KWM recently hosted a webinar where we heard from a diverse panel on governance challenges created by the proliferation of AI in business. Central to the panel’s discussion was balancing immense opportunities created by AI with the unprecedented risks associated with the use of AI. Below we share the key insights arising from the panel discussion.
Panellists
- Tim Bednall (Partner, KWM)
- Cheng Lim (Partner & Sector Lead, Technology, Media, Entertainment and Telecommunications, KWM)
- Nancy Fox AM FAICD (Chairman, Perpetual Equity Investment Company)
- Nick Munro (Head of Innovation & FinTech, AI Product Owner, Westpac Group)
- Fiona Pak-Poy (Chair, Tyro Payments & Non-Executive Director, Silicon Quantum Computing)
- Rebecca Waddell (Head of Legal AU NZ, TikTok)
Key insights
The importance of AI Governance Frameworks
- Organisations must develop and implement robust AI governance frameworks, which should include a clear AI strategy, policies, risk management frameworks, and compliance registers, integrated into existing risk management documentation.
- Board oversight is critical. However, a survey of regulated entities revealed that only half had updated their risk management frameworks to specifically address AI. Companies with clear AI strategies have benefitted most from the use of AI.
- The maturity of AI governance often does not match the level of AI use within organisations, highlighting a gap that needs urgent attention.
Board responsibilities and oversight
- The advent of AI has raised the bar for directors in providing adequate oversight over the corporation. While adequate oversight may involve having an AI specialist on the board, the jury is still out on the viability and effectiveness of this measure.
- Effective oversight includes embedding AI considerations into all board activities, not treating AI as a fragmented or isolated issue.
- The rapid pace of AI development means that reports and best practices can quickly become outdated. Directors must stay informed and be proactive in updating their knowledge and governance practices.
- Board leadership is essential in navigating the opportunities and risks of AI. Elevating AI to a strategic governance issue, building director capability, and ensuring robust oversight and risk management are critical for organisations to thrive in the evolving AI landscape.
Practical challenges and opportunities
- Larger companies are moving quickly to integrate AI, often embedding it into strategy, audit, and remuneration committees, while smaller companies face resource and capability gaps.
- The biggest risk identified is inaction; boards must prudently manage risks while not missing out on the opportunities AI presents.
- Boards must be mindful of legal risks, including confidentiality and privilege. It is advised not to use open AI systems for sensitive or privileged material and to ensure access is restricted to authorised personnel.
- The use of AI tools in boardrooms, such as for minute-taking or as AI avatars supporting discussions, introduces, on one hand, new risks around discoverability and confidentiality. There is a need for clear policies on the use, distribution and disposal of AI-generated materials, especially transcripts and draft minutes. On the other hand, AI can reduce the burden of administration associated with some board roles which may create new opportunities to reimagine and maximise those roles.
