Companies are implementing AI technology at a breakneck pace — and changing the dynamics of the global economy itself.

Across industries, AI has moved from a niche tool to a critical driver, helping improve customer service efficiency, decrease costs and ultimately boost the bottom line. Nearly 80% of global company leaders say their organization uses AI technology in some form; executives estimate 70% of their workforces will use AI to “automate or augment some of their job tasks” by 2028.1

But as AI adoption accelerates, companies operating globally or planning to do so should recognize the new risks this technology.

Risks of AI’s economic impact

AI introduces new types of risk exposures that take on greater impact for organizations with a global footprint. Some of the issues companies need to address when leveraging AI include:

Data privacy and global privacy regulations. Companies that capture and store personal data using AI must meet the individual data privacy protection requirements of each country in which they conduct business or communicate with customers. Failing to comply with the patchwork of global privacy and security laws – such as the European Union’s General Data Protection Regulation (GDPR), which has by far the strictest laws, and the APEC (Asia-Pacific Economic Cooperation) Privacy Framework – can result in serious fines, penalties or both.

Reputational risks and brand integrity. AI breaches and misuses can tarnish an organization’s brand. Examples like the ones below are real scenarios that have occurred at prominent companies:

  • Data breaches resulting in compromised employee or customer data
  • AI or software errors causing large-scale service disruptions to customers and vendors
  • Significant downsizing of labor forces due to AI automation

All of the above can put an organization’s reputation at risk: They may be seen as careless with data, unconcerned about customer service and unsympathetic to employees — putting profits over people. Addressing these types of reputational risks with proactive crisis management and a comprehensive insurance strategy can help protect a company’s long-term brand integrity.

Cyber risks

AI can open a whole new set of vulnerabilities. AI-driven automation systems, for example, can be hacked, leading to business disruptions or even manipulation of operating systems. The rise of deepfake technology also poses significant risks when bad actors utilize AI to mimic corporate executives or employees to authorize fraudulent transactions.

Insurance policy gaps. When companies take on new risks or change how they operate, they must consult with their insurance broker to ensure they have the right coverage for any new or unforeseen exposures. Standard business liability or cyber policies may not account for AI threats, necessitating specialized coverage that includes AI-specific risks.

For example, transportation companies trying autonomous vehicles shouldn’t just secure liability insurance for potential mishaps as in the past. They will also need cyber liability coverage for possible technology failures and the potential of autonomous vehicles being hacked. Similarly, original equipment manufacturer (OEM) risks have transferred to a products/cyber risk focus, removing some of the liability from end users and customers who would otherwise typically be responsible for an accident, and have their auto liability and collision coverage triggered.

Geopolitical. The geopolitical climate is also cause for caution — such as when bad actors leverage AI to make political statements or even undertake acts of terrorism. Companies should be on high alert for potential hacking of their systems and/or use of their products to launch terrorist attacks. The incidents in Lebanon with exploding handheld mobile devices is example of the magnitude of damage that can be done.

The role of risk management

Companies need an AI risk management strategy that incorporates data analytics about technology trends and potential exposures. An effective strategy includes a cross-functional task force of IT, legal and insurance professionals to manage potential crises and help minimize financial penalties and reputational damage.

Continuous education and training are essential to keep your company informed about evolving AI-related risks and regulatory changes. Organizations should turn to their insurance broker — who needs to have access to a global network of experts — to help them stay ahead of regulatory requirements in new markets and industry-specific challenges.

Contact HUB’s Global Risk Solutions experts to optimize insurance coverage to help your organization manage risk while maximizing AI’s potential.

1 UKG.com, “AI at Work: It’s Here and It’s Working, Whether You Know It or Not,” October 24, 2023.