Why D&Os fear GPT
Businesses are starting to realise AI comes with risks, and striking a safe balance is key
By Bernice Han
Never mind the occasional hallucination – nothing, it seems, can slow the uptake of artificial intelligence tools, and in particular ChatGPT. Over the past three years, the Microsoft-funded app has taken off at a pace that is possibly unrivalled since the first iPhone debuted in 2007.
The latter device brought smartphones to the masses. Likewise, ChatGPT has made AI mainstream. It can draft a marketing proposal. It can help generate content ideas. It can even support customer service functions, all at lightning speed.
Nearly every industry has used ChatGPT or similar in one form or another, and the technology has opened a new world of commercial possibilities.
As insurer Allianz notes: “In just a few years since the launch of ChatGPT in 2022, AI applications and automation have become widespread, with new solutions and use cases in the pipeline.”
On the flip side, a growing number of businesses are starting to grasp the associated risks. Survey after survey shows user concerns creeping up as the technology becomes more entrenched.
In one such study by Allianz, about 61% of executives in Australia say they are worried about the downsides of AI.
It is the first time the technology has led the risk list in Australia, after placing eighth in last year’s poll. Cyber incidents and changes in legislation and regulation have each moved down one spot, to second and third respectively, while climate change has climbed up two places to fourth.
“We know from our conversations with partners that AI has become a core operational function for many businesses across sectors including large multinationals and small- medium-sized companies,” Allianz Australia general manager of underwriting Andy Doran tells Insurance News.
“With speed of adoption like nothing we’ve seen before, it was not a surprise to see AI’s ranking jump from eighth in 2025 to [become the top] risk for Australian business in 2026.”
He says as more businesses attempt to scale AI this year, they will face greater exposure to system-reliability issues, data quality constraints, integration hurdles and shortages of AI-skilled talent.
“Meanwhile, new liability exposures are emerging around automated decision-making, biased or discriminatory models, intellectual property misuse and uncertainty over who is responsible when AI-generated outputs cause harm.”
Talent or labour issues and business interruption rank fifth and sixth on the Allianz Risk Barometer, after sharing joint fourth place last year.
They are followed by natural catastrophes, down four spots to seventh. Political risk and violence makes the top 10 for the first time, at eighth, as does energy crisis, which shares ninth spot with market developments.
Globally, AI has recorded the biggest jump, from 10th spot to second on the barometer – an annual study gauging the most important corporate concerns in the year ahead, as ranked by more than 3300 respondents.
Cyber retains its top spot worldwide for the fourth year running. Business interruption places third, followed by changes in legislation and regulation, then natural catastrophes. Sixth place goes to climate change and the last four top-10 placings are filled by political risk and violence; macroeconomic developments; fire and explosion; and market developments.
Allianz says cyber and AI are “closely linked” perils, now viewed as top-five risks in every region and almost all industries analysed in this year’s survey.
“It also interlinks with other key risks in the top 10, including political risk, macroeconomic and market developments, and changes in legislation and regulation,” the insurer says.
“Against a background of increasing geopolitical tensions and heightened supply chain vulnerabilities, cyber is the risk of greatest concern across a broad range of industries … At the same time, attackers are also increasingly using AI to automate attack processes, which enables them to carry out more attacks, faster and more efficiently.”
Allianz says AI’s rapid climb up the risk rankings reflects both the threats associated with the technology and its wider societal, political and economic implications.
Implementation, liability exposures, and misinformation and disinformation are the key factors driving concerns about AI. About 44% of survey respondents globally believe AI is bringing more benefits to their industry than risks. About 20% say the opposite, and the remainder believe the jury is still out.
“Looking ahead to 2026, as AI adoption accelerates and becomes more deeply embedded in core business operations, respondents expect AI-related risks to intensify,” Allianz says.
“The rapid spread of generative and agentic AI systems, paired with their growing real-world use, has raised awareness of just how exposed organisations have become.”
AI is not the first emerging technology to upend ways of doing business – and it will not be the last. Quantum computing is another to keep an eye on.
“Technology moves at lightspeed,” Allianz Commercial head of emerging risk trends Daniel Muller says.
“Until recently, quantum computing was largely theoretical, but it is now moving rapidly toward real-world application. The pace of advancement is extraordinary – underscoring how quickly emerging technologies can shift from concept to disruption.”
Best of the worst: some other risks in Australia’s top 10
Climate change (No.4)
Reliance on just-in-time manufacturing and interconnected global supply chains means a climate event in one region can have ripple effects worldwide.
Businesses remain under pressure to reduce their climate impacts – 2030 is a key year for many national and corporate sustainability targets, and the regulatory environment remains stringent.
Survey respondents are addressing sustainability risks by adopting carbon-reducing business methods; creating contingency plans for climate eventualities; and increasing insurance protection.
Business interruption (No.6)
Conflicts and tariffs raise questions for supply chain resilience. Last year marked a shift towards protectionist trade policies and tariff wars that brought uncertainty to the world economy.
Global trade and supply chains are being reshaped in a world divided by geopolitics, protectionism and the effects of climate change.
Despite the lessons of the Covid-19 pandemic and geopolitical shocks such as the war in Ukraine, many companies are not confident in their supply chains. Only 3% of respondents globally rate their supply chains as “very” resilient.
Natural catastrophes (No.7)
Last year, secondary or non-peak perils – flooding, severe thunderstorms, and wildfires – caused substantial losses.
Natural catastrophes should remain a fixture on the business risk radar, Allianz Commercial senior catastrophe risk research analyst Mabe Villar-Vega says.
“When natural catastrophes are not making headlines, awareness of these issues might fade, potentially causing preparedness for such events to slip down a company’s priority list.”
Political risk (No.8)
War perils are a big fear in 2026. And the risk of terrorism, especially sabotage, has increased sharply over the past 12 to 18 months. On top of the recent attacks on Jewish communities in Manchester, UK, and Bondi Beach in Australia, there has been a rise in “grey zone” sabotage across Europe.
Market developments (joint No.9)
Following another strong year for equity and merger and acquisition markets, businesses appear slightly more relaxed about market risks. Yet how does this square with widespread discussion of an emerging AI bubble?
“Perhaps the key lies in the character of the current AI rally: it is arguably one of the least celebrated in recent memory,” Allianz says. “Unlike the exuberance of the late-1990s dotcom boom, today’s market shows little sign of unbridled euphoria.”
Market participants remain cautious. With technology earnings surging and investors pricing in continued momentum, any signs of slowing – such as missed earnings targets – could quickly undermine confidence. A sharp market correction cannot be ruled out.
