Arize AI, 281 out of the 500 largest U.S. corporations, or 56.2%, now list artificial intelligence as a risk factor in their annual reports. This is a significant increase from just 49 companies last year, marking a 473.5% rise. The report underscores that if the annual reports of the Fortune 500 in the US can convey one thing, it’s that many industries are feeling the impact of generative AI, even those that have yet to embrace the technology. Given that most corporations are treating AI as a risk factor, there is an opportunity for businesses to stand out by emphasizing their innovation and providing scenarios on how they use generative AI.
The surge in warnings aligns with the explosive growth in awareness and interest in AI following the release of ChatGPT by OpenAI at the end of 2022. The number of companies mentioning AI has increased by 152%, reaching 323 companies. Now, AI has become a focal point of concern for U.S. businesses, with companies disclosing their perceived negative impacts.
Some sectors are more concerned than others. According to Arize, the media and entertainment industry is the most anxious, with 91.7% of Fortune 500 companies in this sector recognizing AI as a risk. As performers and companies seek to mitigate this new technology, AI has permeated the entire industry.
Streaming giant Netflix noted in its annual report that the rapid development of new technologies, including generative AI, could negatively impact our competitive position and operating performance if our competitors gain advantages through the use of these technologies.
Disney, the Hollywood giant, stated that it is uncertain how regulations will be established for generative AI and other new technologies, which could eventually affect its revenue streams from the use of intellectual property and the creation of entertainment products.
Arize found that 86.4% of software and tech companies, 70% of telecom companies, 65.1% of healthcare companies, 62.7% of financial companies, and 60% of retailers also issued AI risk warnings. In contrast, only 18.8% of automotive companies, 37.3% of energy companies, and 39.7% of manufacturers issued AI risk warnings.
These warnings also come from companies that have integrated AI into their products. Motorola stated, AI may not always operate as expected, with insufficient or illegal, biased, harmful, or offensive information in the dataset, potentially affecting our operating performance, business reputation, or customer acceptance of our AI products.
Salesforce noted that if our empowered or provided solutions are perceived or have real impacts on human rights, privacy, employment, or other social environments, we may face new or intensified government or regulatory scrutiny, brand or reputation damage, competitive harm, or legal liabilities.
In cybersecurity and data breaches, AI is also viewed as a risk. The Def Con security conference highlighted AI’s importance in cybersecurity.
Meanwhile, a study published in the Journal of Hospitality Market and Management in June found that consumer interest in purchasing products labeled as AI decreases.
Dogan Gursoy, a professor of hotel management at the Carson College of Business at Washington State University and one of the study’s authors, stated that convincing consumers of the benefits of AI in specific products is necessary. Many people ask, ‘Why does my coffee maker need AI, or why does my refrigerator or vacuum cleaner need AI?’ he said in an earlier interview with Fortune magazine.
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