UK Businesses Bullish on AI – Governance Gaps Expose Insurers to New Risks
UK businesses are emerging as global outliers in their enthusiasm for artificial intelligence (AI). Recent research indicates a significant rise in both confidence and adoption, although there remains a lag in formal governance and risk transfer.
Survey Findings
Gallagher’s third annual 2026 Adoption and Risk Survey, based on responses from 200 UK-based business leaders across various sectors, reveals that:
- Half of the surveyed UK businesses have implemented AI in some form.
- 49% have introduced AI into parts of their operations, a notable increase from 20% in 2023.
- 12% reported that AI is now fully operationalized.
AI adoption spans numerous functions, with:
- 52% utilizing AI for chatbots and personal assistants.
- 49% employing it in research and analytics.
- 48% applying AI in customer service.
- 45% using it in IT operations management.
- 44% for fraud detection.
Positive Impacts and Optimism
Early results from AI integration are encouraging:
- 86% of UK businesses report a positive impact on revenue.
- 84% indicate gains in employee trust and engagement.
- 83% see improvements in productivity.
Moreover, UK executives are among the most optimistic globally regarding AI’s potential. The survey found that:
- 93% view AI as a positive opportunity for their organization, a rise from 83% in previous years.
- 83% believe AI will eventually increase revenue.
In terms of investment tracking, 62% of businesses are actively monitoring ROI from AI, with 35% planning to do so. Leaders anticipate it will take about 27 months for AI investments to yield measurable financial returns.
Emerging Risks
Despite the optimistic outlook, UK leaders acknowledge potential downsides. Concerns include:
- 56% worry about a loss of commonsense due to over-reliance on AI tools.
- 55% express heightened exposure to cyberattacks and fraud.
- 43% are concerned about impacts on employee engagement, below the global average of 50%.
For insurers, the cyber aspect is particularly pressing. Data shows a significant rise in nationally significant cyber incidents, with a 129% increase year-on-year. However, adoption of standalone cyber insurance remains limited, with estimates indicating that up to half of UK organizations lack adequate cyber protection.
Governance Gaps
As AI becomes embedded in decision-making, experts warn of new exposure pathways. Businesses risk liability by relying on AI for everyday decisions, especially where AI tools may produce inaccurate outputs. Underwriters caution that reliance on AI-generated advice without sufficient human oversight could lead to professional liability claims.
Gallagher’s survey indicates that many UK organizations are advancing more quickly in technical risk measures than in formal AI governance. Key findings include:
- 60% of leaders have assessed and mitigated AI-related security vulnerabilities.
- 57% have communicated their AI strategy to their workforce.
- 39% have developed incident response plans specific to AI events.
- Only 42% have conducted ethical impact assessments for societal, legal, or reputational harm.
These findings reflect a broader trend where AI adoption is outpacing governance and workforce readiness, contributing to AI’s classification as a top-tier global business risk. Poor AI governance raises concerns about compliance, regulatory fines, and data governance disputes.
The Path Forward
Despite their optimism, UK business leaders must translate this enthusiasm into robust governance frameworks. Steve Rhee, a leading digital officer, emphasizes the importance of establishing formal AI policies, frameworks, and incident plans to mitigate cyber, legal, societal, and reputational risks. The ambition of UK business leaders is commendable, but it is crucial to implement comprehensive oversight and risk management strategies to safeguard against associated risks.
