Managing Spillover Crises in the Age of Generative AI

Abstract

The rapid development of generative artificial intelligence (GenAI) has marked a significant shift in how organizations operate and innovate. While GenAI offers new opportunities, it has also created new risks that can escalate into crises. Importantly, these crises are not always limited to the organization where they originate but can spill over to other organizations in the same sector, leading to broader reputational consequences. This article investigates such spillover crises in the age of GenAI. We build on Laufer and Wang’s crisis spillover model and extend it to GenAI-related contexts. Specifically, we identify five types of spillover crises associated with GenAI and illustrate them through real-world cases. These cases highlight how reputational damage can extend beyond a single firm, affecting others in the industry. We propose a strategic framework to help organizations identify the risk of spillover crises, and we offer prescriptive guidance for avoiding, mitigating, or responding to spillover crises when they occur.