Artificial general intelligence (AGI) is “artificial intelligence that matches or surpasses human capabilities across a wide range of cognitive tasks.” Although powerful, current AI capabilities are still limited and relatively narrow in scope, designed for specific tasks.

Artificial general intelligence may be the ultimate disruptive innovation, affecting global infrastructure and energy demands, geopolitics, national security and business operations and strategy across all industries. Many technology and innovation leaders believe that AGI will be reached by 2027. Leopold Aschenbrenner, former OpenAI executive, published “Situational Awareness: The Decade Ahead”, explaining in detail the future of AGI.

• Exponential Growth in AI Capabilities: Computing power, algorithmic efficiency, and AI capabilities are doubling every year, leading to to AGI BY 2027.

• Economic and Industrial Mobilization: Investments in AI infrastructure, including compute clusters, data centers, and energy production may exceed $1 trillion annually by 2027.

• Security and Geopolitical Risks: AGI involves significant national security concerns and AI labs currently lack robust security measures, raising the risk of sensitive AGI technologies being compromised by state actors like China.

• Superalignment Challenges: Controlling AI systems that surpass human intelligence is a critical yet unresolved issue. Ensuring these systems align with human values and safety norms is paramount to prevent catastrophic outcomes during rapid AI advancements.

• Geopolitical Dynamics: The development of AGI and superintelligence will have profound implications for global power dynamics, likely increasing existing tensions between the US, China, and other major powers..

• Government Involvement: By 2028, there will likely be significant government-led projects aimed at regulating and controlling superintelligence.

Questions business and risk leaders should consider include:

• How does our strategy address the progression and adoption of AGI?

• How is AGI being incorporated into our enterprise risk universe, risk assessments, and mitigation plans? For example, have the risks of uncontrollable systems, automated/ autonomous decision-making and societal risks been included in risk assessment processes?

• Do we have the leadership, decision-making capabilities and talent pool needed to thrive in times of intense disruptive innovation?

• What impact would major infrastructure and power cost increases or shortages have on our business?

• What people, processes and tasks will be replaced by AGI?

Request more information on DelCreo’s Risk Universe and risk assessment services.

As a reminder, here are our Risk Universe categories that we leverage to tackle and understand risk which include:

• External Risk

• Governance Risk

• Strategic Risk

• Product Risk

• Business Operations Risk

• Legal & Compliance Risk

• Financial Risk

• Technology Risk

We leverage our understanding of risk maps and risk universes to better advise our clients in strategic business decisions and to optimize the management of risk throughout the enterprise.

Weighing the Risks

Weekly Highlights

Three Key Ideas:

• Better-than-expected US retail data has reduced the likelihood of a July rate cut by the Fed, but Chair Jerome Powell's comments suggest potential rate cuts in September. In the UK, grocery inflation has fallen to 1.6%, easing pressure on consumers and the retail sector.

• OpenAI's governance challenges, including board oversight issues and the influence of major investors like Microsoft, highlight significant risks in decision-making and maintaining ethical AI development. The importance of explainable AI and expert-guided algorithm selection is crucial to build trust and effectively integrate AI in industrial processes.

• The increasing reliance on AI systems for critical operations in logistics, manufacturing, and healthcare presents significant risks if these tools fail, potentially causing disruptions. The integration of AI tools requires ongoing human labor for training and maintenance, posing ethical and operational challenges, along with sustainability concerns due to energy-intensive data centers.

Recommendations:

• To address these risks, enterprise risk management should focus on robust governance frameworks, continuous monitoring of technology platforms, and strategic workforce planning. This includes ensuring transparency and ethical standards in AI development, investing in IT infrastructure resilience, and upskilling employees to manage and optimize advanced technologies effectively.

Risk Universe Weekly Updates

External Risk

• UK grocery inflation falls to 1.6%; Fed chair Powell hints at US rate cuts – as it happened

  • Better-than-expected US retail data has diminished the likelihood of a July rate cut by the Fed, though comments from Chair Jerome Powell suggest that rate cuts could still begin in September despite not meeting the 2% inflation target.

  • In the UK, grocery inflation has continued to decline, with price growth falling to 1.6%, the lowest since September 2021, indicating easing pressure on consumers and the retail sector.

Governance Risk

• Can AI be Meaningfully Regulated, or is Regulation a Deceitful Fudge?

  • The governance challenges at OpenAI, including the lack of prior notice to the board about ChatGPT's release and the subsequent ousting and reinstatement of CEO Sam Altman, highlight significant risks in board oversight and decision-making processes, especially when influenced by major investors like Microsoft.

  • The shift from OpenAI's non-profit origins to a profit-driven model under Big Tech's influence underscores leadership and culture risks, emphasizing the complexities in aligning AI development with ethical principles while navigating the profit motives and regulatory pressures.

