Sonita Lontoh is an award-winning Fortune 100 executive and public company independent board director.
As artificial intelligence, especially generative AI, becomes more advanced, many companies and boards are seeking to strike the right balance between exploring how best to leverage the advantages of AI and putting in appropriate guardrails to ensure that AI is used responsibly.
AI is still in its infancy, so we don’t fully know what AI is capable of or where it’s going to go. This makes it difficult for boards to create the guardrails needed for companies to use AI responsibly. What does responsibility look like? What sorts of problems do we want to avoid? These are the questions plaguing leaders as they attempt to use AI to its full advantage while avoiding business and ethical pitfalls.
Generative AI as we know it is evolving at lightning speed, and companies are experimenting with it in a multitude of ways to streamline operations, automate simple tasks and more. The uses of generative AI are growing rapidly, with an estimated $19.4 billion spent globally on generative AI solutions in 2023, according to International Data Corp.
According to McKinsey, most potential uses of generative AI fall into the 4C framework:
* Content summarization: summarizing and interpreting data sources
* Coding: generating and testing code
* Content generation: creating content such as contracts, outlines and communications
* Customer engagement: chatbots and customer data collection
Potential use cases of generative AI in business include smart mirrors in retail stores; outlining presentations, decks and reports; research, as AI can compute exponential amounts of data in seconds; medical research and drug discovery; product design and more. The opportunities to use AI are growing, and companies are deploying it to increase efficiency and lower costs while creating new opportunities for more personalized and faster customer experiences.
Creating content, conducting research and talking to customers are business-critical tasks and should not be taken lightly. The risks posed by using AI for these actions should be acknowledged by boards and addressed when creating guidelines for how to use AI responsibly. Such risks include:
AI can be unreliable for decision making. Despite its name, AI does not think like a human. AI depends a lot on data and algorithms, which can contain bias or inaccuracies and can lead to unintended consequences.
For instance, data the AI learns from may be biased due to the way the information is obtained or due to assumptions used by the machine learning process. As such, while AI can help with increasing efficiencies, it shouldn’t be used to make material decisions that affect people and society at large. It’s safe to assume that most AI use cases today should focus primarily on increasing productivity and efficiency.
AI creates both cybersecurity risks and opportunities. One of the major disadvantages of AI is the possibility of hackers using it to launch more sophisticated assaults. Another risk is potential alert fatigue resulting from increased false positives when machine learning algorithms can’t identify threats that don’t fit pre-existing patterns.
AI also presents great opportunities for cyber defenses. In addition to enabling a much faster threat detection and response, AI may also help identify vulnerabilities and reduce risks earlier by proactively spotting new patterns, trends and insights.
AI affects the workforce and society. AI has the potential to both displace and enhance our workforce. It can create both risks and opportunities for companies and workers. Which jobs or roles will be most affected by AI? What human-machine interactions are the most optimal with AI? How should leaders deal with the positive and negative ramifications of AI in our workforce and society? Without thoughtful consideration of these fundamental questions, AI can be a source of major risks for companies and societies.
Acknowledging the risks above and taking into consideration other business and ethical factors, boards should create a framework for AI governance that enables their companies to experiment with AI use cases but also place guardrails to ensure their companies practice ethical AI and are compliant with AI-relevant laws and regulations.
1. Integrate AI into your overall business strategy. Boards and management should understand how AI may impact their business operations internally, their customers and partners externally, their industries in general and specifically how AI may disrupt the relevance of their business models. Boards and management should not view AI in isolation as a technology, but rather, AI should be integrated fully into the company’s overall way of navigating material risks and opportunities to create long-term value.
2. Balance risks with opportunities. There is always a tension between over-indexing on risks and chasing opportunities or shiny new objects with wild abandon. Boards and management need to find that sweet spot where risks and rewards are optimal based on where the company is on its AI journey. There is a tendency for boards to over-index on risk mitigations, but given the infancy and exponentially fast-moving nature of AI, boards must ensure their risk framework allows for fast experimentation to find new ways AI can be used responsibly. Companies should not be afraid to experiment while taking into consideration ethical AI use cases and compliance with the relevant laws and regulations.
3. Create a code of conduct to ensure ethical AI use. While it is not possible for anyone to accurately predict how AI may affect companies, workers, customers and society in the future, we should be thoughtful in ensuring that AI enhances rather than destroys humanity. One way boards can allow for AI experimentation while ensuring ethical use is by creating a code of conduct that sets rules governing the norms, responsibilities and guiding principles of their companies’ AI approaches.
The explosion of AI into the world has changed the way we operate and created a lot of excitement and concerns. AI comes with great potential and great risk. Companies would do well to prepare for their evolving AI journey by creating human-centered and ethical AI guiding principles using the strategies above.
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