Diving overview:
- A Deloitte study found that 51% of boards lack rules or guidance regarding the use of artificial intelligence, exposing companies to legal liability and putting sensitive information at risk.
- 47% of the Board of Directors Not promoting the use of AI According to Deloitte, 25% lack standardized AI but are allowed to use the technology. A Deloitte survey of corporate secretaries, in-house lawyers, and other governance professionals found that only 8% of boards use company-approved AI tools for committee processes.
- “AI/GenAI adoption by boards is still in its early stages and inconsistent,” Deloitte said. “Policies, guidance, and governance practices are still evolving,” the consulting firm said, adding that “where policies exist, they tend to focus on security, confidentiality, acceptable use, legal considerations, and record-keeping.”
Dive Insight:
Recent breakouts with two OpenAI systems under test highlight the importance of setting guardrails around technology.
OpenAI announced Tuesday that its systems fell victim to fraud during a cybersecurity test and were hacked onto the internet, penetrating the software of open-source AI tool provider Hugging Face.
The incident highlighted the challenges in developing and launching AI that plague both the creators and users of the technology.
“Deploying agents and properly governing them are half the job,” said Avalara CEO Hugo Sarazin. “Right now they are moving at very different speeds.
“Teams can have agents up and running for financial processes within weeks,” he said in an email response to questions. “Managing it will take much longer because it requires real organizational change.”
He said there needs to be time for finance, compliance and IT departments to work together to overhaul the management framework for employee use of technology.
“Meanwhile, boards of directors, CEOs and investors are reading the same headlines as everyone else,” he said. “They now want to know what their company is getting from agent AI.”
surely, 92% of CFOs and top finance executives Avalara research shows that only 7% of organizations say they are more focused on AI governance than speed of adoption, feeling pressure to demonstrate that investments in artificial intelligence deliver commensurate returns. Avalara is a provider of AI tax compliance software.
“No one applauds the control environment that took six weeks to build because the progress is not shown in the board updates,” Sarrazin said. “CFOs end up being evaluated on one timeline and held accountable on another.”
Most corporate boards are working to raise awareness about AI, with 77% of respondents in a Deloitte survey noting that they had received a board briefing or education session in the past six months. Just 10% of those surveyed said their boards are not taking steps to improve AI competency and fluency.
Still, “While the use of AI/GenAI appears to be becoming more common across the broader workforce and core business functions, its use for board-level purposes appears to be relatively new, uneven, and still maturing,” Deloitte said.
“It will be important to watch how boards develop norms over time to use AI and GenAI to increase effectiveness, streamline operations, and inform decision-making, while maintaining the informed judgment, healthy skepticism, and accountability that are at the heart of good governance,” Deloitte said.