• Why Guardrails Are Essential For Industrial AI

  • Ensuring industrial AI systems are robust and reliable with specific guardrails is crucial to avoid costly disruptions, and operators must maintain control and understanding of these systems to make timely and correct decisions.

  • The need for explainable AI and expert-guided algorithm selection highlights the importance of transparency and specialized knowledge within the company's structure to build trust and effectively integrate AI into industrial processes.

Strategic Risk

• How leaders can deploy AI and boost skills for the new future of work

  • Companies must navigate significant workforce transitions, requiring extensive upskilling and reskilling to harness the productivity potential of AI and generative AI, while managing the decline in demand for lower-wage occupations.

  • Achieving productivity growth through AI adoption will be influenced by efforts towards net-zero emissions and economic shifts such as e-commerce growth, necessitating rapid technology adoption and strategic workforce planning to stay competitive and sustainable.

• Empowering Enterprises – The Strategic Value of AI Chat Technology

  • AI chat technology enhances customer satisfaction and loyalty through instant, 24/7 responses and personalized interactions, which are essential for maintaining a positive brand image and adapting to evolving customer service demands.

  • The integration of AI chat systems streamlines operations and reduces costs by automating routine tasks, while also providing data-driven insights for strategic decision-making, positioning companies to stay competitive and innovative in a rapidly changing business landscape.

Business Operations Risk

• Your business is going to rely on hundreds of AI models. Here's why

  • The increasing use of multiple AI models, projected to rise significantly, poses challenges for existing IT infrastructure, with concerns about CPU/GPU resources, data locality, and storage performance potentially leading to scheduling delays and impacts on data availability.

  • As organizations expand their AI capabilities to enhance customer satisfaction and operational performance, they face the need for continuous upskilling and management of a diverse array of AI models to ensure effective deployment and bias reduction, necessitating robust talent and strategic planning to mitigate risks.

Legal & Compliance Risk

• Harnessing Big Data And Cloud Computing For Banking Compliance

  • The use of big data analytics and cloud computing in banking compliance enhances real-time risk assessment, fraud detection, and regulatory reporting but requires robust data governance, security measures, and adherence to evolving regulatory standards to mitigate privacy risks and ensure compliance.

  • Banks must navigate challenges such as data integration and cybersecurity concerns while ensuring that their compliance processes using these technologies are accurate and legally defensible, protecting against potential legal inquiries and intellectual property disputes.

• How RegTech is Helping Financial Institutions Navigate the Complexities of Regulatory Compliance

  • RegTech solutions leverage advanced technologies such as AI, ML, and blockchain to automate and streamline compliance processes, enhancing data accuracy and real-time monitoring, but raising concerns about data privacy and security that need to be addressed to ensure regulatory adherence.

  • The dynamic nature of regulatory requirements necessitates that RegTech solutions swiftly adapt to changes, reducing the risk of non-compliance, severe penalties, and legal repercussions, while also fostering better collaboration between financial institutions and regulators for more informed and efficient compliance management.

• UK antitrust watchdog launches probe into Microsoft’s Inflection AI partnership

  • The U.K.'s antitrust watchdog, CMA, is investigating Microsoft’s partnership with Inflection AI to assess if it constitutes a relevant merger situation that could substantially reduce market competition, potentially leading to fines or mandated changes in business practices.

  • The CMA’s scrutiny includes examining Microsoft's hiring of Inflection AI’s workforce and related licensing agreements, with particular attention to the $620 million nonexclusive license and the $30 million agreement preventing lawsuits over employee hires, highlighting potential ethical and contractual compliance issues.

Technology Risk

• Opinion: What’s behind the AI boom? Exploited humans

  • The complexity and reliance on AI systems for critical operations in logistics, manufacturing, and healthcare expose companies to significant risks if these AI tools fail or require human intervention to function properly, potentially causing disruptions and operational inefficiencies.

  • The integration of AI tools into products necessitates ongoing human labor for training and maintenance, presenting ethical and operational challenges, as well as risks related to the dependency on low-paid labor and the energy-intensive nature of data centers, which could impact sustainability and operational costs.

• McKinsey Technology Trends Outlook 2024

  • The rapid integration and scaling of generative AI (gen AI) and other advanced technologies across various industries introduce significant risks related to ensuring these technologies' reliability, security, and effectiveness as they evolve, particularly given their reliance on large language models and the growing complexity of their applications.

  • Despite the positive long-term outlook for AI and technology adoption, companies face operational risks due to the need for substantial investments, the strain on existing IT infrastructure, and the challenge of maintaining a skilled workforce capable of managing and optimizing these advanced technologies in a highly dynamic environment.