AI and the ghosts of tech booms past

In its latest financial stability report, the Bank of England warned that an AI crash could plunge the UK into recession, claiming that a “price correction in AI stocks, driven by a change in productivity and profitability among tech-led companies, could cause a 2.2 percent fall in U.K.

GDP.” This should serve as a warning to businesses everywhere.

The risks surrounding AI extend far beyond Silicon Valley.

As leaders prepare for what comes next, however, many are still asking the wrong question.

“Is AI real, or is it hype?” The last 30 years of technology should have taught us that the answer can be both.

The last tech crisis of the 20th century Y2K was a real technical risk that came to look, in hindsight, like mass overreaction.

The UK spent billions preparing for the millennium bug, with organizations testing and patching systems that underpinned everything from banking and benefits payments to air travel and the National Grid.

The government established Action 2000 to help businesses prepare, while banks and major infrastructure providers ran extensive contingency plans ahead of the deadline.

Then midnight passed, the planes stayed in the sky, cash machines kept dispensing money and the lights stayed on.

The whole affair began to look almost laughable.

Yet the apparent anticlimax obscured an important point.

Much of the disruption people feared was likely avoided because organizations took the risk seriously and prepared for it.

Cybersecurity has the same problem.

A threat that is successfully mitigated can look, in hindsight, remarkably like a threat that was exaggerated.