The world has reached an inflection point. Not only for business and industry, but for society at large. AI is the most often repeated word or terminology in our lexicon these days.
Artificial intelligence is increasingly transforming business processes and strategies across industry sectors. Companies are figuring out how to take advantage of AI, with the primary focus being on customers' needs and experience. And this is the best starting point. But it need not be the end destination.
Boards, board members and executives alike are excited at the chance to shape a future powered by the latest technologies of the day, including artificial intelligence and generative AI. Majority of us carry multiple devices which have AI in-built in them. However, a crucial area seems to be ignored or missing. AI can also be an extremely powerful tool to enhance internal decision-making processes. Corporate governance can be significantly improved through advanced analytical models and robust risk-management methods. Yet how many custodians of organisations use AI themselves to upskill and enhance their capabilities?
Nothing in life comes without its share of risk and responsibility. The decisions we as leaders make today will have significant impacts on the countries we run, the organisations we lead and societies around the world. Therefore, infusing a mindset of trust and ethics from the start is going to be a mandatory vital step to shape short-term and long-term adoption of this wonderful technology. While AI is definitely not new, its scaled-up use in organisations, and by employees, brings the question of governance and oversight of AI and gen AI into very sharp focus. There are many who are individually using free or paid versions of ChatGPT, Deepseek etc on their office devices. And yet, very few organisations have a playbook or processes in place to manage and understand the implications of which part of the world all this data could be going to get analysed and churned and stored.
It is now a given that AI can materially increase the quality of the information on which board resolutions are based. AI can also help directors in monitoring and anticipating business risks through the use of advanced risk-management tools. Directors and CXOs could benefit from the use of AI by tracking the capital allocation patterns of competitors to spot areas of improvement or alternative business strategies.
The opportunities AI offers are undeniable. Real-time data analysis enables boards to uncover trends and insights that might otherwise remain hidden. For example, AI can assess market risks, analyse financial performance and evaluate customer sentiment with unparalleled accuracy. At the same time, there is a great threat of misuse or over-reliance on AI systems.
Without proper understanding, boards and directors may fail to question AI-generated recommendations, leading to decisions that lack context or ethical grounding. Moreover, biases embedded in AI algorithms can lead to unhealthy outcomes, putting the organisation at reputational and legal risk. And how are senior directors expected to know whether algorithms have been created with biases? Aren’t we all aware that with great potential comes significant responsibility? AI’s capabilities can introduce risks if not understood or implemented effectively.
A key barrier to leveraging AI effectively is the lack of AI literacy among many boards. AI is a complex field, and understanding its capabilities, limitations, and implications requires foundational knowledge that many board members currently lack. Without this knowledge, boards cannot critically evaluate AI tools or integrate them into governance processes effectively.
Developing AI competence in the boardroom is essential. Boards must educate themselves on AI fundamentals, including how these systems generate insights, where biases might exist, and what limitations they face. AI also means the ‘Ability to learn’, and the ‘Intent or willingness to learn’.
Boards should also consider recruiting members with serious expertise in technology and data governance, as this is going to be the most critical differentiator going forward. Directors who understand AI at a deeper level ensure the board can proactively address its opportunities and challenges. AI literacy is not optional; it is a fundamental requirement for modern governance. The criticality is such that nowadays there are good organisations where CIOs, CTOs and Chief Data Officers are made to sign water-tight agreements to ensure the organisation’s goals, ethics and compliance are never compromised.
Bias is one of the most pressing ethical concerns. AI systems learn from data, and if that data reflects existing biases, the AI will replicate and even amplify them. Boards must scrutinise the development and deployment of AI tools to ensure fairness and inclusivity. Transparency is also critical to building trust among stakeholders. Data privacy is another ethical challenge. With increasingly stringent regulations on data usage, boards must ensure compliance and accountability. Artificial intelligence is no longer a distant concept; it is reshaping industries and redefining how organisations operate. For boards, integrating AI is not a question of if but how.
The challenge is clear: ensuring a balance between machine insights and human judgment. As a friend put it so succinctly: AI is not the villain. Leadership is. AI will not decide to replace jobs, leaders will. AI will not determine its ethical limits – those in power will. AI will not create inequality – those who design and deploy it will.
The fear should not be about AI taking over. It should be about the choices humans make in wielding it. The misuse of AI or any tool is never a failure of technology. It is a failure of the CIO/CTO/CXO and board leadership. The question is not whether AI will act ethically. The question is whether we as leaders will wield it with wisdom or greed.
So, what kind of executive leadership and board stewardship will define the AI era?
