How boards can effectively oversee AI to drive value and responsible use

The state of AI has advanced at a faster pace than almost anyone had expected. The disruptive power of AI is now clear, and companies are actively looking to identify how they can use this technology to transform products, services, operations and workflows.

For boards, engaging with AI means providing oversight and feedback to management while fostering a spirit of experimentation and exploration. This includes making sure the AI strategy drives value creation and is aligned with business objectives, while also considering risks and taking steps to implement AI responsibly.

1. Develop a board approach and agree on who will oversee the transformation

The board’s role, as with any significant strategic initiative, is to provide oversight and guidance to management. Typically, the full board should be involved in overseeing the company’s AI business transformation given its strategic and risk implications.

Key board actions:

• Understand who owns oversight.
• Make sure there is clear management accountability and board touchpoints.
• Continue to assess and develop the board’s AI knowledge.

2. Align with management on a formal strategic plan to adopt AI

This technology offers businesses real solutions to a wide range of problems. It shouldn’t be viewed as just a source of productivity or “back office” efficiency. AI’s transformational power and value lie in its ability to unlock new growth and business strategies.

Key board actions:

• Understand management’s process for identifying and prioritizing opportunities for AI adoption.
• Oversee the company’s strategic assessment and plan.
• Evaluate resource investment.

3. Understand management’s approach to Responsible AI

Boards face a crucial responsibility in the AI era: overseeing the key risks associated with AI deployment and making sure that management is putting appropriate controls in place to manage those risks. Adopting Responsible AI practices is critical to help companies make consistent, well-informed decisions when adopting Ai and allow them to execute their Ai strategy at speed.

Key board actions:

• Make sure there is a risk foundation.
• Dive deeper on AI models that can create higher risk.
• Understand how management fosters trust with stakeholders.

4. Discuss the evolving regulatory landscape for AI

As AI technologies continue to evolve, the regulatory landscape will likely follow suit. Companies will need to take a proactive approach to capitalizing on opportunities while monitoring and complying with regulations now and in the future.

Key board actions:

• Understand management’s approach to regulations and compliance.
• Discuss contract and legal implications.

5. Oversee management’s talent strategy and how mindsets will shift

The hardest part of any organizational transformation can be culture change, and transformation using AI is no exception. The right talent strategy and ability to change behaviors is critical to success. This shift will demand a focus on new skills, talent sourcing, development and measurement, alongside a significant cultural transformation.

Key board actions:

• Prioritize people and culture.
• Make sure communications happen often and early.
• Understand talent strategy changes.
• Discuss the approach to productivity.

6. Monitor management’s performance for success

Performance monitoring is crucial to verify that investments are yielding the desired outcomes. Companies and boards may not yet have fully established systems for monitoring AI success, but it is important for them to look ahead to prevent AI initiatives from becoming financial black holes. Boards will need to understand whether AI strategies are producing results.

Key board actions:

• Have regular reporting on progress.
• Get metrics to evaluate success.

The value-generating potential of AI is significant – as are its risks. But companies will not realize its transformative effects without focused planning and disciplined execution.

In this complex and rapidly changing environment, boards can help management set their sights appropriately while making sure that they are implementing AI responsibly. While AI technologies are advancing with great speed, the real work of corporate implementation will take years to play out.

By helping management keep an eye on the big picture and the most effective, strategic impacts and risks, boards can help their companies navigate this major technological shift.