Artificial Intelligence (AI) is transforming how businesses run and make decisions, but without the right oversight it can introduce compliance, ethical, and reputational risks. While AI adoption continues to increase, 68% of businesses in Australia are using it, it’s critical this technology is treated by boards as a governance issue – not just an operational tool.
Today we’re unpacking how your business can navigate AI adoption safely and strategically. This includes looking at board responsibilities, risks, practical steps to build AI literacy for executives and implement governance frameworks, and how working with a trusted IT partner (like Perth Support) can reduce complexity and support secure, well-governed AI systems. Let’s jump into it.
Why AI Oversight Belongs in the Boardroom
First, let’s look at why AI oversight is a board-level issue.
- Regulatory bodies are tightening expectations around AI governance. This includes ASIC, APRA, and the EU AI Act.
- Shareholders and customers expect ethical AI use. This includes being fair, transparent, reliable, accountable, and safe – as well as upholding data privacy and security.
- Without the right governance and oversight, AI introduces significant risks including bias, non-compliance, lack of explainability, inaccuracies (hallucinations), and data misuse.
- This technology is evolving rapidly, and this comes with emerging risks including those around AI agents, synthetic data, and post-quantum threats.
- Even one failure resulting from AI systems can lead to a loss of trust and value for stakeholders. This could look like a biased algorithm or a data breach.
While AI presents significant benefits, beginning the journey with strong foundations and guidelines is critical to keep your team on the right path and mitigate risks.
Building AI Literacy at a Board Level
While directors don’t need to be able to code, they do need to stay educated around AI including building a clear understanding of risks, opportunities, and the importance of ethical AI use. This literacy is critical to support informed oversight, helping you to meet compliance while driving better decision making (and competitive advantage as a result).
To build this knowledge, we recommend calling on the experts. This can take the form of training, workshops, or seeking specialised advisory that keeps you on the right track and helps you avoid common mistakes. You also need to know what to ask your Chief Information Officer (CIO). To make things a little easier, we’ve put together 5 key questions you can start with below.
- How is AI being used in the business, and which challenges is it helping us to overcome?
- How is our AI strategy supporting our business goals or competitive advantage?
- What are the main risks AI use raises, and what are we doing to manage these? This includes how we’re keeping data secure.
- Do we have policies in place to support ethical AI use and accountability?
How are we supporting our people to harness AI and use it responsibly
Establishing Governance Frameworks
A comprehensive governance framework is also essential, providing strong foundations for your AI adoption journey. This framework ensures you can keep AI use responsible, safe, strategic, and consistent. To get started, you should cover:
- Integrating AI risk into your enterprise risk management (ERP) framework to support greater visibility and informed decision making.
- Defining core governance principles including fairness, accountability, transparency, and security.
- Assigning oversight responsibility, creating a risk or audit committee with clear roles that outline who’s responsible for approving AI initiatives, monitoring risks, and responding to issues.
- Creating and maintaining an AI use inventory, and requiring regular reporting to the board. An AI use inventory provides a comprehensive snapshot of the AI tools being used (from in-house systems to third party tools and current projects) including their purpose and how they’re delivering value, the data sources they draw on, the cost, and their risk level.
Oversight in Practice
So, once you’ve developed AI literacy for board members and established clear processes and rules that guide use, what should good oversight look like in the long run?
- Creating and upholding an AI policy, maintaining and reviewing audit trails, and conducting ethical reviews of AI systems to ensure they’re fair and responsible.
- Using metrics and dashboards to spot problems and biases, and monitor security incidents, compliance, and quality.
- Conducting regular compliance checks.
- Making sure your AI strategy and tools align with the business’ corporate purpose and environmental, social, and governance (ESG) reporting.
Remember, proactive oversight is critical to build stakeholder trust because it proves you’re committed to using AI tools responsibly, ethically, and securely.
How Perth Support Can Help
Is your organisation ready to drive innovation with responsible AI use? At Perth Support, we bring the right knowledge and experience, and help you build frameworks and governance processes that keep AI use safe, transparent, and compliant. Get in touch today to learn how we can help and get the ball rolling.