The Latest Wave of Board AI Challenges

Is your organization prepared for what’s next?

by Michael W. Peregrine, Executive Fellow

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The extraordinarily rapid evolution of AI is creating an entirely new wave of governance challenges to be addressed by the board of directors — above and beyond those identified by the board in connection with initial AI deployment by the organization. These new challenges, and questions they present to boards, include the following:

• The value of imagination, coupled with diligence, in connection with board evaluation of the current AI environment. Can directors effectively contemplate the full depth and scope of emerging challenges?

• Re-evaluation of the level of engagement and effort expected from board and senior management on AI-related topics. Are boards facing director and executive retention issues arising from AI complexities?

• Increasing director liability/D&O issues arising from third-party litigation grounded in AI-framed causes of action. What do the general counsel and the D&O carrier advise on liability exposure prevention?

• Whether the board’s ability to rely on management reports is compromised by the use of AI in report preparation. To what extent does human judgment contribute to materials presented to the board?

• The potential for AI implementation to significantly impact employee loyalty to the company. How detrimental is the threat of AI job displacement on employee retention and workforce culture?

• AI’s potential impact on the dignity of work within the company’s workforce. To what extent can AI be used to support, rather than replace, human skills, agency and knowledge?

• The continued effectiveness of AI governance and other internal technology compliance mechanisms. Has the speed of AI deployment surpassed the ability of internal AI governance/security controls to keep pace?

• The importance of monitoring stakeholder perspectives on the company’s AI-related products and services. To what extent have “doomsday” and other revelations impacted confidence and trust in AI systems?

• The public historically turns to business to solve problems that the government cannot, or will not, address. What are the pros and cons of the company exercising its perspective in the public debate on AI regulation?

• The extent to which AI tools truly augment workforce performance or rather increase employee burdens. Will the traditional productivity “J Curve” hold true for AI adoption, or are there signs of a deeper misalignment?

• The application of a Chair and CEO-led “whole of board” approach to AI-related oversight and decision-making. Will the company’s governance culture allow for coordinated/cross-committee board engagement on AI?

Thoughtful board consideration of these and similar new concerns will help confirm its “good faith” responsiveness to the rapidly evolving environment.