We are certainly continuing to live in “interesting times.” Even when we feel as though the volume and velocity of risks can’t possibly accelerate further, they do. The past 12 months have seen US companies reacting to numerous cyber events, unprecedented political activity, conflicts in the Middle East and Europe, fluctuations in the US economy, and an increase in artificial intelligence (AI) capabilities. That’s to say nothing of accelerating extreme weather events, regulatory changes, and the continued rise of stakeholder and social activism.
In light of this ever more complex risk environment, what do the largest US public companies view as their most material risks? Deloitte and the USC Marshall School of Business Peter Arkley Institute for Risk Management (USC Marshall Peter Arkley Institute for Risk Management) have completed our fourth year of analysis of annual risk factor disclosures of Standard & Poor’s (S&P) 500 companies. The results show a continued trend toward more extensive risk factor disclosures to reflect this complex environment, even though the SEC’s risk reporting reforms in 2020 [1] sought to simplify and reduce the volume of risk factor disclosures.
This year, we conducted a deeper review of risk factors mentioning AI, complementing our deeper reviews in previous years of cybersecurity risks and climate-related risks. Over 60% of the S&P 500 companies reviewed believe they have material risks around AI, and this wasn’t restricted to the Information Technology sector – companies in all sectors disclosed AI risks relating to cybersecurity, competition, innovation, regulatory, intellectual property, ethical, and/or reputational risks. Numerous companies disclosed multiple AI-related risks this year, with 20% of companies disclosing three or more AI-related risks. Clearly, the AI revolution is well and truly underway and posing challenges for many companies in their ability to manage the associated risks.
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{Categories} _Category: Implications{/Categories}
{URL}https://corpgov.law.harvard.edu/2024/11/20/largest-companies-view-ai-as-a-risk-multiplier/{/URL}
{Author}unknown{/Author}
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{Keywords}Practitioner Publications,Artificial intelligence,Cybersecurity,S&P 500,SEC{/Keywords}
{Source}Implications{/Source}
{Thumb}{/Thumb}