Technological Disruption and Long-Term Investors: Managing Risk and Opportunities

Abstract

The current wave of uncertainty - and indeed, fear - over the possible consequences of artificial intelligence for the global economy and human society is, paradoxically, normal. Technological disruption (TD) is a perpetual feature of modern human life, occurring at various scales and presenting both risks and opportunities to investors. This paper investigates LTI approaches to TD management and proposes improvements. Through case studies and interviews with senior decision-makers from diverse LTIs worldwide, it is found that while some long-term investors (LTIs) recognize TD as a source of risk and opportunity, few have systematic approaches for managing it effectively. However, we argue that systematic TD management is feasible, and we present a toolkit for assessing and responding to TD risks and opportunities at both asset and portfolio levels.

Keywords: Alternative data, technological disruption, institutional investment, innovation

JEL Classification: G23