AI May Do Wonders for Your Business, But What About Your Risk Profile?
The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2024”.
Artificial intelligence (AI) was the biggest technology news of 2023. AI continues to revolutionize business in big and small ways, ranging from disrupting entire business models to making basic support functions more efficient. Observers have rightly focused on the plentiful value-creation opportunities this new technology affords. Less attention has been given to the risks AI creates for boards and management teams, which call for sophisticated governance, operational and risk perspectives. This article identifies key areas of risk and offers suggestions for mitigation on the road to realizing the enormous benefits AI promises.
In the last year, advances in generative AI have catalyzed board level discussion of use cases and increased budgets to fund investment and adoption, but for many corporations risk management lags behind and survey data indicate sub-optimal numbers of senior leaders taking ownership of AI risk management. Delays in formalized risk management and senior leadership involvement highlight the extent to which investment outpaces risk mitigation and corporate oversight strategies.
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