Panelists on a recent Governance Intelligence webinar, held in partnership with Nasdaq, shared their expert insights on how the way in which boards operate may evolve as they face new demands but also new opportunities and gain new tools.
Technology, regulations, shareholder activism and pressures from non-investor stakeholders all require boards to be prepared to work in new ways. The webinar discussion focused on boards’ evolving use and oversight of AI, evolving approaches to engagement and boards’ role in risk management.
The governance experts on the panel were: James Harley, principal product manager at Nasdaq; Hatsuki Miyata, executive vice president, general counsel and secretary with Balchem Corporation; and Joseph Skrokov, senior director and assistant general counsel with Regeneron Pharmaceuticals.
Click here to watch the free, on-demand webinar.
The future of boardrooms – as with so many other facets of life – is likely to be heavily influenced by the emerging use of AI. Harley began the discussion by noting that huge amounts of data and information end up in the hands of directors to support decision-making and other aspects of board activities. Until now, he said, this preparation of data and information has been largely two-dimensional.
Now AI gives boards ‘the opportunity to engage with that data in a way that hasn’t previously been possible’ – such as to ask questions in the context of scenario mapping, Harley said. ‘But on a more simplistic level, [AI can help by] summarizing the information they have [and] bringing them a consolidated view across the different datasets, across the different insights they have access to.’
Governance teams have an important role to play in setting the scene for AI at the board level, firstly by making sure the topic is on the board’s agenda for discussion, Harley added. AI will also need board oversight, meaning it’s important for governance teams to ensure directors have the right training and education to appreciate the risks and opportunities it presents, he explained.
In terms of board training on AI and other new technology, Miyata commented that it can sometimes be helpful to bring in outside experts to help directors understand foundational terminology and concepts as a starting point. She also noted that the AI space is developing rapidly, so ‘you may think you’ve got the right training and then three months later maybe you’re a little bit behind… You have to keep an open mind and be continuous learners.’
‘For many boards these days, one of their most important fiduciary responsibilities is the oversight of management’s AI strategy,’ Skrokov commented. On the risk side, that entails ensuring there is an appropriate governance framework in place that will likely involve policies governing the use of AI by the workforce, robust training on those policies and testing of any tools before they are used, he explained.
On the opportunity side, board oversight involves overseeing the company’s business strategy and challenging management to explain how AI does or does not fit into the big picture, he added.
The panelists were also asked to make predictions for the slightly longer-term evolution of boards. Among their responses, Skrokov said board sizes may increase contrary to recent trends of keeping numbers of directors level or even seeing leaner boards as more efficient.
‘That may need to turn on its head… There are so many unique and complex oversight priorities being thrown at boards these days and they’re being pushed by various stakeholders. It’s almost too much,’ he said.
You can hear the panelists’ other predictions and insights on the future for boards in terms of risk management, stakeholder engagement and regulation by downloading the full webinar (for free) here.
Ben Maiden
Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...
