Shannon Nash
Director: NETSCOUT, SoFi Bank
CFO: Wing (An Alphabet Company)
Artificial intelligence (AI) has become increasingly significant for businesses across various industries and sizes. While AI chatbots, also known as generative AI, have gained widespread attention, there are numerous other ways in which AI can benefit businesses:
- Automation. Utilizing AI-powered automation, businesses can achieve cost reduction, enhanced efficiency and improved accuracy by automating monotonous tasks like data entry, customer support and inventory management.
- Data analytics. AI-driven data analytics empowers businesses to analyze vast amounts of data instantly, providing valuable insights that were previously unattainable.
- Natural language processing (NLP). NLP enables computers to comprehend and interpret human language, allowing businesses to automate customer support, enhance chatbots and improve accessibility for individuals with disabilities.
While AI can help streamline tasks and improve efficiency, companies must recognize the potential risks and establish strong AI governance practices to mitigate them. This is where the role of the board becomes crucial. The board is responsible for ensuring that the company is operating in a responsible and sustainable manner.
As AI becomes more pervasive in business operations, it's critical that the board take an active role in overseeing the implementation and governance of AI. There are several areas and questions the board should be thinking about related to AI governance.
Take inventory of AI use in the business. The first area the board should focus on is taking an inventory of how AI is being used. Many companies use AI without the board being aware of the level of use. Even non-technology companies are leveraging AI, such as fast food restaurants using AI for drive-through customer orders. The board should understand how data, algorithms and other technologies are being used in its business and service offerings, including third-party products that embed AI technologies. By taking stock of AI applications, the board can better evaluate associated risks and benefits.
Identify and mitigate risks. AI can also create new risks, such as bias in decision-making, loss of jobs and data privacy concerns. The board should ensure that these risks are identified and mitigated through appropriate AI governance practices. The board should also understand how AI is being used in operations, such as AI chatbots assisting with administrative writing tasks — from memos, reports and performance reviews to even drafting board materials. Safeguards must be in place to protect proprietary information and prevent data leakage.
AI use in board decision-making. AI has the potential to significantly impact big data utilization, not only in internal auditing but also as a tool for decision-making. In the boardroom, this can translate into helping the board get to insights and trends quicker. This can aid with strategic decisions and actions. It can also help the board better manage risks, understand competitive landscapes and even get more insight on customer needs and effectiveness of marketing and product strategies.
The board should consider which committee(s) will cover AI topics in their meetings and committee charters. Because of the potential for misuse or manipulation of data, boards should ensure that adequate security measures are in place when using AI technologies. The board should also communicate the importance of an ethical approach to technology adoption, audit AI uses, identify risks and threats from AI, and ensure safeguards are in place to prevent bias.
AI Governance Is an Ongoing Process
AI governance is an ongoing process that requires continual evaluation and adaptation. While AI technology evolves, boards should remain vigilant in addressing AI-related challenges and opportunities. This includes considering the potential impact of AI on the workforce, ensuring employee training to effectively collaborate with AI systems, regularly reviewing AI policies, and staying updated on evolving AI technologies and best practices.
By actively engaging in AI governance, the board ensures that the company's AI strategies align with overall business objectives and values. It ensures responsible and ethical AI development and implementation, compliance with applicable laws and regulations, and effectiveness in achieving the company's goals. AI governance should be treated as a major board responsibility, alongside other critical areas like ESG, risk management and cybersecurity. Through proactive involvement, the board can help ensure that the company is operating in a responsible and sustainable manner in the era of AI.