Companies Warn AI Threatens Their Own Business Models
Across four industries, companies are flagging AI as both an operational necessity and a competitive and legal menace in their latest annual reports.
A cross-industry pattern is emerging in corporate risk disclosures: companies are simultaneously weaving artificial intelligence into their operations while warning that the same technology could undermine their business models, expose them to new legal liabilities, and arm their competitors. From packaged food to homebuilding to professional services, executives are grappling with a technology that promises efficiency gains but carries profound strategic and regulatory uncertainty.
Korn Ferry (KFY) offers the starkest example of this tension. The recruitment and consulting giant added a dedicated AI risk factor in its 2026 filing, warning that demand for its services "could be further reduced by advanced technologies being deployed by our competitors or new competitors leveraging AI" to offer cheaper, faster alternatives. The company named a roster of AI-enabled rivals—Eightfold AI, HireVue, LinkedIn, Paradox, and others—that could help employers bring recruiting in-house. It further cautioned that "AI may reduce demand for our services as clients, candidates and competitors use AI tools and platforms to perform functions we currently provide, compressing the scope, value, or pricing of our engagements".
The threat is not purely commercial. Korn Ferry flagged that "cyberattacks using AI are increasing, enabling automated phishing exploits and dynamic malware" that challenge traditional defenses. General Mills (GIS) echoed this concern, stating that "emerging artificial intelligence-related threats may increase the frequency and severity" of cybersecurity risks and "may also introduce new threats, both of which could be difficult to defend against". Lennar (LEN) similarly disclosed that cyber intrusions are growing more sophisticated "including as a result of the use of artificial intelligence".
For C3.ai (AI), whose C3 Agentic AI Platform is "a significant and growing element of our business," the risks cut in a different direction. The company added a new risk factor specifically addressing agentic AI, warning that autonomous processing "could result in violations of data privacy laws" due to inadequate notice or consent. It also cautioned that agentic AI's interactions with external systems, APIs, and platforms "may violate restrictions on access, privacy regulations, computer fraud and abuse laws, third-party contracts and terms of service". With the EU AI Act set to become fully applicable in August 2026, C3.ai faces a regulatory landscape that is hardening even as its core product matures.
Even companies in the early stages of adoption are hedging their bets. Lennar acknowledged it is in the "early stages" of integrating AI into operations and customer-facing systems, yet warned that its development and adoption of AI "may present new technological threats, vulnerabilities and uncertainties, which may expose us to legal, reputational and financial harm". General Mills treats AI as part of the information technology infrastructure critical to digital marketing, supply chain management, and finance—while simultaneously bracing for the risks it introduces.
The disclosures paint a picture of an economy in which AI is no longer an optional experiment but a structural force that companies must both harness and defend against. The legal exposure is real: C3.ai warned that third-party AI capabilities integrated with its platforms "could also produce false or hallucinatory inferences about customer data or enterprises," inviting competitive harm and liability, and that sensitive data fed into third-party AI platforms "could be leaked or disclosed to others". For Korn Ferry, the existential question is whether AI tools will let sole proprietors and in-house HR teams replicate what a $2.9 billion-revenue firm does. The companies that survive this transition will be those that treat AI not as a feature to bolt on, but as a risk to manage at the board level.