Using AI in the New Age of Public Entity Risk Management

Artificial intelligence (AI) is rapidly shifting from future concept to daily operational reality for public entities. However, determining how to use AI responsibly, ethically and effectively remains a challenge that public entities need to address in today’s new age of risk management.

During a recent session at Texas PRIMA, Alliant Public Entity led a presentation titled “Eyes Only: Artificial Intelligence and the New Age of Public Entity Risk Management,” offering a clear look into how AI is already reshaping public sector risk programs and where agencies should focus their efforts next.

Read the key takeaways from this presentation and learn how your organization can drive efficiency through the responsible use of AI.

How AI Is Delivering Value for Public Entities Today

AI is quickly becoming a core part of public sector operations, streamlining tasks and moving organizations closer to meeting their goals. In the session, Alliant Public Entity highlighted several areas where AI is already making a meaningful impact:

• Infrastructure maintenance: By analyzing sensor data across buildings, utilities and machinery, AI helps agencies predict failures, prioritize repairs and extend the life of critical assets. The same pattern-recognition abilities are improving fraud detection and financial oversight by flagging anomalies in benefits, procurement or grant applications long before they escalate.
• Legal services and claims management: AI tools can review large volumes of court rulings, identify emerging litigation trends and surface indicators of nuclear verdict exposure, allowing entities to strengthen their defense strategies. Public safety agencies are using AI to analyze 911 calls, traffic cameras and historical incident data to calibrate emergency response levels instead of automatically deploying full crews to every event.
• Cybersecurity: AI-powered monitoring tools detect suspicious activity and potential attacks faster than manual teams, giving cities and counties a critical defense against increasingly sophisticated cyber threats.
• Emergency management: As one of the most transformative use cases of AI in the public sector, AI in emergency management is making it easier to predict and respond to disasters. Specifically, AI enables agencies to simulate natural disasters, anticipate infrastructure failures and coordinate multi-agency responses with far greater accuracy.

In highlighting the benefits of AI in emergency management, Alliant Public Entity presented a case study on the City of Miami, which used AI to run hundreds of thousands of hurricane flooding scenarios that revealed which neighborhoods consistently flooded first. This data-driven insight dramatically improved evacuation strategies and reduced response times.

The same type of modeling can support earthquake readiness, wildfire planning and disease outbreak responses. With AI, agencies can understand where vulnerabilities exist, how risks evolve and which actions will have the greatest impact when minutes matter most.

Ethical Considerations of AI in Public Entity Risk Management

AI brings opportunity, but only when implemented with strong governance. The session underscored that data quality remains one of the biggest determinants of AI success. Inaccurate, incomplete or biased data leads to flawed outputs that can unintentionally reinforce inequities.

Because of these concerns, human oversight is essential. AI should never replace judgment; it should inform it. Public entities must be prepared to explain how decisions were made, what data was used and why an action was taken. The “black box” effect—where an algorithm produces an answer without transparency—cannot be allowed in public sector operations.

Privacy and surveillance risks add another layer of complexity. Tools like facial recognition, location tracking and behavioral analysis require strict governance to avoid overreach and to maintain community trust. Establishing clear parameters before deploying these tools is critical.

How to Successfully Implement AI at Your Organization

Alliant Public Entity emphasized that the safest, most successful AI programs are constructed with these key strategies in mind:

• Start by identifying one specific problem to solve and launch a small pilot program before expanding. Strategic partnerships with universities, startups and innovation labs can provide cost-effective expertise and accelerate progress.
• Ensure the AI tools you leverage can integrate smoothly with existing software, cloud platforms and operational workflows. Cross-department collaboration is equally important. Risk management, IT, public works, legal, finance and emergency management must work together from day one to anticipate downstream impacts and avoid costly retrofits.
• Embed ethics and clear guidelines for AI deployment into your rollout. Outcome-based RFPs, transparency requirements, human-in-the-loop controls and bias testing are essential components of any responsible AI strategy.

While AI can strengthen risk management frameworks, it can also introduce new risks that threaten organizations from achieving their missions. Before implementing AI at your organization, carefully consider emerging risks associated with rolling out new AI tools and common pitfalls.

Common Pitfalls Public Entities Should Avoid

As agencies explore AI, several recurring issues have surfaced that threaten public entity risk management, including:

• Placing sensitive or confidential information into public AI tools without realizing the exposure it creates.
• Assuming all staff members have the same technological comfort level, which leads to inconsistent adoption and training gaps.
• Overreliance on AI-generated outputs without properly verifying the responses, causing agencies to risk making decisions based on fabricated or incomplete information.
• Treating AI as a universal fix rather than a targeted solution, which can create inefficiencies and unrealistic expectations.

By implementing clear governance, training protocols and ensuring human oversight across all AI use cases, public entities can effectively integrate these tools into their risk management framework while mitigating technology-related risks.

Looking Ahead: AI’s Growing Role in Public Entity Risk Management

Over the next several years, AI is expected to reshape public sector operations in profound ways, including:

• Digital twins of infrastructure systems will allow agencies to simulate how utilities and transportation networks behave under stress.
• Climate and natural hazard modeling will grow more precise, improving long-term resilience and daily readiness.
• Regulatory compliance, document management and records retention will benefit as AI tools help agencies organize large datasets and anticipate regulatory changes.
• Community sentiment analysis—spanning multiple languages and platforms—will enable agencies to understand resident feedback in real time and respond proactively.

These advancements will help public entities deliver services more efficiently while strengthening transparency, accountability and public trust. With AI expected to play an increasingly important role in the public sector, it is critical that organizations take their time when rolling out new AI tools to ensure they are used ethically, responsibly and in line with their mission to serve the public.

How Alliant Public Entity Supports Responsible AI Adoption in Risk Management

AI is not just another tool; it is a transformative force capable of making public entities smarter, safer and more resilient. With thoughtful planning, ethical guardrails and a trained workforce, agencies can harness AI to strengthen operations and better protect the communities they serve. As the leading specialty insurance broker, Alliant Public Entity is committed to meeting today’s evolving risk management challenges with custom insurance solutions and strategies. Our public entity risk management specialists work closely with Alliant Cyber to help public entities adopt AI responsibly while jointly protecting agencies from evolving cyber threats. Connect with a representative from Alliant today to learn how we can support your risk management and cybersecurity strategy.