The past few years have been marked by geopolitical tensions, cyberattacks, supply-chain disruptions and sudden economic shifts. An international EY survey of 1,200 risk leaders indicates that artificial intelligence (AI) can help firms detect early warning signs of such events and reveal cross-domain connections that are not immediately obvious.
Recent developments illustrate how a risk known for years can quickly become a global business threat. Tensions around the Strait of Hormuz, for example, affect not only energy markets but also shipping routes, procurement costs and supply chains. Handling situations that impact multiple sectors and continents is increasingly challenging for companies.
What AI can offer
AI can analyse large volumes of data to spot warning signals sooner and correlate information from different sources to uncover links that human analysts might miss. EY’s findings suggest that these early warnings can substantially reduce potential losses and give companies that use them a competitive edge.
Péter Molnár, head of EY’s business consulting practice, said: “It is no longer sufficient for company leaders to review key challenges a few times a year. They must identify risks and make decisions in continuously changing situations. Artificial intelligence can help them recognise warning signs earlier and better understand the likely impacts of interconnected events.”
Erik Slooten, partner at EY AI Confidence, cited a concrete example: an AI-agent-based system used by a leading European car manufacturer forecasted the expected effects of a helium shortage resulting from a closure of the Strait of Hormuz. According to Slooten, such early predictions can prevent losses worth millions and provide a significant competitive advantage.
Practice: experimentation and an efficiency focus
However, the survey also shows that most companies remain in an experimental phase with AI: they primarily deploy it to speed up tasks and improve efficiency, rather than fully embedding it into strategic decision-making.
The research highlights a clear divide between organisations that regard risk management as part of strategic decision-making and those that treat it as a traditional support function. Among leaders in the first group, 70% expect AI to fundamentally transform risk management, while that expectation drops to 40% in organisations with a more traditional approach.
Why it matters for companies
How an organisation positions risk management — as a strategic capability or a supporting one — greatly affects its ability to capitalise on AI. Companies that integrate AI-based early-warning systems into their decision processes can respond more quickly to multidimensional risks and reduce the financial impact of unexpected events.
Source: Magnific
