Artificial intelligence is transforming business at a pace few technologies have matched before. From customer service and marketing to compliance, finance, and operations, organizations are increasingly using AI to automate tasks and improve efficiency.
As AI adoption accelerates, organizations face growing operational, reputational, and financial risks that many are only beginning to understand or aren’t aware of.
For CEOs and executive leadership teams, the conversation is no longer about innovation. It is increasingly about mitigating AI-related risks before they become business disruptions.
According to Van Carlson, founder and CEO of SRA 831(b) Admin, many organizations remain focused on AI’s opportunities while underestimating its potential downside.
“AI is creating new opportunities and new exposures,” Carlson said. “Success will depend on an organization’s ability to innovate while managing risk. This is uncharted territory for most businesses.”
Carlson highlights three key insights executives should understand as AI adoption grows and AI-related risks continue to evolve.
1. AI Risk Is Already Embedded Throughout the Organization
One of the biggest misconceptions about AI is that it exists as a standalone initiative managed by a single department.
In reality, AI is increasingly embedded inside customer relationship management platforms, cybersecurity tools, HR software, financial systems, marketing automation programs, third-party vendor solutions, and more.
Many organizations already rely on AI-powered tools without fully understanding where they influence decisions or customer interactions.
This creates significant exposure.
An AI-generated customer response with inaccurate information, automated approval issues, or a vendor AI failure can quickly become a public-facing issue.
The challenge is that customers and stakeholders rarely distinguish between a company and the technology it uses. When something goes wrong, accountability falls on the organization.
“You can’t effectively manage a risk you haven’t identified. Visibility is the first step toward mitigating AI-related risks,” Carlson said.
Executives should work across departments to map AI usage throughout the organization, identify customer-facing applications, and establish clear human oversight for high-impact decisions.
2. Insurance Markets Are Signaling Growing Concern About AI Exposure
Historically, insurers have often been among the first industries to identify emerging risks. Their business model depends on understanding uncertainty and potential loss.
Today, the insurance industry is increasingly viewing AI as a difficult-to-model exposure.
As organizations adopt generative AI and automation tools, some insurers are responding by tightening underwriting requirements, narrowing policy language, and introducing exclusions related to AI-driven incidents.
The trend mirrors the evolution of cyber insurance over the past decade. As cyberattacks became more frequent and severe, insurers adjusted coverage terms to address growing exposure.
AI appears to be following a similar path, but at a much faster pace.
For business leaders, this raises key questions about whether existing insurance policies cover AI-related losses or limit protection when AI contributes to operational or financial harm.
“There’s often an assumption coverage exists when a loss occurs,” Carlson said. “Organizations should verify those assumptions before facing a claim. The last thing you want is to learn you aren’t covered after you suffer a loss and file claim.”
According to Risk and Insurance, AI-related errors often trigger claims starting in the $1 million range for standalone AI errors, while AI-driven cyber breaches average $10.2 million.
Reviewing insurance policies, conducting risk assessments, and evaluating AI-related exposures should become a routine part of enterprise risk management strategies.
For some organizations, that conversation may also include exploring supplemental risk-mitigation strategies. One example is an 831(b) Plan, a risk management structure that allows qualifying businesses to set aside tax-deferred money to help address risks that may be excluded, limited, or difficult to insure through traditional commercial insurance policies. As AI-related exposures outpace many insurance products, business leaders are exploring 831(b) Plans for risk management and business continuity planning.
Organizations that proactively address coverage gaps are better positioned to navigate future challenges.
3. Trust and Transparency Are Becoming Competitive Advantages
For today’s CEOs, AI risk is increasingly a trust issue. Consumers, investors, regulators, employees, and partners are paying closer attention to how AI is deployed and whether it is used responsibly and transparently. When AI-related failures occur, the impact extends beyond operations to reputational harm and stakeholder confidence.
This makes governance and communication critical. Organizations need clear AI policies, defined safeguards, and the ability to respond quickly when issues arise. Leaders are also looking to tools such as 831(b) Plans, which can support risk mitigation strategies that include coverage for brand and reputational management.
“Trust is one of the most valuable assets any organization has,” Carlson said. “Technology drives efficiency, but trust sustains relationships. Companies are increasingly using broader risk mitigation tools to help protect brand and reputational value when issues emerge.”
The Bottom Line
AI is reshaping industries and driving significant opportunities for growth and innovation. However, the rapid expansion of AI also introduces new categories of risk that leaders can no longer afford to ignore.
Managing these risks requires visibility into where AI is used, a clear understanding of potential exposures, and stronger governance and transparency practices.
Because traditional insurance may not cover emerging AI-related risks, many organizations are exploring additional strategies to help address potential gaps.
Organizations that balance innovation with practical risk management are better positioned to protect operations, maintain trust, and navigate ongoing change.