Are boards well equipped for the future of AI governance?

AI has taken the world by storm in recent years, offering businesses a range of benefits, from efficiency and productivity to innovation and better services. But many boards are still getting up to speed with AI. Consider some of the discoveries of AI Governance: A Critical Imperative for Today’s Boardsa Deloitte Global Boardroom Program survey of nearly 500 board members and C-suite executives in 57 countries:

• Nearly 50% say AI is not on their board’s agenda.
• More than 75% recognize that their boards have limited, minimal or no knowledge or experience with AI.
• More than 40% say their organizations are not ready for AI.

With many companies now planning to scale AI across their organizations, nearly half (44%) of respondents say the pace of AI adoption needs accelerate—the issue of governance and supervision is highlighted. Instilling a mindset of trust and ethics from the beginning is vital to shaping short- and long-term adoption.

The time is now

More than 40% of respondents in Deloitte’s global survey do not believe their organizations are ready for a broader deployment of AI, with just 3% saying their organizations are very prepared. Indeed, the expansion of GenAI in particular is proving challenging, with many efforts still in the pilot or proof-of-concept phase.

This still nascent state of AI presents an opportunity for boards to contemplate, define, and scale AI oversight in ways that allow the board to maximize the time it devotes to the organization’s most strategic topics. To achieve this, councils must get involved, communicate transparently between multidisciplinary teams and continue to update themselves on the topic. Right now, however, nearly half of respondents are not satisfied or concerned about the amount of time devoted to board discussions about AI.

Part of the reason for the lack of engagement may be the limited understanding most boards have of the “art of the possible” in using AI, with only 2% of respondents saying they consider their boards to be highly knowledgeable and experienced with AI. To remedy this, nearly 60% of respondents say they are independently seeking to improve their own knowledge, while others say they are providing basic board training or hiring outside experts to learn about the opportunities and challenges presented. by AI. Some are even turning to immersive experiences, using digital avatars and demonstrations to help board members become more fluent in technology.

Addressing board-level AI governance is even more critical when considering the popular adoption of readily available GenAI tools, especially among employees. While many companies still limit their workforce’s access to approved GenAI tools, your data could be at risk if employees use unsanctioned tools.

Taking action

With two-thirds of organizations increasing investments in GenAI, according to research from Deloitte in the US, boards will likely have to start addressing AI risks sooner rather than later. To develop effective governance models, boards should consider the following steps:

• Put AI on the board agenda and make it strategic. Boards that are not already discussing AI should consider adding it as an agenda item. They must decide how often AI should appear on board agendas or whether a special session might be necessary. Boards should also consider bringing in management to hear their analysis of risks and opportunities to inform strategy and scenario planning. Other areas of focus include figuring out how and when they will assess management’s AI ambitions and measure results, their risk appetite for AI, and how they intend to review regulation across geographies and jurisdictions.
• Define the governance structure. To effectively exercise supervision, Boards will likely need to outline and assign AI-related responsibilities. This includes deciding which issues need the full board’s attention and ensuring that members receive the most robust and beneficial information from management. Boards may also need to consider connecting with business leaders beyond the CEO or chief technology officer, while striking the right balance regarding the level of board involvement.
• Assess and improve AI literacy. To effectively oversee the opportunities and threats posed by AI, boards must consider whether they and their management teams have AI expertise. They should explore training and education opportunities to help the board upskill in emerging technologies and remain actively involved in the evolving AI landscape. Boards may also want to consider whether they need to recruit board members with more experience in AI and emerging technologies or revamp their succession plans accordingly.

In a complex environment where opportunities, challenges and priorities frequently arise, it is critical for organizations to govern at scale, whether in relation to AI oversight or another emerging topic. This means challenging orthodoxies while implementing balanced processes that enable the board to operate efficiently, transparently and in the best interests of the organization as a whole – supporting growth, creating long-term value and sustaining the organization.

To read more about AI governance and the role of boards, check out the AI Governance: A Critical Imperative for Today’s Boards from Deloitte’s Global Boardroom Program on Deloitte Insights.com.