The number of Fortune 500 companies citing AI as a business risk in company reports has gone up by nearly 500% since 2022.

So says Arize AI, an artificial intelligence engineering platform, which has scrutinised the most recent shareholder reports from Fortune 500 companies.

Nearly 60% of companies flagged AI as a business risk in 2023 – an increase of 473% from the previous year.

In total, 281 Fortune 500 companies cited AI as a risk factor in their latest annual reports, up from 49 just one year earlier. 

Of course, public companies have to slather their annual reports with disclaimers, especially when it comes to risks which could largely be hypothetical.

However, the sextrupling of mentions of AI as a corporate risk factor is a weather vane as to the increasing importance of artificial intelligence.

The number of companies that referred to AI – both good and bad – leapt by 152% to 323. 

Businesses most worried about AI

But certain companies are more worried than others.

Nearly 92% of Fortune 500 media and entertainment businesses cited AI risks to their businesses. 

Disney, for example, said that new technologies such as developments in generative AI “remain unsettled” and these developments could affect its existing business model “including revenue streams for the use of our IP”.

And Netflix worried that rapidly evolving generative AI could give its competitors an advantage, undermining its ability to compete effectively and how it operates.

Software and tech companies (86%), telecoms businesses (70%), healthcare companies (65%), financial houses (63%) and 60% of retailers were also spooked.

By contrast, just 18.8% of car companies flagged AI as a risk, along with 37% of energy firms and 39% of manufacturers.

In total, over half (65%) of Fortune 500 companies mentioned AI in their most recent annual report, with over one in five enterprises specifically referencing generative AI. 

Over two thirds (67%) of developers and machine learning teams plan to deploy generative AI in these Fortune 500 companies at some capacity this year. 

This could be in anything from speeding up drug discovery to accelerating software deployment. 

More than one in ten (14%) are already deploying large-language model (LLM) systems.

What are the risks AI poses?

As to what these risks actually are, 76% of C-suite executives of billion-dollar companies surveyed by KPMG in its latest generative AI report cited data privacy and security. 

The second-biggest worry according to these business leaders is being so dependent on external partners and their resources (58%) and the risk of not being compliant with regulations (52%).

On a more positive note, 78% of the 225 C-suite and senior business leaders surveyed by KPMG were confident they will see returns on their investments in generative AI within one to three years.

This tallies with a Gartner report published in August in which 90% of CEOs agreed that AI will boost revenue over the next couple of years. 

Generative AI is being used in industries with a high demand for data analysis and management. 

Sectors that saw significant use of generative AI include inventory management (64%), healthcare and life sciences (57%), media and telecommunications (43%).

Use cases were more evenly spread, with 45% citing IT and technology - especially query support - and 42% citing product development, 41% identifying trends and patterns in marketing and sales, and 39% in anticipating demand.

Building AI in-house or buying in?

Just 12% of companies told KPMG they are building their generative AI programs inhouse. Half are currently buying or leasing all of their generative AI tools from vendors. Nearly three in ten (29%) say they use a mixture of vendor solutions and inhouse development.