What Is Your View on the Existential Theat Posed by AI: A Best Practice Framework for Investor Engagement

While not all investors will have the same level of concern regarding the existential threats of AI, it is a growing area of interest, particularly among those with a focus on long-term sustainability, ethics, and risk management. How companies respond to these inquiries can significantly impact investor confidence, the company's reputation and resulting valuation.

This article outlines:

• the areas of investor interest related to AI and their view on the existential threat.
• the best practice approach for public companies in addressing these concerns, demonstrating an understanding of the risks and outlining their strategies for mitigating them.

Areas of Investor Interest

1. Risk Management: Investors often seek to understand how a company manages various risks, including those related to technology. AI poses unique risks, not just operationally, but potentially on a larger, existential scale, affecting society and humanity as a whole.
2. Regulatory Compliance: As governments and international bodies become more aware of the potential risks of AI, regulations may evolve to address these concerns. Investors will be interested in how companies are preparing for and complying with these regulations.
3. Ethical and Social Responsibility: Investors, particularly those focused on ESG (Environmental, Social, and Governance) principles, are increasingly concerned with the ethical implications of the technology's companies use or develop, including AI.
4. Reputation and Public Perception: How a company handles AI can significantly impact its reputation. Investors are aware that mishandling AI, or contributing to its negative impacts, can lead to public backlash and a decline in brand value and resulting valuation.
5. Innovation and Competitive Edge: While existential risks are a concern, investors also recognize that AI is a powerful driver of innovation. They ae focused on how a company balances the pursuit of technological advancement with the safety and ethical considerations of AI, particularly as we move into 2024.
6. Long-Term Viability: For long-term investors, the sustainability of a company's business model in the face of technological advancements like AI is critical. The focus will be how changes to the business model are being done that will create a highly competitive market position, off-set with considerations on pace and control.
7. Industry-Specific Concerns: The level of concern and the nature of inquiries will vary significantly by industry. For instance, investors in tech companies, especially those heavily involved in AI, might be more proactive in asking about these risks.

Best Practices for Public Companies Responding to Investor Concerns About AI's Existential Threat

1. Acknowledge the Importance of the Issue: Begin by acknowledging the legitimacy of the concern. AI’s potential existential threats, such as ethical dilemmas, privacy, or other uses, are serious issues. Recognizing their importance demonstrates to investors that the company is aware and attentive to the broader implications of AI.

2. Provide an Informed and Forward-Looking Perspective: Ensure that the response is informed and reflects a deep understanding of AI. This might involve discussing current AI trends, potential risks, and benefits. The response should be grounded in a balanced perspective, recognizing both the opportunities and challenges of AI.

3. Detail Your Company’s AI Strategy: Clearly outline the company’s strategy regarding AI development and deployment. This should include how the company integrates AI into its operations, the objectives of using AI, and how it aligns with the overall business strategy.

4. Emphasize Ethical AI Practices: Discuss the ethical guidelines and practices the company adheres to in its AI investments. This includes measures to prevent biases in AI algorithms, ensure data privacy, and maintain transparency in AI operations. Highlight any ethical AI certifications or standards the company follows.

5. Highlight Risk Management Practices: Investors need to know how risks are managed. Explain the risk assessment processes in place for AI-related projects, including how potential existential threats are identified and mitigated.

6. Discuss Regulatory Compliance: Address how the company stays compliant with current AI regulations and how it is preparing for potential future regulations. Emphasize a proactive approach in adapting to the evolving regulatory landscape.

7. Showcase Commitment to Ongoing Research and Development: Investors should be made aware of the company’s commitment to ongoing AI research and development, especially in areas that mitigate existential risks. Discuss collaborations with academic institutions or involvement in industry consortia focused on responsible AI.

8. Open Channels for Continuous Dialogue: Offer channels for ongoing communication about AI-related developments. This could include regular updates in investor meetings, dedicated sections in annual reports, or special briefings on AI advancements and challenges.

9. Present Case Studies or Examples: If applicable, present case studies or examples where the company has successfully integrated AI in a safe and ethical manner. Real-world examples can provide concrete evidence of the company’s responsible approach to AI.

10. Future Outlook: Develop a forward-looking statement. Outline the company’s vision for AI and how it plans to harness its potential while effectively managing existential risks. This provides investors with a sense of direction and confidence in the company’s future with AI.

In responding to investor concerns about AI’s existential threats, public companies must adopt a comprehensive, informed, and transparent approach. By demonstrating an awareness of the risks, commitment to ethical practices, and proactive risk management strategies, companies can reassure investors and build trust in their handling of AI technologies. This approach not only addresses immediate investor concerns but also positions the company as a responsible leader in the evolving landscape of AI supporting the elevation of their value.