How Do You Manage Unknown Risk?
How Do You Manage Unknown Risk?
"The new risk is the unknown risk!"
I had an interesting session in Boston yesterday with a group of corporate risk managers from a vast number of Fortune 500 companies, as well as a large group of insurance executives who serve their industries. The topic, of course, was the acceleration of AI and the new and dramatic corporate risk issues that are emerging as a result.
New risk? It's now emerging faster than ever before, and now sometimes takes on increasingly bizarre forms.
Here's the thing - I'm always modifying my slide deck up to the last minute and had a section that would go over the new types of risk that is emerging with this fast-moving technology. But I left that section blank up until the day before as I thought through the best way to try to describe what is happening with the 'future of risk.'
And then, like clockwork, a fascinating article floated across my news clipping service that is almost too bizarre to be true.
Here's a quick overview of what happened in Australia:
A Senate committee has warned artificial intelligence may have seriously undermined its integrity, after consultancy giant KPMG lodged an official complaint about factually inaccurate information receiving parliamentary privilege.
A group of academics has apologised to the big four consultancy firms after their submission to an inquiry contained false allegations of serious wrongdoing, which were collated by an AI tool and not factchecked.
One academic has claimed responsibility for the errors, generated by the Google Bard AI tool, which produced case studies that never occurred and cited them as examples of why structural reform was needed.
KPMG lodges complaint after AI-generated material was used to implicate them in non-existent scandals
The Guardian, November 3, 2023
Here's the kicker:
The submission accused firms of involvement in scandals that either didn’t exist or that they had nothing to do with. It referenced partners being dismissed by firms that had never employed them.
KPMG lodges complaint after AI-generated material was used to implicate them in non-existent scandals
The Guardian, November 3, 2023
How do you even try to guard against this type of new risk? Companies are now in a situation in which they can be accused of being involved in a scandal that simply does not yet exist because of some entirely bogus information. We all know that AI has a marvelous ability to generate all kinds of useful information, and yet at the same time we know it to be a useful tool, we also all know that this information can be full of errors.
Increasingly, AI-generated misinformation presents an unknown form of new risk that must be managed.
How do you manage what you might not even be able to anticipate? That's the new risk management challenge, and it promises to provide everyone with rather new, unique, and increasingly bizarre circumstances! It's no longer just managing the new and known risk - it's about having to manage the new and increasingly unknown risk!
Futurist Jim Carroll has been speaking about the 'future of risk' in keynotes going back to 1993.