI systems. Businesses doing either in the course of their work should consider how AI can be made compliant with the EU AI Act and what impact this might have on the business and its operational performance. Jackie Hennessy is the Risk Consulting Partner at KPMG Dani Michaux is EMA Cyber Leader at KPMG International

Paul Guess explains what work-related burnout means and outlines the pivotal role managers can play in prevention and recovery Many people think of ‘burnout’ as solely related to how much they work. They believe just taking some time off will relieve feelings of overwhelm and pressure and that they can quickly return to work feeling refreshed and renewed. Several factors can cause burnout, however, and it is unlikely to be resolved by taking a break. One of the most important contributors to a person’s well-being at work is their relationship with their manager. As burnout has been classified as an “occupational phenomenon” by the World Health Organization, support at work is essential to curb the rising tide of overwhelm at work.  The manager's role is critical in assessing and addressing employee burnout. Here are some tips to support leaders in preventing and managing burnout in their teams. 1. Be knowledgeable about the factors that contribute to burnout  Research has indicated the six areas that, when left unchecked, can lead to burnout. Recognising how these areas impact a team can give leaders a better idea of how to improve.  Workload Do staff have a clearly defined job description, and are their responsibilities reasonable? Additionally, do they have the resources they need to fulfil the duties assigned to them? Perceived lack of control When people feel they have a say in the decisions being made that are related to their job, it can positively affect well-being and reduce feelings of disengagement and cynicism.  Appreciation and reward When people feel the extrinsic and intrinsic rewards of their job don’t match their effort and time, they can become disengaged and unmotivated – a key indicator of burnout. Fairness Ensure that people receive fair and equitable treatment. Transparency and trust are the foundations of psychological safety within the workplace, and innovation and creativity flow from this. It is essential to effectively communicate the thinking behind decisions that impact them. Community It is vital that people feel a sense of belonging within the organisation. Develop opportunities to bring teams together and keep connections strong to build positive relationships, as loneliness and isolation are often drivers of poor mental health and well-being. Values Do the leadership’s behaviours create an environment in which people feel that it’s okay to look after their well-being? Role modelling and recognising their own management style and how it contributes to an employee’s experience is an important piece of reflective work that will lead to improved relationships. 2. Pay attention to the warning signs of poor mental health There are common indicators of burnout that managers should be aware of: poor decision making; reduced concentration levels;  feelings of overwhelm;  withdrawal; procrastination;  inability to prioritise tasks effectively;  poor timekeeping;  relationship difficulties;  expressions of anger and frustration; and  increasing cynicism and disengagement. If a manager notices these behaviours in a team member,  they must be aware of how to manage burnout in an employee. There are several steps they should take:  Start supportive conversations  Managers should use one-on-one opportunities to start exploring what might be driving any difficulty. Some people will need a little encouragement to open up, so actively listening to what they say, creating space and responding sensitively will help to reassure them that their manager is there to support them. If they feel stressed or overwhelmed by their workload, guide them on how to handle pressure. Set clear goals and spotlight progress When people don’t have clear goals, they either become stuck because they are unsure where to invest their energy or frantically churn out work in the hope it will be valuable. Good leadership involves setting clear goals that contribute to the team’s success. It’s also important to recognise progress and highlight any accomplishments or achievements by individuals or the team. Protect the team’s time A manager must protect their team’s time, especially regarding their well-being. Ensure that people take time off in light of illness, bereavement or other notable situations. Encourage people to take their annual holiday allowance and have some protected time to rest and decompress during periods away from work. Managers should always be practising the behaviours they encourage, so they must be sure to take their own time off as well. Paul Guess is a mental wellbeing expert at caba, the occupational charity supporting ICAEW

