AI is everywhere these days\u2014and that means so is AI risk.<\/p>\n
Among S&P 500 companies, 72% mentioned AI as a\u00a0material risk<\/a>\u00a0on their Form 10-Ks this year, the Conference Board found, up from 58% last year and 12% in 2023. The shift is reflective of how AI use within business has matured from the experimental to the widespread, the organization wrote in a report. (The Conference Board\u2019s report defines \u201cAI\u201d broadly, including not only LLMs but also robotics, automation, machine learning, and other types of AI.)<\/p>\n The companies most likely to disclose AI risk were those in \u201cfrontline adopter\u201d industries, such as the\u00a0finance<\/a>,\u00a0healthcare<\/a>, industrial,\u00a0IT<\/a>, and consumer discretionary sectors.<\/p>\n S&P companies were most concerned about the reputational risks of AI, the Conference Board reported; 38% of them disclosed potential reputational threats from AI on their 10-Ks. Forty-five companies mentioned \u201cimplementation and adoption\u201d risks, such as overpromising on AI projects or AI not meeting expectations, while 42 stated that consumer-facing AI was a risk. Other reputational risks companies mentioned included privacy and data risks, hallucinations, competitive threats, and issues with bias and fairness.<\/p>\n One in five S&P companies mentioned AI-related threats to cybersecurity as a risk on annual filings. While 40 companies simply stated that cybersecurity in general was a risk, 18 called out third party or vendor risks, and 17 said\u00a0data breaches<\/a>\u00a0were a risk.<\/p>\n Companies also foresaw\u00a0potential compliance risks<\/a>\u00a0from AI. Forty-one listed \u201cevolving regulation and uncertainty\u201d as a risk area, and some specifically referred to the EU AI Act, which has steep penalties for noncompliance.<\/p>\n This report was originally published<\/a> by CFO Brew<\/a>.\n<\/p>\n