What should investors be told about the risks companies take in using AI?
Artificial intelligence is already prevalent throughout our lives – it’s not going away, so the question is not if we use it, but how.
Ontario Securities Commission staff have been considering how investors should be protected from the risks involved with companies’ increased use of AI, specifically what disclosures should be required to ensure transparency.
The report analyzed how often AI was mentioned in financial reports by companies that participate in Canada’s capital markets and found a “substantial” increase in mentions within Management Discussion and Analysis (MD&A) filings from S&P/TSX Composite Index issuers over a 10-year period.
This is perhaps not surprising, but more so – and more concerning – is a shift in the tone from companies, which had been mostly positive about AI usage but are now also highlighting negatives. This includes a more balanced view of the risks and opportunities.
The finance and information sectors are more bullish on the benefits of AI than other industries which are typically increasingly cautious.
"This research underscores the evolving landscape of AI in corporate disclosures. As issuers become more attuned to the potential benefits and risks of AI, we see a more nuanced discussion emerging," said Leslie Byberg, Executive Vice President, Strategic Regulation at the OSC.
The OSC’s staff research comes as a report by IBM reveals that Canadian CEOs (71%) are ahead of global peers (62%) in adopting AI agents and preparing to implement them at scale.
But just 14% of AI initiatives have been successfully adopted at scale in their organizations and just 27% have delivered on expected return on investment. This reflects the speculative sentiment among Canadian business leaders in this regard, with 76% willing to invest in AI before fully understanding their ROI (vs. 64% globally).
Seven in ten Canadian CEOs are willing to take more risks than their competitors to maintain a competitive edge.
The use of AI in business is rarely talked about without noting the potential impact on the human workforce and IBM’s research found that 50% of Canadian CEOs are hiring for positions that did not exist a year ago and 58% planning to use automation to bridge skill gaps. One third of leaders said the workforce will need retraining to be competent in an AI-powered world.
"Canadian CEOs are taking bold steps to integrate AI into their operations, signalling a clear understanding of its transformative potential," said Rob Wilmot, general manager and managing partner of Consulting, IBM Canada. "But this isn't just about adopting AI – it's about embedding it thoughtfully and effectively across the organization. The IBM study indicates that Canadian businesses have the ambition. Now it's time to focus on execution."
