AI is everywhere these days, and it’s hard to ignore how much it’s changing the way we work. But as a board member, it’s crucial to understand how AI can help you—and where it might trip you up. Let’s break this down in a way that’s practical and easy to digest, focusing on how AI fits into the world of board reporting.
The Good and the Bad of AI in Board Reports
First things first—AI isn’t a magic solution for everything. Yes, it’s powerful, but it also comes with some serious pitfalls. When used incorrectly, AI can churn out biased information, make up facts, or even accidentally share sensitive data. And when it comes to something as important as board reports, those risks could lead to major issues.
But there’s a bright side. If you use AI as a tool to edit rather than to write your reports, it can improve the quality of the information you’re working with. Think of AI as a digital assistant that helps you clarify and refine your reports rather than taking over the entire process.
Why Should You Care About Generative AI?
Generative AI is a step up from older AI technologies. It doesn’t just follow rules—it learns from patterns and can tackle a wide range of problems, from summarising lengthy documents to analysing complex data. Plus, it’s designed to be user-friendly, meaning you don’t need to be a tech wizard to use it.
However, there’s a catch. It’s easy to fall into the trap of thinking AI can do it all, but that’s not the case. A Harvard study showed that even smart, tech-savvy professionals were 19% less likely to get things right when they used AI for tasks it wasn’t suited for. On the flip side, when used correctly, AI helped them produce higher-quality work 40% faster.
Example Imagine you’re reviewing a report on tenant satisfaction. An AI tool might quickly highlight key issues, saving you time. But if the AI isn’t properly set up, it could miss crucial details, leading to decisions based on incomplete data. That’s why it’s so important to use AI wisely—let it help, but don’t let it lead.
Understanding How AI Works
At its core, generative AI works by predicting what comes next in a sequence of words. It’s like a very advanced version of your phone’s autocorrect. But instead of just fixing typos, AI can generate whole paragraphs, summarise reports, and even draft recommendations.
However, according to a survey conducted by the Corporate Governance Institute, one-third of directors fear they’re not tech-literate enough, and nearly two-thirds believe that most of their colleagues lack sufficient expertise to oversee the use of technology. The first step, therefore, is to get a better understanding of what goes on behind the AI scenes.
But here’s the thing: AI doesn’t truly “understand” what it’s writing. It’s just really good at guessing based on patterns it’s learned. That means it might produce text that sounds great but isn’t always factually correct.
Example: Let’s say the AI summarises a financial report. It might do a decent job most of the time, but there’s always a risk it could misinterpret a complex financial term or overlook a key piece of data. That’s why it’s essential to have a human review of anything AI generates—especially when it’s something as critical as a board report.
The Risks of Using AI in Board Reporting
While AI can be a powerful tool, it’s not without its risks. Here are a few you should watch out for:
1. Bias in AI-Generated Content
AI models learn from the data they’re trained on. If that data is biased, the AI will be too. For example, if most of the reports it’s seen focus on positive outcomes, it might downplay or ignore negative aspects in its summaries.
Example: Imagine the AI is summarising tenant feedback. If it’s biased, it might focus on positive comments and overlook areas where tenants are dissatisfied. That could lead you and your fellow board members to make decisions based on an overly rosy view of the situation.
2. AI’s Tendency to Make Up Facts
AI can sometimes “hallucinate” facts, meaning it creates information that isn’t accurate. This happens because AI is designed to predict the most likely sequence of words, not necessarily the correct one.
Example: Think about a scenario where the AI generates a summary of legal risks for a new project. If the AI gets it wrong, it might invent a legal precedent that doesn’t exist, leading the board to make decisions based on false information. It’s crucial to double-check AI-generated content for accuracy.
3. Risk of Data Leaks
AI models can unintentionally leak information if they’re not properly managed. For instance, if an AI has access to sensitive data, it might accidentally include that information in an unrelated report.
Example: If the board is discussing a confidential acquisition, and the AI is involved in drafting reports, there’s a risk that sensitive information could be exposed inappropriately. This is why it’s so important to have strict controls on how AI interacts with confidential data.
How AI Can Support You (But Not Replace You)
Given these risks, it’s clear that AI should be a supporting tool, not the main author of your board reports. Here’s how you can use AI effectively:
1. Encouraging Critical Thinking
AI can prompt you to think more critically about the reports you’re reviewing. It might ask questions like, “Does this report align with our strategic goals?” or “Have all potential risks been considered?” This helps ensure that the reports presented to the board are not only accurate but also insightful.
Example: If you’re reviewing a report on a new housing initiative, the AI might highlight areas where more information is needed, prompting you to dig deeper before making a recommendation. This ensures that the board gets a comprehensive view of the situation.
2. Improving Clarity and Readability
AI can also help make reports clearer and easier to read. It can suggest ways to simplify complex language or rephrase sentences for better understanding. This is particularly helpful when time is of the essence, and you need to ensure that everyone on the board can quickly grasp the key points.
Example: If the AI suggests simplifying a financial statement, it could help you communicate the information more effectively during board meetings, leading to more productive discussions and better decision-making.
Wrapping Up
For board members, generative AI can be a powerful ally—but only if it’s used correctly. By viewing AI as a tool that supports your expertise, rather than a replacement for it, you can enhance the quality/analysis of your board reports and make better, more informed decisions.
Remember, AI is here to help, not to take over. With the right approach, you can harness its power while avoiding the pitfalls, ensuring that your board is always making decisions based on the best possible information.
For more information on how AI can help boards download our guide- Scepticism to Success: A Board Member’s Guide to Gen AI.
