TheCorporateCounsel.net

Recently, A&O Shearman announced the release of its Annual Corporate Governance & Executive Compensation Survey – its first as a combined firm. The survey covers trends in shareholder proposals, Delaware case law, executive compensation, and more. One article – on pg. 45 – provides a governance framework for generative AI that is particularly helpful. Here are a few high points:

– The need for and shape of corporate governance is driven by a number of features (and consequences) of generative AI. Broadly, these can be categorized into a few key factors: legal and regulatory risk, market dynamics and people. The article then delves into each of these.

– Companies fundamentally want to do 3 things: deploy AI quickly and effectively, deploy AI safely with demonstrated risk management to key stakeholders, and maintain effective corporate governance without expending significant cost and time. A solid governance framework can help with achieving these objectives.

– While some may consider a complete overhaul of corporate governance frameworks, we do not believe that a lengthy and expensive overhaul is necessary. Instead, organizations can leverage existing policies and governance processes. A central AI governance structure acts as the central hub of a wheel with existing policies acting as the spokes. We structure this central framework as a 3-part hierarchy: Responsible/Ethical AI Principles, Policy on Use and Use Case Deployment Policy. The article takes a close look at each part of this framework.

Download the survey for more tips on using a centralized governance structure to apply existing policies to AI issues.

– Liz Dunshee