Navigating optimism and risk in the AI revolution

Leaders aren’t blind to risks in the year ahead, they’ve certainly had plenty to deal with, and volatility has become the new norm, making it increasingly difficult to plan with certainty. Rapid advances in AI and other emerging technologies, combined with shifts in global trade, are reshaping even the most modern and adaptable business models.

It’s encouraging to see such high levels of optimism among C-suite executives in the barometer this year. Though I welcome the positive view, over-optimism or tick- box compliance will not be adequate in a world with so many ongoing changes. Leaders need to be wary of hidden risks that may not only impact their organisations, but have wider implications with stakeholders, customers and clients, and regulators.

Recognising emerging risks and being prepared

Effective risk management requires real creativity, business collaboration and practicality. Leaders need, now more than ever, a strong risk advisor to help navigate the potential consequences arising from key decisions and a well understood risk appetite framework to enable agile decisions to be taken at the right level in the company.  

Organisations need a strategic risk officer or advisor who is well networked externally, tech savvy, understands the business deeply, able to challenge and hold leaders to account, and collaborates effectively across the enterprise.

Understanding and bringing clarity to the organisation on the full suite of levers available is a new imperative, which links horizon scanning, strategy, resilience, insurance, risk appetite and controls, and keeps a weather eye open for opportunity. Global considerations alongside local action needs increasing agility as well as a clear understanding of how geopolitical and digital considerations play into transformation or expansion opportunities – this is key.  

Balancing strategic technology investments with ethical foresight

As businesses around the world continue to evolve and invest in the value that technology (like AI) can bring, we can see from our barometer that there are core components missing from these strategic investments that will ultimately impact their level of return. From an efficiency perspective, the returns in AI adoption may feel immediate and transformative. Longer-term, ethical foresight will outweigh these short-term advantages. Regulatory compliance is driving ethical structure and transparency around AI but enforcing it and ensuring organisation-wide awareness is still a challenge.

Responsible use of tech and avoiding the hidden risks associated with it is reliant on organisations and their leadership to drive it, something that is unfortunately too low in terms of transformation strategy priorities – only 18% of C-suite executives include responsible use and regulatory compliance as a priority investment in their transformation strategies and only 17% include governance. It is crucial to have a thorough risk assessments approach and safeguards in place as early as possible, not after widespread adoption across the company.

This may sound simple, but it involves clarity of strategy, organisational design and ways of working that are aligned to it, with policy, approach and procedure fully embedded in a regulatory compliant manner.