Friend or foe? A comprehensive guide to AI for business directors

The impact of artificial intelligence on society continues to increase — but what are the key challenges and opportunities ahead for business leaders?

Alicia Muñoz Lombardía

As the Head of Governance, Legal and Regulatory Affairs, Alicia Muñoz Lombardía is well placed to offer expert opinion on the impact of artificial intelligence (AI) on global business. 

A leading figure in the global financial sector, Lombardía has seen first-hand how the benefits of AI-enabled optimization and automation reduce repetitive and manual tasks while mitigating operational risk.

Writing in the 18th edition of the CGC newsletter, Lombardía has examined the impact AI has - and will continue to have - on the economy, business and society as a whole. The senior fellow at the Esade Corporate Governance Centre (CGC) has some sage advice for business directors on the use of AI, and highlights some ethical dilemmas that cannot be ignored. 

Not if, but when

The financial sector is a prime example of how the elimination of some jobs has seen the creation of others. Experts in data and security work alongside their customer-facing colleagues, creating knowledgeable teams who offer personalized attention based on vast levels of instantly accessible insight. 

The diverse range of sectors that have similarly thrived by embracing AI, from medicine to manufacturing, provide the business world with endless examples of its benefits. But the exponential growth of AI has also seen many detractors — with some even warning that it poses an existential threat to humanity

The financial sector is a prime example of how the elimination of some jobs has seen the creation of others

Opinions may remain divided, but there is no doubt that AI will continue to gain prevalence in all areas of life. While consumers have little choice in whether to participate (unless they live completely off-grid), businesses must knowingly embrace AI — and all its faults. 

Here, Lombardía outlines the key areas in which all business managers must be fully up to date with the powers and pitfalls of AI. 

1. Boards and committees

A good leader accepts their knowledge is finite and so surrounds themselves with specialists to fill the gaps. But when it comes to AI, every board member should become familiar with the technology. This doesn’t mean everyone has to be an expert, but an awareness of the uses and risks should be a minimum. Specialist technology committees should be established to advise the organization on value creation and the creation of new experiences and products. 

2. Strategy

AI predicts and analyzes trends, identifies threats and opportunities, explores and assesses new business models and can even plot the future vision of a company. AI is not simply advisable when developing strategy, it’s essential. 

3. Internal processes and operations

Generative AI simplifies, optimizes and streamlines processes. For the uninitiated, it can be used at a project level to analyze cost reduction and revenue generation. If the pilot is successful, it can then be rolled out to a sufficient number of departments or individuals (such as production lines or stock management) to validate results, with a view to organization-wide adoption.

4. Customers

Machine learning is a well-established method of customer-centered care. Vast amounts of data are gathered and analyzed instantaneously to offer personalized products and services that improve customer experience. However, extreme caution should always be taken to ensure privacy and avoid the risk of breaches. This is one area where human supervision and oversight are essential. 

5. Governance, policy and ethics

AI is used in a business setting to improve products and services and, ultimately, enhance the lives of the people who use them. This presents several ethical dilemmas. AI relies on the use of algorithms which could include cultural or social biases that result in unfair or discriminatory decisions. Human intervention is essential to ensure monitoring, intervention, transparency, traceability and protection of rights. It should never be forgotten that the board of directors is ultimately responsible for all business decisions, including those generated by AI. 

6. Mitigation of risk

All cyber security systems are required to have robust security systems in place. Accredited, certified companies should always be deployed to operate third-party services, and both internal and external compliance systems should incorporate controls that cover the lifecycle of an AI solution. Every aspect from design to implementation, employee access and reporting should be regulated by relevant codes of conduct. 

7. Auditing

All AI systems, however limited their business impact may seem, must be included in business auditing. As well as functionality, the availability of access, data quality and specific use cases must be systematically audited

8. Talent management

The automation of human resources, and recruitment in particular, remains a controversial topic. However, AI is a valuable recruitment tool in the identification of candidates with the relevant skills and capabilities. It’s also increasingly implemented to identify the ongoing training and development required for the workforce. The World Economic Forum predicts the use of AI in talent management will transform the labor market and create more jobs than it will eliminate. 

9. Regulation and supervision

There are fears that AI is outpacing the regulation required to contain it, but there are many global initiatives in progress to tackle this dilemma. Spain is leading the way with the Royal Decree 729/2023, the Statute of the Spanish Agency for the Supervision of Artificial Intelligence. The US is establishing new AI safety and security standards, the European Union has recently agreed on a landmark AI regulation deal and organizations such as the European Central Bank and the European Data Protection Supervisor are monitoring the proposed regulation. 

An ethical implementation

There’s no doubt that AI brings challenges to businesses of all sizes. But, just as the computer replaced the typewriter in every office, AI will permeate business whether we like it or not. The challenge for directors is not whether to implement it, but how to do so safely and ethically. 

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