The flap of a butterfly’s wings in South America can famously lead to a tornado in the Caribbean. The so-called butterfly effect—or “sensitive dependence on initial conditions,” as it is more technically known—is of profound relevance for organizations seeking to deploy AI solutions. As systems become more and more interconnected by AI capabilities that sit across and reach into an increasing number of critical functions, the risk of cascade failures—localized glitches that ripple outward into organization-wide disruptions—grows substantially.

It is natural to focus AI risk management efforts on individual systems where distinct risks are easy to identify. A senior executive might ask how much the company stands to lose if the predictive model makes inaccurate........

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