Insights from the 5th Episode of Academia de Guvernanță: AI in Corporate Governance - Opportunities, Risks, and the Evolving Role of Boards
The 5th episode brought together Vitalie Tataru, Founder & CEO AC Tech, and Carmen-Daniela Micu, MABPD EMBA MEng, CEO and Co-founder Envisia, who explored the theme "AI – Risks and Opportunities in Governance".
The 5th episode of Academia de Guvernanță delves into the transformative impact of artificial intelligence (AI) on governance processes, highlighting both the opportunities and risks it presents. Carmen Micu, CEO and founder of Envisia - Boards of Elite, emphasizes that AI radically improves the performance of organizations across the economic and social ecosystem. AI is expected to boost GDP, improve customer experiences, and enhance business forecasting capabilities. However, the most significant advantage AI offers in governance is the increased transparency it brings to decision-making processes.
Despite these benefits, AI implementation comes with risks, particularly concerning business ethics. Micu notes that the data input into AI systems can reflect biases or be manipulated, referencing past incidents like Google's algorithmic bias. There is also the phenomenon of AI "hallucination," where systems generate fabricated outputs if poorly structured. The risk of AI being influenced by entities with manipulative agendas further necessitates strong governance and oversight of AI implementations.
Vitalie Tătaru, CEO of AC Tech, stresses that AI systems rely on a data infrastructure, and errors or intentional manipulation in data can lead to significant negative consequences. To mitigate such risks, companies must adopt a robust digital resilience management framework that includes cybersecurity, risk evaluation, and preventive measures like intrusion detection systems. Tătaru explains that company personnel must closely monitor AI systems to prevent unauthorized data modifications or theft.
For effective AI governance, Micu asserts that boards of directors must take responsibility for creating policies that oversee AI usage. This includes establishing governance structures, such as committees, to manage AI within organizations. As companies grow and their ecosystems become more complex, AI governance committees are becoming standard practice to ensure the transparency and accountability of AI systems.
Education is another key factor in managing AI implementation. Board members must develop a deep understanding of AI's implications, including the potential risks and how to mitigate them. Good corporate governance practices recommend appointing a board member with expertise in AI governance to oversee the complexities and challenges associated with AI's future role in corporate environments.
The European Union’s Digital Operational Resilience Act (DORA), set to be implemented in January of the following year, will further regulate AI use, particularly in sensitive industries like finance. Tătaru explains that boards will play a pivotal role in ensuring compliance with DORA, which requires companies to adopt policies, solutions, and techniques to identify and manage risks. Continuous monitoring, evaluation, and collaboration with third parties are crucial, as companies increasingly rely on interconnected digital technologies.
Addressing these challenges requires board members to enhance their technical knowledge and awareness of AI risks. Tătaru acknowledges that some companies may struggle with compliance initially, but strong leadership at the board level can set an example for the rest of the organization by balancing innovation with regulation.
Micu highlights the three primary responsibilities of boards: supervision, monitoring, and mentoring. AI can assist with monitoring, but decision-making requires human insight. As AI systems become more integral to governance, board members must develop critical thinking and independence to manage risks effectively and interpret AI-generated data accurately. This requires ongoing education and the development of specialized AI governance skills.
In response to the growing demand for AI expertise in governance, Envisia is launching a new program in partnership with DATABORN and Vitalie Tătaru to develop AI competencies for board members. The program, set to begin in November, aims to provide board members with the knowledge and skills necessary to implement AI governance effectively and establish AI oversight committees.
The entire discussion is here.
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