Companies are rushing to implement AI, but it’s not all smooth sailing.

More than half of businesses say the dangers of AI have led to at least one negative consequence.

But which issues plague businesses the most?

This infographic, via Visual Capitalist's Jenna Ross, breaks down the most common risks.

It’s a preview of the brand-new executive guide from Terzo and Visual Capitalist, AI’s Illusion of Truth: The Data Behind AI Errors.

The Top Dangers of AI

Inaccuracy is the biggest risk companies report, with almost a third experiencing a negative consequence at least once.

Source: McKinsey, online survey of 1,753 participants conducted June 25 to July 29, 2025.

The other dangers of AI are reported on a much lower scale. Explainability, which is the ability for people to understand an AI system’s inner workings, has affected half as many companies as inaccuracy has.

The Knock-On Effects of Errors

AI inaccuracy can lead to much bigger issues. It undermines trust in AI systems, causes operational inefficiencies, and can lead to flawed strategic decisions. When AI generates incorrect outputs, the damage is often amplified through cascading processes.

It also has the potential to create legal issues. As the Harvard Law School recently pointed out, many insurance companies are adding limitations or excluding coverage for AI-related losses. This means that leaders may not be covered under traditional Directors & Officers policies for any liabilities that arise from AI errors.

Next Steps for Leaders

Many companies have started taking steps to combat the dangers of AI. In fact, 54% of businesses are actively working to mitigate AI inaccuracies.

Leaders can take charge by ensuring their teams have humans in the loop to review AI’s output before it is used. 

See the data behind AI’s errors and how to get 99% accuracy in the free executive guide, AI’s Illusion of Truth.