The health and pharmaceuticals sector is set to be hardest hit by the adverse effects of artificial intelligence (AI) over the next decade, according to a new report by Swiss Re Institute. The study looks at emerging AI risks across ten industries, exploring the probability and severity of various AI-related loss incidents due to data bias, cyberattacks, algorithmic and performance-related risks, among others.  

Christoph Nabholz, Chief Research & Sustainability Officer at Swiss Re, said: "While IT services are currently the most affected by AI risks as a pioneer in this area, this is set to change as the use of technology becomes more widespread across all industries, such as in health and mobility. Insurance companies are therefore starting to introduce specific cover for AI performance failures – one of the biggest risks for all industries."

As the health industry increasingly uses AI technology to streamline functions such as administration, patient monitoring, diagnosis, and drug development, the risks are also rising and consequences can be serious or even fatal. For instance, flawed or biased AI algorithms could result in misdiagnosis, leading to serious illness or loss of life.

Other industries most at risk of the adverse effects of AI technology over the next eight to ten years are 'mobility and transport' and 'energy and utilities', which rank second and third respectively. The mobility and transport sector will be highly exposed to AI risk, largely through the use of AI-powered connected and automated driving which poses challenges in highly diverse urban settings. Energy is likely to be another sector to utilise AI extensively, particularly as the ongoing net-zero transition necessitates electrification and the creation of smart grids.

Pravina Ladva, Group Chief Digital & Technology Officer at Swiss Re, said: "The benefits of AI are significant for a broad range of industries, but there are also risks that can lead to potential vulnerabilities. Given its role as a shock absorber, the re/insurance industry has an important role to play in addressing AI-related risks and helping build the digital trust needed to harness the full potential of such emerging technologies."

Swiss Re Institute's publication "Tech-tonic shifts: How AI could change industry risk landscapes" is available online.