Artificial intelligence continues to develop at a pace where it can be challenging to predict and manage risks, said executives of Norges Bank Investment Management, the manager of Government Pension Fund Global, Oslo.
The executives at the 14.92 trillion Norwegian kroner ($1.43 trillion) sovereign wealth fund called on companies to responsibly develop and use of AI for well-functioning markets, noting AI can potentially affect the financial returns of the fund's investments over time.
Responsible AI development by portfolio companies would include board accountability, transparency, robust risk management as well as privacy, security, non-discrimination and human oversight and control, according to the executives. Nicolai Tangen, CEO of Norges Bank Investment Management, and Carine Smith Ihenacho, chief governance and compliance officer, also called on the creation of a regulatory framework for AI that would facilitate safe innovation and would mitigate adverse impacts.
"We believe boards play a key role by overseeing that corporate governance and strategy balance competitive deployment of new technology against potential risks, including risks to people and wider society. This will require board expertise and resources that are proportionate to the company's risk exposure and business model," executives said on NBIM's website.
While AI is likely to bring great opportunities it can also bring severe and uncharted risks "for the companies we invest in and for the stakeholders affected by their activities, the executives warned.
AI can increase the risk of large-scale misinformation, deception or manipulation, they said.
The fund reported a 10% investment return for the six months ended June 30.
The return on the fund's equity investments in the period was 13.7%. Fixed income investments returned 2.2% in the period, whereas investments in unlisted real estate lost 4.6%. Unlisted renewable energy infrastructure lost 6.5%.
GPFG's assets increased 7% to 15.29 trillion kroner in the three months ended June 30.
"The stock market has been very strong in the first half of the year, following a weak year in 2022. Especially technology stocks have seen significant growth, largely driven by the increased demand for new solutions in artificial intelligence," Mr. Tangen said in a news release.