Boards should upgrade their structures to deal with the governance of new technologies and clearly define the board’s role in data oversight, a leading US governance body has said.

The National Association of Corporate Directors (NACD) has issued the report as corporates across the world come to terms with the impact of artificial intelligence on business models and strategy.

According to the NACD, there are six key issues driving the need for upgraded governance over technology, which include the fact that technology innovation is beginning to outstrip boardroom experience.

They also highlight: a growing public focus on whether data and technology can be trusted; the shortening of strategy timelines; and the patchwork of “uneven” regulation around the world targeting AI and data.

Nora Denzel, co-chair of the NACD’s special commission looking at governance and technology, says: “Boards must strengthen oversight, deepen insight, and develop foresight alone with adopting a strategy-centred approach that balances risk and opportunity.”

In recent weeks, Board Agenda has partnered with Diligent to focus on the governance of AI. At a special briefing event, delegates heard that AI governance must go beyond compliance.

The CEO’s responsibility

Author, researcher and PwC AI policy expert Maria Axente told the meeting that AI governance must remain the responsibility of chief executives.

She warned the governance issue should be “owned” by CEOs.

“Not the legal function, because Legal can very easily go off down the compliance route,” she said. She added that AI requires not only compliance but “ethical decision making” on the part of corporate leaders.

The emergence of ChatGPT at the end of 2022 and numerous other generative AI solutions has caused a widespread rush to incorporate the technology into business strategy and operations.

The special briefing audience also heard speculation that boards now need dedicated AI or technology committees. The idea was challenged as unnecessary by one governance expert.

AI is not becoming a feature of operations. Some companies have turned to placing the technology in their boardrooms as part of their decision-making process.

Canadian company Realbotix announced last week it had appointed its own proprietary AI, Aria, a “AI-enabled, humanoid robot and brand ambassador” to its board as a non-executive director. The company describes Aria as having an “unfiltered, adult-focused conversational style”.

The NACD stresses the pressure on companies to incorporate technologies into their plans and yet maintain oversight.

“Boards face a tough balancing act,” says David Kenny, co-chair of the NACD’s technology commission. “They need to encourage management to innovate quickly while also acting as a steward of hard-earned trust with both customers and shareholders.”