Fortune 500 companies reporting AI risks up 473.5%

According to a report by research firm Arize AI, the number of Fortune 500 companies citing AI as a risk has reached 281. This represents 56.2% of companies and a 473.5% increase from the previous year, when only 49 of companies have signaled the risks of AI.

“If the Fortune 500’s annual reports make one thing clear, it’s that the impact of generative AI is being felt across a wide range of industries—even those that aren’t yet embracing the technology,” the report said. “With most mentions of AI being a risk factor, there’s a real opportunity for businesses to stand out by highlighting their innovation and providing context on how they’re using generative AI.”

Certainly, the jump in warnings also coincides with the explosion of awareness and interest in AI following OpenAI’s launch of ChatGPT in late 2022. The number of companies that made any mention of AI increased by 152% to 323.

Now that artificial intelligence is fully on America’s corporate radar, the risks and opportunities are coming into focus, with companies revealing where they see the potential downsides.

But some companies are more concerned than others. Leading the way was the media and entertainment industry, with 91.7 percent of Fortune 500 companies in that sector citing AI risks, according to Arise. That’s because AI has swept the industry as performers and companies look to protect themselves against the new technology.

“New technological developments, including the development and use of generative artificial intelligence, are evolving rapidly,” streaming leader Netflix said in its annual report. “If our competitors gain an advantage by using such technologies, our ability to compete effectively and our results of operations could be adversely affected.”

Hollywood giant Disney said the rules governing new technologies such as generative artificial intelligence are “unsettled” and could ultimately affect revenue streams for using its intellectual property and how it creates products. entertainment.

Arise said 86.4% of software and technology companies, 70% of telecoms, 65.1% of healthcare companies, 62.7% of financial companies and 60% of retailers also warned.

In contrast, only 18.8% of automotive companies reported AI risks, along with 37.3% of energy firms and 39.7% of manufacturers.

Warnings have also come from companies incorporating AI into their products. Motorola said that “AI may not always work as intended, and data sets may be insufficient or contain illegal, biased, harmful or offensive information that could negatively impact our results of operations, business reputation or acceptance by customers of our AI offerings”.

Salesforce pointed to AI and its Customer 360 platform, which provides customer insights to customers: “If we enable or offer solutions that cause controversy because of their perceived or actual impact on human rights, privacy, employment or other social contexts, we may suffer a new or improved governmental or regulatory control, brand or reputational harm, competitive harm or legal liability.”

AI has also been flagged as a risk when it comes to cybersecurity and data breaches. In fact, the recent Def Con security conference highlighted the importance of artificial intelligence in cyber security.

Meanwhile, a study published in the Journal of Hospitality Market and Management in June found that consumers were less interested in buying an item if it was labeled with the term “AI.”

Consumers need to be convinced of the benefits of AI in a given product, according to Dogan Gursoy, a professor of hospitality management at Washington State University’s Carson College of Business and one of the study’s authors.

“A lot of people ask, ‘Why do I need AI in my coffee maker, or why do I need AI in my refrigerator or my vacuum cleaner?'” he said. wealth at the beginning of this month.