AI Can Save Time and Money, But It Has Hidden Costs Too

This report makes some good points; increasing reliance on AI systems exposes insurance brands to risks on energy supply, server/data capacity, security and more.

Arthur D. Little’s Blue Shift institute has published its latest report, AI’s Hidden Dependencies. This in-depth report, involving more than 50 experts, explores AI’s resource dependencies and the consequent direct systemic vulnerabilities for businesses and lays out strategic actions in response.

With AI’s adoption and usage expected to remain on its growth trajectory, so is its strain on resources. The report notably identifies three main areas of dependency:

• Environmental impacts, including emissions due to AI’s heavy energy usage and the manufacture of related hardware
• Energy supply, including increased electricity demand and strain on the grid
• Compute infrastructure, including supply chain choke points and dependencies on dominant providers

As AI is now becoming a critical infrastructure, the report anticipates that those “hidden dependencies” will increasingly expose businesses to three systemic vulnerabilities:

• Economic instability as the real costs of AI become apparent
• Sustainability risk as companies lose control of their carbon footprint
• Strategic lock-in as supplier dependency constrains competitiveness

In response, the report recommends that businesses prioritize a set of “no-regret” actions, namely:

• Anticipate the real cost of AI by aligning AI costs with real business value
• Restore environmental credibility by gaining control over the real footprint of AI use
• Build strategic resilience by maintaining the freedom to move between providers and jurisdictions

Dr. Albert Meige, Global Director of Arthur D. Little’s Blue Shift institute, comments: “AI feels cheap today because its real economic and environmental costs are essentially hidden. Once dependence sets in, those costs will surface. And companies should be strategically prepared.”

AI’s Hidden Dependencies is available to read and download here https://www.adlittle.com/en/ai-hidden-dependencies