The effect of AI on the board of directors

Artificial Intelligence (AI) is a popular topic of conversation in the world of governance, with organizations worldwide wondering how it will affect their business. Boards of directors are feeling the impact when it comes to operations and responsibilities. They must ensure that their companies are future-proof regarding the advancement of AI, while also exploring and investing in the benefits that it can provide.

So, what are the key effects of AI on boards of directors? And should boards be worried about the impacts? This article examines the key benefits and drawbacks of this controversial technology.

Benefits of AI for boards of directors

AI presents many opportunities and benefits to boards of directors when used appropriately; we’ve rounded up the top advantages below.

Improved decision making

One of the most obvious benefits of AI is the ability for boards to analyze large amounts of data in a short amount of time. AI often provides quick insights which can help boards of directors make decisions, backed by accurate information. AI can also provide competitor analysis, aiding in long-term strategic planning.

Operational efficiency

Board of directors’ meetings require a lot of time and planning. With AI, corporate secretaries can automate routine tasks such as meeting scheduling, document preparation, and even taking meeting minutes. With time saved, corporate secretaries can spend their time on other strategic avenues.

Risk mitigation

While AI brings some risks with it (more on that here) it can also help boards avoid risk, by helping to identify potential issues through trend and pattern analysis. Moreover, AI may be able to find potential risks that are not be immediately obvious to board members, helping them to proactively identify and address risks that could impede business strategy and growth.

Compliance and governance

Boards are required to keep companies on track regarding regulatory compliance and AI can assist with ensuring that this is the case. AI can monitor activities and flag potential issues, ensuring that boards maintain high compliance and governance at all times.

Potential risks of AI for boards of directors

While there are many benefits of AI, if misused AI could pose a threat to business operations and the overall reputation of companies. Below are the biggest risks boards could face when investing in AI.

Data inaccuracies

Relying on AI to gain data insights can sometimes result in inaccuracies. Some AI systems may be trained using incomplete data, creating unreliable results. It’s important that boards keep this in mind when making strategic decisions with the assistance of AI.

Biased data

All AI systems are trained with certain training data. Depending on the data used to train the system, it can result in algorithm bias further down the line. It’s important for the board of directors to use AI with caution and implement safeguards when using AI.

Data privacy risks

AI systems need a lot of data to work properly, which raises privacy and compliance concerns. Boards need to ensure that they don’t misuse or share private information with AI systems that could put their business at risk.

Regulatory compliance

Regulations around AI are constantly evolving and changing. When using AI, boards must ensure that they do so in compliance with regulatory standards, and that they keep up to date with the evolving regulations. Moreover, if they are promoting the company-wide use of AI, they should be reviewing regulations often to avoid potential legal issues.

Operational risks

It’s clear that AI can streamline processes and reduce time spent on work tasks. However, over-reliance on AI can result in operational risks if the technology breaks or is not administered correctly. Boards need to ensure that companies and personnel are still well-trained

Transformative board of directors’ software

AI can be a great tool for boards and improve their ways of working. However, it’s important that boards take a balanced approach to AI in order to maximize the benefits but minimize any potential risks.

With AI solutions still in development, many boards are turning to board management software to help them automate processes and improve operations. BoardWorks is board of directors' software that enables boards to streamline processes and easily access confidential documents in a secure location for increased productivity and engagement in board meetings.

To learn more about how BoardWorks can assist your board of directors, contact us.