There is a noticeable gap between organizations with boardrooms proficient in generative artificial intelligence and those lagging behind, as warned by Florian Rotar, chief AI officer at Avanade.
Rotar expresses concern about the growing disparity, indicating that some organizations may be left behind in their AI capabilities. Avanade, an IT services and consulting firm, has observed that some boardrooms are becoming increasingly adept at utilizing AI in various ways. Some examples include using generative AI to enhance board meeting preparation, conducting simulated activist investor exercises, and utilizing AI-enabled risk planning exercises.
The Importance of AI Governance
However, the adoption of generative AI by board members can pose risks to companies if proper AI governance measures are not in place. This includes establishing guidelines to ensure safety, compliance with policies, and protection of sensitive company information. In response to the surge in AI interest among employees, organizations have had to implement policies to regulate AI use effectively. Similarly, board members may require training to navigate the use of AI tools responsibly.
Nithya Das, chief legal officer at Diligent, emphasizes the need for board members to have a fundamental understanding of AI basics and the potential security and privacy concerns associated with AI tools. Training programs, such as Stanford University’s “The AI Awakening: Implications for the Economy and Society,” are recommended to educate board members about AI.
AI as a Top Priority for Corporate Directors
A survey by Diligent’s research arm indicates that generative AI will rank sixth on the priority list for board directors at U.S.-based public companies in 2025. While AI may not be the top priority, it is a significant area of focus for boards and companies. Leaders are grappling with issues related to data privacy, risk management, and the reliability of AI models.
Companies like Wayfair are exploring the deployment of generative AI technologies to enhance their businesses. Management teams play a crucial role in identifying opportunities to leverage AI effectively and communicating that vision to the board. Moreover, boards should consider investing in AI startups to access cutting-edge solutions.
Embracing Disruption and Understanding AI
Board members should adopt an outside-in approach to drive innovation within their companies, according to Fiona Tan, CTO at Wayfair. Understanding the nuances of generative AI technologies and their potential risks is essential for effective decision-making. Omar Khawaji, CISO at Databricks, warns against conflating AI usage with a deep understanding of how AI systems function and can be applied within a business context.
Khawaji likens the challenge of AI governance to preparing a dish seen in a cooking video – while the process may seem simple, the real work lies in managing and curating the data effectively. Leveraging AI models with the right use cases requires significant effort beyond simply using AI tools.
