AI gaps in the boardroom are becoming a reputational risk
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AI is reshaping corporate strategy at record speed, yet many responsible for overseeing it aren't keeping pace.
Why it matters: That gap is increasingly a reputational and governance risk, not just a technical one.
The big picture: Companies across every industry are being forced into rapid AI-driven transformation, but many corporate boards lack the expertise to guide strategy, manage risk or communicate decisions credibly to stakeholders.
By the numbers: Only 39% of Fortune 100 boards have any form of AI oversight, such as committees, a director with AI expertise, or an ethics board, according to McKinsey research.
- Another recent report found that only 13% of S&P 500 companies have at least one director with AI-related expertise.
- Similarly, McKinsey's survey of directors found that 66% say their boards have "limited to no knowledge or experience" with AI, and nearly one in three say AI does not even appear on their agendas.
- And a report from the National Association of Corporate Directors (NACD) found that only 17% have established an AI education plan for directors, and 6% have a dedicated committee to oversee AI.
Between the lines: Having an AI-savvy board is a major competitive advantage, according to a recent MIT study.
- Those with AI-literate directors outperform their peers by 10.9 percentage points in return on equity, per the study.
The intrigue: Some CEOs are using AI to craft their own unofficial board of directors, chiefs of staff or even an AI version of themselves to serve as a sounding board.
- Still, AI isn't replacing governance anytime soon. There's a broad consensus that human judgment remains essential for overseeing risk, maintaining ethics and managing corporate reputation.
What they're saying: "There is a pretty material variance or spread across companies, around at a board and leadership level, around knowledge, adoption and use of AI, "says Brian Stafford, CEO of Diligent, an AI-powered governance, risk and compliance company.
- The use of AI in the boardroom is also on the rise, says Stafford, adding that ignoring it could lead to more exposure.
- "X number of years from now, what if a board or company didn't use AI to interrogate their financial statements, and there was fraud?" Stafford asked.
- "Board members have a fiduciary responsibility, and if you had a tool that was available to you and you didn't use it, that's a different way to think about risk or legal risk," he added.
What's next: Boards are attempting — but struggling — to recruit AI-literate directors, says Boardsi CEO Martin Rowinski.
- In the meantime, organizations like NACD are rolling out AI oversight certifications and training programs to close the gap.
What to watch: AI board members could be here soon, suggests Stafford.
- "You could have an AI board member that was steeped in the knowledge of every single board presentation you've ever written, remembers it perfectly, understands what you may have told your board two years ago and what you're telling your board now, and be able to recall with perfect clarity," he said.
- "It can be trained up in the world around you, with depth around your competitors, markets, segments, and so I think it's an incredibly powerful capability."
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