The Role of Board Directors in AI Governance

I had the opportunity to participate in a panel discussion on the subject of Artificial Intelligence (AI) at the Page Society Spring Conference.? My focus was on how Board Directors should be thinking about AI.? I thought I’d share some of my observations from the session.?

?In an era where AI is rapidly reshaping industries and economies, the governance surrounding its use has become paramount. Yet according to research undertaken by the NACD (National Association of Corporate Directors) in conjunction with Data & Trust Alliance while 95% of Directors believe AI will impact their business in some way in the next year, only 28% say it’s a regular topic in the Boardroom.? While the European Union has taken steps with the AI Act, and the US and UK have initiated frameworks for AI's safe and trustworthy application, a critical aspect remains largely unaddressed: the role of Public Board Directors in overseeing AI within their organizations. While legislation is yet to codify this responsibility, Boards must proactively engage with AI to ensure both strategic alignment and ethical use within their companies.

?Strategic Alignment and Future-Proofing

?At a strategic level, Boards must evaluate how AI aligns with the company's long-term vision and competitive positioning. AI offers transformative potential, allowing companies to innovate, anticipate market shifts, and outpace disruptive competitors. However, harnessing this potential requires a clear roadmap that balances innovation with integrity, foresight, and ethics. Boards should identify areas for AI experimentation, continuously refine strategies, and ensure adaptability as the AI landscape evolves.

?AI in Core Business Operations

?Beyond strategic alignment, AI's proliferation into core business operations necessitates immediate attention. Whether it's compliance, communications, HR, finance, legal, or product development, AI is likely being experimented with across various business functions. For instance, AI's role in handling disclosures in proxy statements, earnings calls, and investor updates is becoming increasingly prevalent. Similarly, AI's use in HR processes such as recruiting, screening, hiring, training, and succession planning is on the rise. Boards must be vigilant about potential risks, including unsanctioned use of GenAI (e.g., ChatGPT), and ensure robust policies and regulations are in place.

?Asking the Right Questions

?From a Board perspective, effective oversight hinges on asking the right questions. Instead of creating new AI-specific committees, Boards should leverage existing committees to foster cross-functional collaboration on AI. Whether it's the remuneration committee, audit and risk committee, compensation committee, or any other governance committee, each should prioritize understanding AI's implications and ensuring its responsible use. At a fundamental level, we need to ask whether an employee policy on the safe use of AI is being developed or already exists. By adopting a human-centered and accountable leadership perspective, Boards can navigate the complexities of AI governance effectively.

?In Conclusion

?As AI continues to redefine the business landscape, the role of Board Directors in overseeing its strategic alignment and ethical implementation is more crucial than ever. By proactively engaging with AI, asking the right questions, and fostering cross-functional collaboration, Boards can ensure their organizations harness AI's transformative potential while maintaining integrity, foresight, and ethics. In the age of AI, accountable leadership is not just a responsibility—it's a necessity.?

You may find helpful perspectives in The Athena Alliance’s 'AI Governance Playbook', NACD and Data & Trust Alliance 'AI and Board Governance', Korn Ferry's 'AI is everywhere except on Boards', HBR's 'It's time for Boards to take AI seriously'.