The Emerging Risk Beneath AI Adoption

Engineering work is inherently tied to complex variables involving the built environment, property, public safety, and economic interests. As AI becomes increasingly integrated into engineering workflows, firms must recognize that the use of AI-assisted tools does not reduce an engineer’s professional responsibility for that work.

Professional Engineers Ontario defines engineering as work involving planning, evaluating, designing, directing, reporting, and supervising. Regardless of the technology used, engineers remain accountable for the accuracy, quality, and integrity of their professional services. In some cases, AI can actually make responsibility more difficult to trace, validate, and defend.

One of the most significant underlying concerns is the rise of “shadow AI”—the use of AI tools by employees within organizations without formal approval, oversight, or documentation. This may include:

• Uploading confidential drawings into public AI platforms such as ChatGPT or Claude;
• Using AI to summarize technical specifications; and
• Drafting reports or recommendations using AI-generated assumptions.

Individually, these moments may appear harmless. Over time, however, they can create significant exposures that impact a firm’s professional judgment, governance standards, and overall integrity.

RELATED: The Impact of AI on Engineering: Best Practices for Risk Management

How Does AI Risk Become a Real Liability Exposure?

The reality is that AI is already being used within many firms—whether formally approved or not. Ignoring that reality does not eliminate the risk. It simply removes an important opportunity to manage and defend against it effectively.

The consequences of unmanaged AI usage extend far beyond the possibility of receiving an incorrect answer from a chatbot. Within engineering firms, AI-related exposures can lead to professional liability claims, costly project rework, confidentiality breaches, contract disputes, regulatory scrutiny, insurance complications, reputational damage, and more.

AI now sits at the intersection of operational efficiency, cyber risk, professional liability, organizational reputation, and contractual compliance. Leadership shouldn’t be treating AI as “just another tool” without considering some key risks, including:

1. Erosion of Professional Judgement

AI can accelerate technical work, but it cannot replace professional expertise. AI systems often generate responses that appear highly confident, even when summaries, recommendations, or calculations are inaccurate or incomplete. If those outputs influence reports, design decisions, client communications, or project recommendations, firms may face allegations that they failed to properly validate their work.

Even when errors are caught before project completion, firms may still incur costs related to delays, redesigns, additional reviews, and strained client relationships.

RELATED: Why Engineers Might Get Sued and What You Can Do About It

2. Weakened Quality Assurance and Oversight

Engineering firms already operate under compressed timelines, tight margins, and increasingly complex project delivery requirements. AI appears to offer a solution by accelerating workflows and reducing administrative burdens. However, without clear governance and formalized policies, firms risk unintentionally weakening the review processes that help ensure work meets professional standards.

When AI is used in the creation of a project deliverable and a firm cannot clearly demonstrate how that work was reviewed and validated, defending a claim becomes significantly more difficult. Importantly, claimants don’t necessarily need to prove that AI directly caused a loss—they may only need to create doubt around whether the firm maintained appropriate quality assurance and professional oversight procedures.

RELATED: 3 Reasons Engineers Shouldn’t Forgo Professional Liability Insurance

3. Cyber

The use of AI technologies lends itself to several cyber risks, especially when it comes to data security and privacy. Any software, whether it involves AI or not, can have vulnerabilities that could be exploited by cyber attackers—which can result in unauthorized access and data breaches. The exposure of confidential data in this way could lead to financial losses, reputational damage, and legal liabilities, and relying on third-part AI services and cloud platforms could heighten your exposures.

AI is “continuously consuming information from users,” including potentially sensitive information. This creates more questions surrounding privacy and confidentiality. Consider this example: your company uses an AI-powered tool that transcribes and summarizes meeting notes. But if the model begins using data for other purposes without user consent or records data outside of meeting hours, that could cause problems for your company. Unless you’ve tested rigorously, you risk unauthorized access or misuse of sensitive data.

RELATED: Unchecked AI: Top Cyber Risks for Businesses

4. Intellectual Property

In the engineering field, designers often navigate complex intellectual property (IP) landscapes, dictated by contracts that specify the ownership and use of the IP created. Additionally, designers often work collaboratively in teams, which further complicates the management of IP.

If designs are being fed into AI models to leverage existing knowledge—that runs the risk of an engineer unintentionally infringing upon the IP rights of a client or another partner, since the AI may reuse this data without the proper authorization. Though reusing an idea is not a problem, reusing an actual design might require the designer to seek permission or pay royalties to another party. In the early stages of AI adoption, tools might not have the capability to manage IP risks effectively, thus necessitating vigilance from users to ensure compliance with IP regulations.

PRO Tips: What can you do? 

The onset of AI technology could revolutionize the day-to-day role of engineers. But new opportunities always come with new risks that require careful oversight. You need to be cautious about the way you incorporate AI, otherwise, you could put your business on the line. And your insurance coverage might not always be there to protect you in the event of a lawsuit.

Why? Involving AI technologies in your professional services could be considered a material change in your operations and your risk profile, especially if you’re using it for client-facing activities. From an insurance standpoint, the uncertainties associated with AI means that insurance providers might see your firm as higher risk. That could lead to premium increases, limited coverage, or even denied claims if you haven’t informed your insurer about your use of AI. In the short term, AI usage may increase your exposure to lawsuits if not properly implemented, and leave you without the protection you need when it counts.

