How to govern generative AI

How to govern generative AI: a corporate governance education guide unpacking the essentials of managing this crucial innovation. 

Five years ago, generative AI wasn’t even on the priorities list in most boardrooms. How fast things have changed. The potential has appeared in ways never seen before, but with that potential comes the serious responsibility to govern correctly, starting at the board and executive levels. 

Corporate leaders must be able and willing to manage the many risks associated with generative AI. This guide explores the governance of generative AI, the role of board leaders, and the steps corporate leaders can take to safeguard their organisations.

The term refers to any learning model or similar system that can create dynamic, high-quality content. The most obvious example is ChatGPT, which is now used extensively worldwide to generate text and image-based content. 

These models produce content based on their access to and interpretation of vast sets of online data, often to the point where they can mimic human creativity. Their capabilities can also extend to image synthesis, predictive modelling, and decision support, offering endless potential for innovation across various sectors.

Generative AI is still limited by the quality of the available data. This data is mainly human-generated, so generative AI is often fed by factual errors and intentional or unintentional bias. This has knock-on effects on the integrity of the content the AI produces.

As part of the proposal, companies must have two diverse directors on their boards, including one female and an underrepresented minority or LGBTQ+. If they don’t, they must provide a reason.

Companies will also be required to disclose the diversity of their boards.

We need to govern anything in business for the same reasons: laws, risk, and stakeholder expectations. All of those factors implore us to manage generative AI use properly.  

While it might be straightforward only to consider the benefits of generative AI and use it without restriction, such a policy would be a severe corporate governance error. Ungoverned AI can raise data privacy issues, intellectual property concerns, and the potential for biased outputs that send wrong messages and land the business in a reputational nightmare. As many in corporate governance know, it takes years to build a reputation, but it may only take a day to destroy one. 

From this, it should be a no-brainer that governance of generative AI is essential to establish frameworks that ensure responsible AI usage, maintain stakeholder trust, and minimise legal exposure.

You might think that generative AI governance should be left to a company’s tech or design and development teams, bypassing the board and executives entirely. This is a mistake because it immediately omits a vital degree of accountability. 

Governance of generative AI must begin at the top because the functionality already offers so much corporate potential that rules around its use need a proper imprint on the corporate agenda. 

AI governance is not just a technical issue but a matter of strategic oversight that requires leadership to align AI deployment with the company’s values, ethics, and long-term objectives. 

Active involvement from board members ensures that the risks and opportunities associated with generative AI are evaluated comprehensively and that AI systems operate transparently. This leadership is critical in setting policies safeguarding the business while fostering innovation.

Directors should create formal governance structures that define the ethical use of generative AI and set guidelines for its deployment, usage, and monitoring.

Corporate leaders must ensure that AI models are transparent, explainable, and auditable, clarifying how AI-driven decisions are made. This is the difference between rules that exist on paper and rules that can easily work in practice.

While tech/design and development/IT teams will have a huge role in implementing AI rules, the Governance of AI should not be siloed into just those areas. True governance requires collaboration between legal, compliance, HR, and other key departments to manage all risks properly.

As generative AI technology evolves, corporate leaders should stay informed and continuously train employees on AI’s risks and governance best practices. If no one on the board is familiar with the potential and risk around AI, seek out new personnel or upskilling opportunities.

Regardless of what you do as a company, regulators will craft their own rules around AI in the next ten years, and you will need to produce reports to show you’re following them. Ensure you keep abreast of the latest legal and ethical standards so your company can demonstrate robust compliance.

Governance of generative AI is not just an operational necessity but also a critical responsibility for business leaders. Organisations can harness its transformative power by actively governing generative AI when mitigating risks, ensuring compliance, and upholding ethical standards. As AI technologies evolve, governance will be key to sustainable and responsible AI integration.