Even a cursory look at this year's Crisis Value Erosion Index shows that, in many cases, the causal factors of crises were 'known knowns' — risks that could be proactively identified and planned for, if not completely mitigated.
Businesses have long had to consider risks associated with aspects of their operations. However, beyond identification, it is the weight or appreciation and then action given to particular risks that is crucial. When dealing with 'known unknowns', this is hard to do. Stepping beyond that to analyse the compounding effect of such risks on other 'known' risks is extremely difficult.
Take, for example, artificial intelligence (AI). Widespread adoption of generative AI across the globe is seemingly inevitable, even though prior to 2022 the term was almost completely unheard of.
Now, large businesses everywhere are adopting—or working to adopt—generative AI. Companies across all sectors are seeking ways to leverage it. AI is the broad investment theme driving up financial markets, and some of the world's most sophisticated investors are expecting unprecedented growth from AI-related innovations.
While there is much dialogue, head-scratching, and soul-searching about AI's inherent risks, attempting to discern its impact in the context of existing risks could be even more daunting.
For instance, the impact of ubiquitous adoption of AI on the transition to net zero.
In its submission to the Australian Senate Select Committee Inquiry into Adopting Artificial Intelligence, Science and Technology Australia noted that climate change and resource use should be critical considerations in digital infrastructure investment and that data centres—already significant contributors to greenhouse gas emissions—could eventually account for 14% of global emissions by 2040 with the uptake of AI.
Although we have just ticked past AI sunrise, generative AI business plans may already be sunsetting 2030 carbon-negative business goals.
Our research has found that, even before the dawn of generative AI less than two years ago, few companies considered the energy impact of fundamental business operations such as their websites and social platforms, and few took a low-emissions approach to these digital activities. My colleague Jon Cookson will explore this in more detail in future articles.
Given the need (and public demands) to address climate change, is this a bit negligent? What are the potential risks to businesses that are seen to be prioritising technology over environmental considerations —especially as we approach 2030 and beyond?
Effective risk management is complex. Eventually, evolved artificial intelligence may help us identify, weigh, and respond to the knowns and the unknowns. For now, even with imperfect humanness as our foremost tool, there is always an opportunity to plan better for crises.
Of course, we can always ask the bot for guidance. Perhaps the most intelligent response we might get would be, "Computer says… know."