PwC’s Irish CEO Survey 2024 reveals rising concerns about company survival in a shifting business landscape. CEOs must drive innovation, agility and digital transformation for lasting prosperity, writes Amy Ball The PwC Irish CEO Survey 2024 shows that 28 percent of Irish CEOs are still not confident that their company would survive more than a decade on its current path – up from 21 percent last year. In an age where CEOs increasingly foresee the possible demise of their company within 10 years if they continue in their current direction, the imperative for business transformation has never been more critical. Innovation is at the forefront of this transformation. CEOs must champion a culture that not only welcomes but seeks out innovation. This means moving beyond traditional models to embrace disruptive technologies and processes in areas such as finance, front office, HR and operations transformation, in particular. Agility The digital era demands a shift towards more agile, technology-driven business strategies that resonate with contemporary market dynamics. Equally crucial is understanding and adapting to rapidly changing consumer behaviours. Today’s consumer landscape is a mosaic of evolving preferences and expectations heavily influenced by digital technologies. Businesses closely monitoring these shifts and aligning their strategies will likely create a valuable competitive advantage. Survival strategy Digital transformation isn’t just a buzzword; it’s a survival strategy. Integrating digital technologies into every business area, from operations to customer engagement, is essential. This digital pivot involves a fundamental change in how businesses operate and deliver value as part of the transformation journey. Clear and flexible leadership Leadership in such times of change requires a nuanced approach, too. CEOs need to navigate uncertainty with a clear vision and a flexible strategy. This involves making tough decisions, fostering a culture of resilience and preparing the organisation for continuous change. Data Data is the compass in this journey. Leveraging data-driven insights for strategic decision-making can uncover new opportunities, optimise operations and enhance customer experiences. CEOs who harness the power of data can steer their company towards more informed and effective pathways. Adaptability Lastly, business model adaptability is crucial. The ability to pivot quickly in response to market changes can be the difference between thriving and merely surviving. This adaptability should be ingrained in the company’s DNA, encouraging continuous evolution and responsiveness to emerging trends and challenges. A prosperous future The CEO’s role in steering their company towards a prosperous future is more dynamic than ever. It requires a blend of innovative thinking, digital savvy, strategic adaptability and data-driven decision-making. By embracing these principles, CEOs can ensure their company is resilient enough to create sustained outcomes. Amy Ball is Business Transformation Leader at PwC

A staggered board can support continuity, strategic stability and help to defend against takeovers. Dan Byrne outlines the pros and cons of this distinctive governance structure A staggered board is a type of board structure designed to provide stability and continuity at corporate governance level. It divides its directors into “classes” – each serving a different time length across staggered terms. Usually, more senior directors will serve longer terms. In modern governance, the structure of a company’s board of directors can help to steer an organisation’s strategic direction.  Different companies will structure their boards differently to achieve the results they want. Adopting a staggered board structure is one option. Staggered boards are designed to ensure that only some directors are up for re-election at any given time. This has the advantage of ensuring there is always continuity across different election cycles as only some faces will be new. It also reduces the likelihood of hostile takeovers, which usually need a rapid and large-scale leadership change to succeed.  The processes of a staggered board The operation of a staggered board involves dividing directors into classes; it could be as low as two or as much as five. Each class will be up for election/re-election at different times. Take the example of  a board with three classes: each class serves a three-year term, but only one class is up for election each year. In other words, at least two-thirds of the board will stay the same after any election.  In cases where the more senior directors serve longer terms, class one may be up for election every year, class two every three years, and class three (the most senior) every five years.  These rules will depend on the company. The advantages of a staggered board A staggered board can help to ensure continuity after each election and delay or outright eliminate the risk of hostile takeovers.  It can also reduces the logistics challenge of training and onboarding several new directors simultaneously. There will always be a healthy cohort of veterans to oversee any work needed in this area, feeding a culture of long-term planning. Disadvantages Much of the criticism directed at the staggered board approach comes from shareholders who effectively only have a say on the future of a third (or less) of directors at any given time.  This means shareholder criticism is less likely to be listened to and the board may be more concerned with itself or its relationship with management. Creating a staggered board If an organisation is thinking about instituting a staggered board, it must analyse the company’s governance thoroughly before doing so.  How much does your board depend on fresh, new experience? If it’s a lot, a staggered board might not be for you.  How concerned are you about a hostile takeover or activism? If the answer is ‘a lot,’ then a staggered board may be for you. You should also consider how much your company spends on onboarding: how easy it is to find relevant talent at the board level, and how confident you are in your current board? By asking the right questions, you may find that introducing a staggered board structure is beneficial for your organisation. Dan Byrne is a writer with the Corporate Governance Institute

