TheCorporateCounsel.net

A decade ago, Broc blogged about a “robot director.” That seemed far-fetched at the time. But since then, some boards have expanded the use cases for AI in the boardroom – for example, in director recruitment.

Of course, now there are conversations about directors having the type of expertise around artificial intelligence that would allow them to oversee AI risks & opportunities. That’s an appropriate consideration. But why not cut out the middleman? Should we start talking about “AI Directors” instead of directors with “AI expertise”? An Abu Dhabi company is taking the plunge with a non-voting board observer named “Aiden Insight”:

Aiden Insight is a virtual entity with sophisticated AI capabilities that aims to revolutionise the way IHC navigates the complexities of the global investment landscape. The groundbreaking initiative by IHC has been powered by the leading AI capabilities of G42 in collaboration with Microsoft, setting a new benchmark for excellence in AI development in the business and investment sector.

Here’s what Aiden is going to do for the board:

The role of Aiden Insight will encompass a wide range of responsibilities, including continuous data analysis, risk assessment, strategic planning support, innovation tracking, and ethical and compliance monitoring. Aiden will attend IHC Board meetings as a non-voting observer, offering real-time insights to inform discussions and guide decisions.

It sounds kind of appealing, to be honest, but still not a full-fledged board member. That’s because corporate law and the fiduciary duty framework only contemplates directors as natural persons. This HLS blog says that we are getting very close to the era of AI directors – and we really need to be expanding our legal framework to work with that:

As a result, global and national governance standard-setters have until now not been forced address the implications of AI board members. Neither the OECD governance principles nor national standards address the role of AI apart from the expectation that boards consider technology risks. In order for market regulators not to be caught by surprise – as their peers have been in the face of cryptocurrency or car-sharing innovations – the potential role of AI board members needs to be considered now.

This consideration should focus not only on legal responsibility of AI board members but also on aspects of their work that can help companies create value. AI board members may, for instance, be required to participate in board risk or technology committees. The latter are still not required by most regulators and are consequently rarely present even in IT companies which is a governance risk in itself.

The role of AI board members such as Aiden or Vital would need to be clearly defined not only in a sense of fiduciary duty but also from a broader philosophical perspective that would allow for creation of a governance framework in which they would be embedded. The relevant questions, ranging from AI directors’ potential contribution to board diversity to their role in board committees, are only now starting to surface. The latest announcement from Abu Dhabi highlights that there is no time to waste.

– Liz Dunshee