Artificial intelligence has become a critical business tool, with nearly two-thirds of companies testing AI technologies in the past year, according to a new report by Gallagher.
The research revealed that the majority of companies have adopted AI in their operations, highlighting its potential, but with a catch.
By the end of 2024, 45% of businesses were integrating AI into daily operations, marking a substantial one-third increase from the previous year. Larger firms have been particularly aggressive, with 82% adopting AI technologies compared to 69% a year earlier.
Business leaders cite numerous benefits, including improved problem-solving (44%), enhanced employee efficiency (42%), and increased productivity. Primary AI applications include drafting company documents, conducting market research, managing customer queries, and supporting strategic decision-making.
However, the rapid adoption comes with challenges. Business owners now report heightened awareness of AI-related risks compared to just 12 months ago. Top concerns include AI-generated errors or "hallucinations" (34%), data protection violations (33%), and potential legal liabilities (31%).
"AI is now an intrinsic part of our everyday lives," said Ben Waterton, executive director of professional indemnity at Gallagher. "However, the output from AI is only as good as the data input and cannot be relied upon blindly."
Cyber security experts warn that AI is also empowering malicious actors, providing more sophisticated tools for targeting vulnerabilities. The technology enables cybercriminals to operate with greater efficiency and scale, making threats harder to detect and defend against.
Directors and officers face additional risks, including potential lawsuits for "AI washing" - overstating AI capabilities - and making business decisions based on incorrect AI-generated information. Laura Parris, executive director of directors' & officers' insurance at Gallagher, noted increasing legal scrutiny around AI claims and disclosures.
James Pearce, from Gallagher's cyber team, suggests that while the insurance market has historically adapted to new threats, companies must carefully review their current coverage for AI-related risks.
The research shares a critical message: while AI offers tremendous business opportunities, it requires careful governance, human oversight, and a nuanced understanding of its limitations.
What potential AI risks concern you most? Share your thoughts below.
