TheCorporateCounsel.net

According to a new report from Arize AI, the number of Fortune 500 companies citing AI-related risk factors in their annual reports has increased by nearly 500% since 2022, with 281 companies currently addressing AI in their risk disclosures.  The report says that media and entertainment (92%), software and technology (86%), telecommunications (70%), healthcare (65%) and financial services (63%) lead all other industries in disclosing risks from AI.

The report also includes excerpts from various categories of corporate risk factor disclosures, including competitive risks, regulatory risks, security risks, and what the report calls “general harms”.  This latter category encompasses “physical, reputational, or other harms to company or its stakeholders from AI”. Here’s an example of this general harm risk disclosure from Motorola’s annual report:

As we increasingly build AI, including generative AI, into our offerings, we may enable or offer solutions that draw controversy due to their actual or perceived impact on social and ethical issues resulting from the use of new and evolving AI in such offerings. AI may not always operate as intended and datasets may be insufficient or contain illegal, biased, harmful or offensive information, which could negatively impact our results of operations, business reputation or customers’ acceptance of our AI offerings.

Although we work to responsibly meet our customers’ needs for products and services that use AI, including through AI governance programs and internal technology oversight committees, we may still suffer reputational or competitive damage as a result of any inconsistencies in the application of the technology or ethical concerns, both of which may generate negative publicity.

– John Jenkins