Make sure the threats of AI do not outweigh the opportunities
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Artificial Intelligence (AI) now touches on almost every business, even when the business is not the one applying it. AI systems can have tremendous benefits for society with exponential productivity boosts, dramatic cost savings and increased profitability. PWC has estimated that AI could contribute up to $15.7 trillion to the global economy by 2030.
However, there are inherent property, privacy, professional liability, and cybersecurity risks their use brings. It is likely we will see new risk pools emerge as a result of the rapid transformation of the global economy resulting from digitisation, automation and AI.
It can be tempting to think of risks from AI as science fiction fantasy along the lines of the apocalyptic Terminator film franchise. With AI impacting almost every area of our life the risks are very present, but unlike for property or casualty they are not always easily quantifiable. For one, given the relative "newness" of AI, the risks are not well understood, and even where they are, there is not enough relevant data to build robust models that can quantify those risks.
This is compounded by a lack of material available to help them understand the risk. The educational materials that are so readily available for risks such as property damage are simply not there to the same extent for AI.
Risk profiles are changing. Risk engineers at insurance companies and brokers, can help. A good risk engineer can look beyond simple risk transfer to guide risk managers through the process of assessing the risk as well as facilitating access to third party specialists. However, there is a knowledge gap at present, which needs to be addressed. Even when a risk manager does understand the risks posed by AI, they may find that risk transfer is a lot harder to secure.
The insurance industry and the companies they serve need to form partnerships to overcome this challenge. By partnering with corporates, insurance companies can work in partnership to get the data they need so they can provide the insights and risk transfer that is necessary.
In our most recent article, we look at what AI is, how it is being used, what the risks are and how risk managers can help to mitigate these risks.