Boards of directors are responsible for overseeing strategy, risk, ethics and social impact, and financial reporting. Occasionally, a world-changing new technology profoundly affects all or most of these areas, whether a company sells information technology or not. Artificial intelligence is one such technology. It is already altering the way people live, work and receive care. Companies are investing and reorganizing to receive their share of the trillions of dollars in value this technology will create. Besides bringing enormous value to those who can produce it, AI will improve people’s lives in many ways. However, its pervasive use also raises concerns about fairness, accountability, explicability, misuse and unintended societal consequences. Helping directors understand and meet their responsibilities in regard to this transformational technology is the purpose of the guidance and tools contained here.
Relationship Between Management & Board
Executive teams are charged with creating the strategies and carrying out the work needed in a world with AI. Boards of directors play a different role: They oversee management’s decisions and their results in the interest of shareholders and other stakeholders. Boards have additional responsibilities, too. They judge whether management is putting the organization at risk through unwise strategies, poor execution, violations of the law or damage to its reputation. They stand behind the accuracy of the company’s financial reporting to the public. Directors are expected to hold management to the highest ethical standards. They establish the governance structure, the principles and the values of the organization.
How AI Impact Boards
AI requires boards’ attention because it affects every aspect of their oversight duties. For example:
Strategy is often influenced and executed by AI technologies. Its impact on strategy will grow as AI shapes lives, customer expectations, markets and the supply chain.
AI will affect financial reporting as it is put to work to process financial data.
AI amplifies existing ethical issues and creates new ones that boards should heed.
The management of the data, algorithms and people involved in AI requires governance mechanisms for decision-making that are consistent with and assist the organization’s overall governance.