Adverse weather can bring disruption to businesses and their staff. Gemma O’Connor explains how an adverse weather policy can help employers to minimise its impact Adverse weather can bring power outages, high winds, and flooding and can cause major destruction of towns and villages across the country. Furthermore, employers dealing with storm and weather warnings may also face staff absenteeism. So, what can they do if employees are unable to be at work for the day because of the effects of poor weather conditions? Experts recommend putting an adverse weather policy in place. Pay obligations Payment obligation is a common topic employers ask about when bad weather strikes. A strict interpretation of the law allows employers to determine whether payment is owed to employees for workdays they miss due to extreme weather. If a company’s premises are open but employees are absent, there is no legal obligation to pay them for what is technically an unauthorised absence. Choosing to withhold pay should be considered with care, however. Doing so may affect staff morale and your reputation as an employer. Employees may also rely on prior experiences to argue that payment is due. If an has organisation paid absent employees during a previous weather warning, they will expect the same going forward. During an extreme weather event, it is possible that companies may need to close their premises. When employees are sent home or told not to come to work due to adverse weather, it is recommended that they be paid as normal. Employee options If employees can’t attend work due to the extreme weather, there are a few options available: Ask them to work from home and continue to pay them as normal. Allow them to make up any missed time later. With the agreement of the employees, the organisation could deduct any absences from their paid annual leave entitlement. Many people are already currently working from home. Employers with remote working arrangements should include a clause on working from home in their adverse weather policy. This clause could specify, for example, that staff are permitted to work from home during periods of bad weather and will be paid as normal even if the employer’s premises are closed. Change of roster An employer is entitled to change a roster at short notice in exceptional events, including extreme weather. Keep in mind that outside of these exceptional circumstances, however, employees are entitled to a notice of at least 24 hours for any roster change. Employee safety As an employer, the safety of employees should always be paramount. An employer’s statutory duty is to provide a safe place of work. This also includes ensuring that employees are not required to undertake a hazardous journey to get to work. Employers should know that, if public transport isn’t operating, they face a heightened risk of claims and reports to the Health & Safety Authority (HSA) by employees who suffer accidents on their way to work. Time for a policy Adverse weather can be a reminder and an opportunity to develop your own internal policy regarding how weather warnings will be handled. If this policy is reasonable and clearly communicated to employees, organisations can minimise their exposure to the winters of employee discontent. Gemma O'Connor is Head of Service at Peninsula Ireland

As 2024 unfolds amidst continued global challenges, Loretta O’Sullivan outlines why the island of Ireland will still likely see some economic growth We are just a few weeks into 2024 and it has already acquired many labels. It's the year of rate cuts, war and global elections. Despite this, the all-island economy is expected to be a year of growth. EY Ireland's Winter Economic Eye report forecasts reasonably solid growth in the Republic of Ireland (ROI) and a modest expansion in Northern Ireland (NI). Outlined below are the four forces we see shaping both economies in 2024. 1. A subdued external environment The world economy is recovering from a multitude of shocks – the COVID-19 pandemic, the war in Ukraine and decades-high inflation. The likelihood of a soft landing has increased, but geopolitical tensions, including the conflict in the Middle East and the Red Sea attacks, are among many headwinds. Prospects for key trading partners in 2024 are mixed, with growth set to slow in the US, but due to pick up in the Eurozone and the UK. 2. A turn in monetary policy After introducing a series of interest rate hikes in 2022 and 2023, the European Central Bank and the Bank of England are both on hold. Higher borrowing costs are expected to weigh on business spending decisions in 2024. Proactive digitalisation and decarbonisation agendas should provide support, however, and we can look forward to rate cuts later this year. The Irish government is also undertaking a large-scale capital spending programme to enhance public infrastructure and underpin digital and green transitions. In NI, the restoration of power-sharing and a Stormont Executive should encourage future investment. 3. Inflation is on the retreat Inflation has eased significantly and the passing on of lower wholesale energy prices to household bills and business costs, coupled with the transmission of monetary policy to economic activity, points to further easing ahead. In ROI, an inflation rate of 3.0 percent is forecast for 2024, falling to 2.0 percent in 2025. This downward trend will alleviate pressure on household purchasing power and improve consumer confidence, which bodes well for consumer expenditure. 4. Warm labour markets While the ROI and NI labour markets put in a strong performance in 2023, signs of softening are beginning to emerge and some cooling is likely this year. Nonetheless, unemployment rates are projected to remain low by historical standards and many businesses will continue to experience staff recruitment and retention challenges. Given the tight labour market and some compensation for past inflation, wage increases are also anticipated. This year is shaping up to be one of rate cuts, elevated geopolitical tensions and monumental elections. Yet, amidst these events, households and businesses can likely expect to see some growth across the two economies on the island of Ireland. Loretta O’Sullivan is Chief Economist and Partner at EY Ireland