In the complex and dynamic field of engineering, it’s critical to cover all your bases. With ever-evolving technologies and compliance requirements to worry about, what meets your business needs today might not suffice tomorrow. That’s why it’s essential to be proactive and establish a solid risk management strategy to identify, manage, and offload threats. Here are our top tips to integrate AI technologies into your operations and position your firm for success!

1. Look before you leap. 

Whether your firm is just starting to experiment with using AI technologies or you’re already deeply immersed, do your due diligence. Be sure to:

• Define your engagement level. Determine how extensively you want to leverage AI and set specific goals and objectives.
• Engage all relevant parties in your organization, including your internal design team or any contractors you employ, to identify risks and develop strategic action plans for responsible AI development, deployment, and usage.
• Before adopting any third-party AI tools, carefully test the processes and investigate the provider’s expertise, reputation, and track record.
• Consult an expert when additional guidance is needed, particularly for any legal concerns related to AI implementation.
• Stay up-to-date on new trends, tools, and best practices within the engineering industry. This will enable you to adapt your AI strategy and mitigate risks accordingly.

Once your risks have been identified, you can then develop tailored strategies to manage and contain them.

RELATED: D&O Insurance: Sail Through Troubled Waters With Confidence

2. Document everything well.

By implementing comprehensive documentation practices, engineering firms can boost transparency and accountability, minimizing many of the risks associated with the use of AI systems. Proper documentation helps to ensure compliance with industry standards and regulatory requirements, as well as minimizing downtime when identifying and fixing any issues that may arise. Engineering firms should:

• Keep robust records of calculations, code, algorithms, and system architectures created with the aid of AI in any capacity.
• Monitor AI outputs, cross-check important information, and be prepared to intervene if an AI system produces questionable or unsafe recommendations.
• Employ strong data security measures and efficient debugging and maintenance processes to ensure the protection of your intellectual property and support the long-term reliability of AI-supported systems.

RELATED: Unchecked AI: Top Cyber Risks for Businesses

3. Train your staff.

Continuous learning and adaptation are necessary to keep up with the ongoing advancement of technology and harness the full potential of AI in engineering. It’s crucial for firms to:

• Encourage and facilitate learning and development opportunities for the skills necessary to use AI tools and supervise AI work.
• Invest in retraining and upskilling programs for employees to prepare them for new roles in an AI-augmented workplace.
• Establish ethical guidelines for AI development and use, and engage in regular ethical reviews of projects completed with the use of AI.
• Integrate ethics and regulatory training into engineering education and ongoing professional development.
• Promote a culture of continuous learning to keep pace with rapid AI advancements in the engineering field.

RELATED: All Aboard: Onboarding Risk Management for Engineers

4. Implement quality control procedures.

As an engineer, you’re well aware that even a single mistake could have massive consequences. That’s why implementing best practices for the review of work is integral for any engineering firm—and it becomes even more essential after incorporating AI into the process. You might already have some in place, but here are our top guidelines to boost AI quality control and minimize errors:

• Ensure that all AI-assisted outputs are independently reviewed and verified by at least two or more qualified engineers. Keep in mind that AI cannot and should not replace human judgment.
• Develop and document quality control protocols, including steps for data validation, output accuracy, and model verification—and regularly update them to incorporate new insights and technological advancements.
• Conduct regular audits of AI systems and their outputs to verify compliance with quality standards.
• Promote an iterative approach to development, continuing to refine outputs and checking/rechecking your work.
• Maintain transparent communication within your team to share best practices and encourage open discussion of AI-related challenges, limitations, and risks.

RELATED: 3 Common Engineering Mistakes—and How You Can Avoid Them

5. Review your insurance.

Insurance may not be top of mind when it comes to the AI implementation process, but it’s crucial to the well-being of your business. Even a groundless claim can require hours of costly litigation—valuable resources that could be better spent on growing your firm. In addition to costs, lawsuits can also destroy your reputation, deterring potential clients.

With the right protection in your back pocket, you’ll be able to protect the financial well-being and reputation of your company in the case of legal action. But make sure to maintain transparency with your insurance provider. However you choose to incorporate AI, keep your insurer in the loop every step of the way. This will help you ensure coverage for any AI-related risks and identify limitations ahead of time.

Plus, your insurance broker can also advise you on any additional coverages to offer greater protection for any new risks that crop up, and allow you to start your AI journey with confidence.

6. Work with a broker that understands the unique needs of the engineering space.

Each firm will experience the impact of AI differently, and the right risk management strategy for your needs will depend on a variety of factors—including your engineering specialty, operations, and the specific systems you’re working with.

That’s why it’s critical to work with a risk advisor that specializes in the engineering & design sector. With over 40 years of experience, a licensed broker like PROLINK can help you navigate the changing AI landscape and become resilient in the face of change. Our dedicated advisors will:

• Keep you informed about emerging threats, legislation, and innovations that could affect you and share what steps other firms in your industry are taking;
• Provide you with comprehensive insurance and risk management solutions that align with your business goals and budget;
• Regularly reassess your exposures and readjust your strategy to scale with your leadership, people, and processes.

AI is transforming the engineering landscape by enhancing design workflows, increasing efficiency, creating more space for creativity, and allowing firms to truly leverage the collective knowledge and experience of the entire firm. It’s here to stay, regardless of how you feel about it—but by understanding your risks with a dedicated partner by your side every step of the way, you can operate with confidence and stay ahead, no matter what new developments come your way. You can work to control your exposures—and your costs—long-term. You can focus on what’s most important: your business.

To learn more, connect with PROLINK today!