Artificial Intelligence & Innovation In Predictions

Artificial Intelligence is changing the way we live our daily lives and how we do business. In virtually every sector. It affects our decisions, lifestyles and professions. If you are reading this article, and breathing, you most likely own a smartphone. And if I had to make a guess, you’re likely reading this blog on your smartphone. And if you’re using your smartphone, you’re interacting with AI whether you know it or not. And how about those time-sucking “machines” we find in social media apps? Even if you are living under a rock, there’s a good chance you are tweeting from underneath it. If you use social media, many of your decisions are being impacted by Artificial Intelligence. Whether it’s the feeds you see in your timeline to the notifications you receive from these apps, everything is created by AI. There’s really no better display of AI than what we see on many of our highways – smart cars. Just a few years back, using a fully automatic car was a Jetsons-like dream. However, now, companies like Tesla, have made so much progress that we already have a fleet of semi-automatic cars on the roads. Artificial Intelligence is creating an opportunity to do things we’ve never done. With this reality, comes much hype around how AI is going to transform society in almost apocalyptic ways. Images of the movie Terminator 2 come to mind as we contemplate machines with the ability to learn and adapt. The fear is these liquid metal robots might force us out of our jobs. Yet, despite our human tendency to jump to extremes, the truth about AI is more nuanced than what we hear in the news. In recent studies related to AI, it’s noted that technological change has had the primary effect of making things cheap that were once expensive. So in the short run, we can expect AI’s impact to make at least some things less expensive. Specifically, the art of prediction. Prediction is the process of filling in the missing information. It takes the information you have and uses it to generate information you don’t. But prediction isn’t just about the future. The ability to see otherwise hidden information can be about the past, present or future. Its predictive nature is shown in the fact that the answer is more or less probable. Therefore we need to bear in mind that prediction isn’t always tied to future events. Traditionally, the prediction has been used for tasks like inventory management and demand forecasting. However, with its costs falling, it’s now being used for non-traditional problems, like transportation – the smart cars we talked about above. By reframing questions around self-driving vehicles, engineers have gone beyond the simple “what if” scenarios to ask questions like, “What would a human do?” Artificial Intelligence learns to drive by predicting what a human driver would do given specific road conditions. The keyway it accomplishes this is through, what is referred to as, machine learning, which gives the machine the ability to take information and “learn” relationships among the various data types. From there it can make predictions and classifications depending on what questions are asked. Innovations in prediction are impacting very different industries. For a look into some of these industries, along with what to expect in the world of accounting and financial reporting, check out our more in-depth white paper on Artificial Intelligence: How It’s Impacting Accountants & Financial Reporting.