The essentials of AI risk

Artificial Intelligence (AI) has become a frequent topic of conversations with our clients, who are curious to understand how it’s going to impact them and their risk management. When examining the details of advancements in AI over the past couple of years, it has become evident to everyone, particularly since the release of ChatGPT, that there has been a leap in the capabilities of certain types of AI.

In this whitepaper and wider series, we’ve attempted to distil what Generative AI (‘GenAI’) is, where it’s going, and how it’s likely to affect businesses and the wider economic and political environment. On its surface, AI seems to be just another technological advancement that organisations must respond to – for now, that’s likely an accurate assertion. Over the longer term though, the advancement of Generative AI, Machine Learning, and other types of decision-making engines using deep learning and neural networks are likely to herald a change as transformational as the explosion of the internet in the 1990s and mobile devices in the 2000s. This transformation brings both risks and opportunities which we explore throughout the series.

We’ve also tried to outline how the emergence of AI technologies is changing the threat environment – particularly at the geopolitical level and in the cyber domain – and how this change in the risk exposure of companies and economies may galvanise regulator involvement. Landmark regulation and legislation are already being considered and enacted in the United States, United Kingdom, and most importantly the European Union – the latter being a common source of legislative direction for many countries around the world.

Investment into artificial intelligence in recent years has topped $300 billion, with technology behemoths like Meta, Apple, Alphabet, Microsoft and Amazon leading the charge. The investment and strategic decisions made by this group, which now makes up around 26% of the S&P 500 index and over 50% of the Nasdaq, have an outsized impact on the operating environment for businesses in every sector, and in every jurisdiction. Investment by these companies, and at this level, in a single frontier technology is unprecedented. But will the bet pay off?