Florian Rotar, chief AI officer at Avanade, warns that there is a growing disparity between organizations with boards well-versed in generative AI and those that need to catch up.
“I’m a little concerned that we’re going to see this difference in construction, and some people are going to get left behind,” Rotar says, during a virtual conversation hosted by the organization. luck In partnership with Diligent for The Modern Board series.
Avanade, an IT consulting and services firm, has worked with hundreds of organizations, and in those conversations has found that some boards have become “very sophisticated about using AI itself,” says Rotar. Some of the deployed use cases include relying on generative AI to better prepare for board meetings, piloting and simulating activist investor exercises, and AI-powered back-office exercises to better plan for business risks.
Risks without proper AI management
But as board members delve deeper into applying generative AI to their workflows, it could present some risks for companies if proper AI governance is not in place. This includes clear instructions on how to adhere to safety, policies and procedures without revealing sensitive company information. Over the past couple of years, employers have had to quickly put policies in place around the safe use of AI, especially after consumers’ increased interest in AI following ChatGPT’s debut.
The thinking was that employees would use generative AI whether they had management’s blessing or not, so HR and IT teams had to put in place restrictions, upskilling classes, and other forms of training, as well as internal AI playgrounds to allow for safety. exploration. Experts say the same logic should apply to board members as well.
“I think what we’re seeing is that there is definitely a need for a more fundamental understanding of the fundamentals with the board,” says Nithya Das, chief legal officer and chief administrative officer at Diligent, a governance, risk and compliance SaaS company. “You should assume they will find their own tools, and that may raise different security and privacy concerns for you as an organization, given the sensitivity of the board work and board materials.”
Das says training classes can be helpful in making boards familiar with AI, similar to the education that had to be done when cybersecurity threats came into focus in recent years. One such course, recommended by Rotar, is the Stanford University course “The Awakening of Artificial Intelligence: Implications for Economy and Society.”
Artificial intelligence is an increasing priority for business managers
Diligent reviewed a soon-to-be-published survey from the company’s research arm showing that generative AI will rank sixth on the list of priorities for board directors at U.S.-based public companies in 2025, trailing behind pursuing growth and improving financial performance, but above cybersecurity. and workforce planning.
Sixth place may not seem very high, but Das says it’s an indication that AI is top of mind. Leaders are still examining how knowledgeable their management team is about AI, and are working to resolve data privacy concerns and concerns about hallucinations, which can occur when AI models generate incorrect information based on invalid data.
“We believe that most boards and companies are at the beginning of their AI journeys, but they are certainly very interested in AI,” says Das. “We expect this to be a continued area of focus for 2025.”
Fiona Tan, chief technology officer at Wayfair, an e-commerce furniture and home goods retailer, says that even at digitally native companies, management has had to explain to their boards the difference between generative AI techniques and the traditional use of AI and machine learning that has been Already posted it.
“For the board, it’s actually understanding some of the nuances between what was predictive…what are the generative capabilities, what are the capabilities of large language models, and what are the risks,” Tan says. From there, they can consider where to deploy generative AI. For a company like Wayfair, this can include content creation and creating more personalized content to meet the needs of each specific shopper.
Tan says the management team should be responsible for looking at different opportunities to enhance the business using generative AI and articulating this vision to the board. This should also include monitoring AI startups that are building solutions that may be better off purchased rather than built internally from scratch.
Find ways to disrupt your own company
“For the board, it is about making sure we take an outside-in approach,” says Tan. “Where should we go in and disable ourselves?”
Board members and management should not confuse being enthusiastic users of AI with actually understanding how these systems work and their applicability to the business, says Omar Khawaji, chief information and security officer at Databricks, a data and AI software company.
“In fact, the trap I often see boards and other leaders fall into is: ‘I used AI, I know how it works, it’s been three months, why haven’t you magically solved the problems, x, y, z,’” Al Khawaji says.
He likens this common mistake in estimating AI readiness to watching a cooking video on TikTok. It may only take a few minutes to watch a dish being prepared by an influencer, but doing the same task at home can take hours.
“The challenge of managing, governing, governing, organizing, organizing your data is what happens in 90% of the business,” says Al Khawaji. The rest, he says, is about training the model and leveraging it for appropriate use cases.