Allianz Risk Barometer 2025 -
Global risk #10: New technologies (10%)

AI is a double-edged sword, it brings benefits, but also potential risks, according to Rishi Baviskar, Global Head of Cyber Risk Consulting, Allianz Commercial – a view reflected in the Allianz Risk Barometer results. When asked about the impact AI is having on their industry or sector, 50% of respondents said they believed it brings more benefits than risks, while 35% said it was “neither a positive nor a negative” and 15% that there were more risks than benefits.

Take cyber risk. AI is being used by criminals and nation states to cause disruption or spread misinformation. But it can also help mitigate risks and build resilience.

“AI can help improve processes and productivity, but it  also impacts employees and raises questions in areas like ethics, privacy and cyber security. There is a balance to be found between the risks and the rewards,” says Baviskar, who stresses that AI has also a vital role to play in helping to mitigate the impact of cyber-attacks.

While the application of AI can help prevent or mitigate risk, there can be other unintended consequences, Michael Bruch, Global Head of Risk Advisory Services, Allianz Commercial, notes: “AI plays a crucial role in creating solutions to lower emissions and support the transition to Net Zero, such as by enhancing the efficiency of energy generation, transmission, and consumption. However, it is important to note that AI itself demands substantial computing power and energy.”

According to Boston Consulting Group [2], AI has the potential to help mitigate 5% to 10% of global greenhouse gas (GHG) emissions by 2030. However, generative AI systems also use around 33 times more energy to complete a task than software, while Google’s GHG emissions in 2023 were almost 50% higher than in 2019, largely due to the energy demand from data centers [3]. By 2026, data centers are predicted to account for over 28% of total electricity demand in Ireland. Meanwhile, the growing power demand for AI could cause blackouts in North America as the electricity grid struggles to keep up. The North American Electric Reliability Corporation, an industry watchdog [4], said that consumption is expected to rise 15% in the next decade even as coal-powered plants are shutting down.

“One mitigation action can create new problems, or even be counterproductive to the original goal. This is a major challenge going forward. Businesses will need to manage these risks and risk prevention measures holistically. It’s essential to ensure that an AI-driven solution doesn’t inadvertently increase risks, such as those related to climate change", concludes Bruch.