Artificial intelligence (AI) continues to change how work gets done, with a deep impact on the employment landscape and implications for both highly skilled and less experienced workers and their employers. Though AI is disrupting employment, its potential for productivity gains is significant. According to McKinsey, AI could add up to $4.4 trillion annually to the world economy, making it the biggest commercial opportunity since the dawn of the internet. Yet AI also changes organizations’ risk profiles, from increased cyber exposures to new regulatory and reputational risks.
The growing use of AI
We’re already seeing how generative AI (GenAI) can quickly create content based on vast amounts of information, while agentic AI can complete more complex tasks that require specialized applications. Yet much of AI’s potential has yet to be imagined. AI can:
- Increase efficiency and productivity: AI can automate repetitive tasks, enabling businesses to streamline operations and allocate resources more effectively
- Enhance customer and employee experience: AI-powered chatbots and virtual assistants can provide personalized and round-the-clock customer support, though they also can lead to impersonal and frustrating customer experiences that can tarnish brands
- Improve analytics: AI can analyze vast datasets quickly, uncovering patterns and trends that humans may miss. This helps organizations make better data-driven decisions and identify gaps in workforce skills or markets. For example, we recently worked with a client to pilot AI-supported job evaluations after an acquisition
- Reduce healthcare costs: AI is revolutionizing healthcare by enabling more personalized, efficient and predictive solutions. It promises to help employers control healthcare costs, improve the employee experience and create a healthier and more engaged workforce
- Aid innovation: AI creates opportunities for businesses to develop innovative products and services as well as explore new business models that were previously unfeasible
AI risks
But with any change comes new risks and boards recognize AI as a leading risk, according to our Global Directors' and Officer' Survey Report 2024/2025 — Artificial Intelligence.
- Legal and reputational risks: AI systems can perpetuate biases and discrimination if not properly designed and monitored. This can lead to legal and reputational risks for businesses
- Patchwork of regulation: As is typical for tech, regulation is both forthcoming and lagging on the heels of AI’s trailblazing path. While the EU has acted relatively quickly, other jurisdictions aren't, creating a patchwork of AI regulations and confusion among businesses
- Job displacement/skills shortages: Automation powered by AI can replace certain job roles, leading to potential unemployment and social disruption. In addition, the lack of sufficient highly skilled individuals to implement AI limits its efficacy and compromises return on investment as well as AI’s ability to meet expectations
- Data privacy and security: AI relies on vast amounts of data. If it’s not secure, data breaches, cybercrime and the loss of sensitive information can create a range of problems with far-reaching implications. AI can be used to create malware that exploits current data-security vulnerabilities, while quantum computing can overcome traditional encryption methods. Proper governance and training can help avoid some of these AI risks
- Misinformation/disinformation, hallucinations and gray-zone attacks: Though generative AI’s ability to answer questions accurately is improving, it's still prone to “hallucinations,” where large language models seemingly “imagine” incorrect “facts.”
AI also enables gray-zone and other actors with malicious intent to fabricate information that can be used to manipulate public opinion, foment discord and lead to social and political unrest - Lack of transparency: Complex AI algorithms can be difficult to interpret, making it challenging to understand how decisions are made. This lack of transparency can raise concerns about accountability and trust
- Climate impact: AI and data centers are boosting energy demand. Fossil fuels are primarily filling the energy demand, affecting the sustainability goals of leading technology companies. Solutions range from transitioning to nuclear energy to green AI
Managing these risks will require sophisticated new governance protocols for different types of risks that depend on specific use cases.
Explore our insights to understand how you can use AI to create opportunities, improve productivity and mitigate risk.
