The recent breakthroughs in AI (Artificial Intelligence) and its deployment across industries could have broader ramifications for enterprises. As AI becomes more capable with each passing day, corporations are increasingly worried about the dangerous consequences of its fast-paced developments. AI-related risks could harm businesses and lead to reputational damages; thus, AI as a risk factor has seen a spike in SEC disclosures.
To capture AI-related risks, TipRanks scanned through the risk disclosures of companies filed with the SEC (Form 10-K and Form 10-Q) since 2016 and found out that enterprises are increasingly mentioning AI as a risk.
AI Risks – Monumental Growth
Our data shows that the number of risk reports including mention of AI marked a whopping increase of 646% since 2018. Meanwhile, it increased by 52%, 42%, and 63% year-over-year in 2021, 2022, and 2023 (as expected), respectively.
Further, the reporting of AI-related risks increased by 131%, 31%, and 63% in 2021, 2022, and 2023 (expected), respectively.
AI Risks – Expected to Continue Rising
The AI boom following the success of OpenAI’s ChatGPT, its rapid adoption, the increase in the number of firms offering AI-related tools, and multi-billion-dollar investments in this space suggest that this may just be the start.
Top tech companies like Alphabet (NASDAQ:GOOGL)(NASDAQ:GOOG) and Microsoft (NASDAQ:MSFT) are already communicating the risks related to AI to their shareholders. Their annual SEC filings highlighted that ongoing investments in new technologies like AI are inherently risky and could harm their businesses, operating results, and financial conditions.
Meanwhile, Nvidia (NASDAQ:NVDA), which has significantly benefitted from the AI evolution, revealed that the risks associated with the responsible use of its AI tech might result in reputational and financial loss.
AI is viewed as a transformational technology that could boost innovation and product development. Also, it could offer compelling productivity savings to enterprises. Thus, the number of AI risk disclosures is only expected to increase from here.
Further, the number of enterprises using AI at the maturity level (not just experimenting with the technology) is set to increase, which will again drive the disclosures.
TipRanks’ Risk Analysis Tool
The rise of AI brings solid long-term investment opportunities. However, investors should take caution and keep an eye on the evolving risk factors related to AI to make informed investment decisions.
While it’s essential to be mindful while managing investment risks, keeping a tab on the new ones could be tedious and challenging. Thus, investors could leverage TipRanks’ Risk Analysis tool to stay up-to-date with the changing risk scenario.
TipRanks’ Risk Analysis tool enables investors to fully understand all the possible risks related to a stock. It categorizes risks on the basis of its proprietary classification algorithms and machine learning. Moreover, it benchmarks these risks against the sector average, revealing which stock has more risk in a particular category.
Besides for the Risk Analysis, investors can use TipRanks’ other valuable data sets, like its Experts Center tool, to research with ease and invest.
