Artificial intelligence (AI) is becoming a regular feature of boardroom discussions, but many directors are not yet equipped to engage with it. Research by Deloitte shows that two-thirds of board members have “limited to no AI knowledge or experience”. And one-third are “not satisfied” or “concerned” with the amount of time their boards spend discussing it.
In our latest Board Masterclass, governance expert Ralph Ward shared practical guidance on how boards can approach AI oversight with confidence, from asking the right questions to understanding the risks.
Here are five key actions every board should take this year.
1. Move past the hype and focus on governance
AI has moved through several waves of hype in a very short period of time. At first it was portrayed as a revolutionary technology that could solve almost anything. Then skepticism followed as some questioned whether it would deliver on its promises.
Now, though, boards are now entering a more practical phase. “It’s been what I call a Wizard of Oz approach in governance management,” Ralph explains. “At first we thought it was huge, monstrous, all powerful. Then people looked behind the curtain and said, ‘this is all a scam.’ Now we’re getting to the stage where we’re realising it could actually be useful depending on how we use it.”
For boards, the challenge is understanding how the technology could change the company’s strategy and making sure the risks are properly managed.
“Boards have a very important role in this,” Ralph says. “They’re dealing with strategic opportunities and oversight, and they need to understand how AI is going to have an impact on business models and risks.”
2. Understand the different types of AI
For many directors, AI still feels like a vague concept. One way to make it easier to understand is to break it down into a few broad groups.
“The first one is generative AI,” he explains. “That’s creating new content – images, music, text – all the things you’re seeing online right now.”
Another category is predictive AI, which helps companies forecast outcomes using data and analytics. “This is very useful for business and boards,” he says. “It includes things like demand forecasting and risk assessment.”
The third type is assistive AI, which helps employees complete tasks more efficiently. And finally, there’s conversational AI: systems that interact directly with people through chatbots or digital assistants.
Looking at AI through these categories makes it easier for directors to understand how the technology may already be appearing across different parts of their organization.
3. Align your approach with your strategy
Boards don’t need to know how to build AI systems. But they do need to make sure their organizations have a clear plan for how the technology will be used. And according to Ralph, that conversation often hasn’t started yet.
“Probably the most straightforward question is: what is our strategy?” Ralph says. “Do we have a clear plan for deploying AI? What use cases are we prioritizing? And how will we measure the value those initiatives deliver?”
Boards also need to look closely at whether the organization actually has the talent to execute that strategy. “There aren’t many skilled practitioners in AI out there,” he says. “And there’s a bidding war for that talent.”
4. Don’t rely on one “AI expert” in the boardroom
As AI becomes more important, many boards are asking whether they need a dedicated AI or technology committee. Ralph’s advice is to be careful. “This is the tricky part,” he says. “Because there really aren’t standards yet for what an AI expert actually is.”
Instead of relying on a single technology specialist, boards should aim to build a broader mix of digital experience across their members. That could include directors who have worked with cybersecurity incidents, data strategy, or technology transformation initiatives.
When boards bring together that range of perspectives, they’re much better equipped to oversee emerging technologies. Research even suggests that companies with multiple directors who understand digital strategy can see significantly stronger financial performance.
5. Use AI to support board decisions, but never to replace them
AI tools can also be valuable in helping directors do their jobs more effectively. For example, boards can use AI to analyze large datasets, identify patterns or highlight information that might otherwise be overlooked.
“Ask AI in your board work to spot what’s missing in the data that you have,” Ralph suggests. “What more would be useful here?”
These tools can also help directors test scenarios, analyze risks or explore how different strategic decisions might play out – but there’s an important boundary to keep in mind.
“Directors need to use these tools to give advice on a decision, but not to make the decision itself,” Ralph warns. “That’s an important part of fiduciary duty.”
Watch the masterclass
Ralph’s insights are part of our Ideals Board Excellence Framework, where governance leaders share practical lessons on strengthening board effectiveness.
Watch the full session for more perspectives on how boards can build the skills, transparency and leadership needed for long-term success.