A couple of months ago I was invited to be part of a virtual meeting for a committee and one of the attendees to this meeting was courteous enough to request permission from the chairperson and all the other attendees to have their virtual AI assistant be part of the meeting to record minutes and notes. Nobody objected to the request, in fact, someone made a remark commending them that it was kind of them to request permission because in most instances you always see these tools in the meeting room with no request or explanation. The meeting proceeded as usual and after that engagement, the AI assistant tool sent a set of minutes to all the attendees with a full transcript, summary notes with key highlights from the meeting and action items. Those minutes, notes and action items were brilliant (I mean there were a few errors I had to correct BUT the overall result was brilliant) – so much so that I immediately went and signed-up for that very same tool myself, I was quite impressed. And the sign-up for the product was FREE – or was it? How much easier can life become?
Fast forward a couple of months, I received an invitation to attend a PwC Xchange Boardroom Workshop for Non-Executive and Executive Directors on “Generative AI and emerging technologies on the rise” and based on my experience I decided to sign-up for the workshop, and it opened up a whole new world to me. If I am being honest, half the things that were discussed in those presentations (mind-blowing as they were – to me at least) flew way past my head but that session revealed to me how much I didn’t know about generative AI and emerging technologies and how they are being applied within the boardroom. Based on available statistics, I also got to appreciate how little those who are charged with the task of governing entities know about what some of these technologies that we use do and the associated implications. Following this revelation to myself, I have been on a journey of learning to understand how these technologies – convenient as they are, can be used to enhance corporate governance systems without compromising security or privacy of the organisation.
I recall asking the question: “What are the implications of these technologies from a company secretarial point of view within the context of the boardroom?” – and the frank response was we are yet to find out. This made me even more curious, and I have been on a quest to find at least part of the answer to that question and the journey is on-going. One thing that one has to appreciate from the onset is that application and adoption of gen AI and these emerging technologies vary widely from business to business and from industry to industry but there are a few basic principles that will apply to all entities, and these will be our conversation starters in this discussion.
The Companies Act provides that a director and/ or prescribed officers in a company have a responsibility to act in good faith and for a proper purpose, act in the best interest of the company and with the degree of care, skill and diligence that is expected of a person in that capacity. King IV further provides that the governing body is responsible for setting the strategy for the organisation and ensuring that there are approved policies and operational plans that will give effect to the approved strategy. King IV further states that the governing body should assume responsibility for the governance of technology and information by setting the direction for how technology and information should be approached and addressed by organisations.
One of the major risks that is associated with the use of generative AI tools is that these systems process and retains user interactions as training data which is used through machine learning to improve the quality of its results and outputs for future interactions and if you are using free services, chances are your data will be openly available in the public domain and thus lead to the risk of leaking important confidential organisational information or client data.
An interesting case to note as was reported by The Economist Korea back in early 2023, Samsung – the tele mobile giant was reported to have experienced several incidences wherein proprietary company information had been uploaded to ChatGPT when programmers were trying to fix a bug on their code and another employee had uploaded a recording of a meeting via a personal assistant app. These alarming events led to the company issuing a ban on the use of these generative AI tools as they navigated how to manage and put protocols in place to safeguard sensitive company information.
Circling back to my opening remarks, there isn’t enough awareness around the boardroom table in most organisations about the responsible use of these emerging technologies. Several surveys conducted by reputable institutions and organisations reveal that the topic of generative AI is not being discussed in boardrooms and coupled with that, lack of regulation around the use thereof makes it even more complicated to manage. But the fact of the matter though is that people at various levels within many organisations are using these technologies – with good intentions, but they are exposing their organisations to enormous risks which can only be managed by the intervention of the board.
A contemporary company secretary should be able to assist the board in translating some of these complex challenges into simple and meaningful conversations that are designed to advance the needs of the company. There is definite value to be unlocked with the adoption of these emerging technologies, but this must be done responsibly. The first consideration for a company secretary is to engage the Board Chair and the CEO on devising plans that can be put in place to enhance AI literacy of the board members as part of the continuous board training programs so that all members become familiar with the subject matter. As a natural outflow of that, the board must take ownership in ensuring that there are proper governance structures to ensure responsible use of generative AI and these emerging technologies at all levels across the organisations. This will in turn inform the risk mitigation measures and the ethical considerations that the organisation will take in making sure that the organisation, particularly the board – exercises its duty of care, skill and diligence as they carry their responsibilities in the best interests of the company. The tools that are readily available for free that are convenient are really not “for free” – there is a trade-off that all parties need to be aware of especially the members of the governing body.
These are some of the ways with which a company secretary, a contemporary company secretary, can explore as part of their value add towards the board especially when considering their evolving role into becoming corporate governance custodians.
If you wish to engage more on this subject or any other corporate governance related matter, please do drop us a message or schedule a chat for us to connect.