Boards: Human intelligence is important in the AI era

Dr. Srinath Sridharan

Author | Policy Researcher | Corporate Advisor

In the vast arena of corporate governance, the integration of artificial intelligence (AI) presents both remarkable opportunities and formidable challenges. As we navigate this era of unprecedented technological advancement, it is imperative for Boards of Directors to recognise the enduring significance of human intelligence and gut instinct. While AI offers transformative capabilities, the human element remains irreplaceable, necessitating that Boards remain agile, engaged, and well-versed in AI technologies.

AI’s potential to revolutionise decision-making processes, enhance operational efficiencies, and drive innovation is undeniable. AI can significantly enhance Corporate Governance by providing advanced tools for data analysis, risk management, and decision-making. Through machine learning algorithms, AI can analyse vast amounts of data to identify trends, anomalies, and potential risks that might be overlooked by human oversight. This capability allows for more informed and timely decision-making, ensuring that Boards can proactively address issues before they escalate. Additionally, AI can automate routine compliance tasks, streamline auditing processes, and improve the accuracy of financial reporting. By offering predictive analytics, AI helps in forecasting future scenarios, thereby enabling Boards to make strategic decisions with greater confidence and precision.

However, the adoption of AI also brings with it significant challenges. One of the foremost concerns is the potential for over-reliance on algorithmic decision-making. AI systems, while powerful, are not infallible. They can be prone to biases inherent in their training data, and their outputs may lack the nuanced understanding that human experience and intuition provide. This underscores the necessity for Boards to exercise critical oversight and to blend AI-driven insights with human judgment. Gut feel, honed through years of experience, offers a qualitative dimension that AI alone cannot replicate. It enables Directors to sense market shifts, understand stakeholder sentiments, and navigate complex ethical considerations.

Furthermore, the ethical and regulatory landscape surrounding AI is still evolving. Boards must stay informed about legal requirements and ethical standards to ensure responsible AI deployment. This includes understanding issues related to data privacy, security, and the potential societal impacts of AI technologies. Directors must be proactive in setting policies that govern AI use, balancing innovation with accountability.

The agility of a Board in adapting to AI advancements is crucial. This agility is not just about adopting new technologies but also about fostering a culture of continuous learning and adaptability. Boards should prioritise ongoing education in AI and related fields, ensuring that Directors are well-equipped to understand and oversee these technologies. This might involve partnering with AI experts, engaging in regular training sessions, and staying abreast of the latest developments in AI research and applications.

Engagement is equally important. Directors must be actively involved in discussions about AI strategy and implementation. This means asking the right questions, challenging assumptions, and ensuring that AI initiatives align with the organisation’s broader strategic goals. Active engagement helps prevent the risk of AI projects becoming siloed or misaligned with the company’s mission and values.

Moreover, an informed Board can better navigate the risks associated with AI, such as cybersecurity threats and operational disruptions. By understanding the intricacies of AI systems, Directors can implement robust risk management frameworks, ensuring that the organisation is resilient in the face of technological uncertainties.

Boards of Directors must strike a balance between leveraging AI’s capabilities and preserving the insights and instincts that come from human intelligence.

•  Srinath has been a strategic counsel for over 26 years, with leading corporate across diverse sectors including automobiles, e-commerce, advertising, and financial services. Independent Director across multiple sectors. Advises organisations on the intersection of finance, digital, ‘contextual-finance’, consumerism, urban studies, GEMZ (Gig Economy, Millennials, Gen Z) & ESG. Prolific media columnist across topics he works with. He is also the Editor and Co-author of ‘Time for Bharat’ (a book on public governance). X: @ssmumbai