Corporate boards grapple with AI — study
CORPORATE BOARDS across the world are less confident in their understanding of the importance of generative artificial intelligence (AI) as well as trade and geopolitical disruptions, according to INSEAD Corporate Governance Centre.
The study, titled “Boards and Society: How Boards Are Evolving to Meet Challenges from Sustainability to Geopolitical Volatility,” showed that only 36% of directors feel prepared to tap the potential of AI, while 37% agree that their companies have sufficient strategies in place to manage geopolitical risks.
The research was conducted in partnership with leadership advisory provider Heidrick & Struggles and Boston Consulting Group, according to INSEAD Corporate Governance Centre.
The report surveyed 444 directors and executives around the world, along with a dozen roundtables that gathered over 130 directors in North America, Europe, Southeast Asia, Africa, and South America.
According to the study, half of the directors surveyed said they are not confident that their company is equipped to identify new threats and opportunities related to sustainability, generative AI, and geopolitics.
“Boards today can benefit from moving from being reactive to proactive. Beyond understanding disruptions, they can focus on looking ahead — anticipating future shocks and potential risks and finding ways to capitalize on emerging trends to leverage opportunities,” INSEAD Corporate Governance Executive Director Sonia Tatar said in an e-mailed statement.
“By translating insights that inform decision-making into strategic actions, they will be better positioned to guide companies in becoming more resilient and navigating change effectively,” she added.
The study also showed that 77% of boards think that their companies have a responsibility to address sustainability concerns, while 54% said that business objectives should remain the primary focus.
Meanwhile, the report showed that 29% of directors lack confidence in their CEO’s capacity to navigate uncertainty and boost long-term value, while 26% of CEOs are skeptical of their board’s effectiveness.
“This year’s survey reveals tensions between directors and management regarding each other’s capacity to navigate disruption. With so much at stake — and an increasing complexity to unpack — alignment between board directors and management isn’t just a best practice; it’s essential for addressing both today’s challenges and those of the future,” Heidrick & Struggles Partner Jeremy C. Hanson said.
“Importantly, alignment does not mean boards should shy away from constructive debate with management. In fact, fostering open, even difficult, conversations is crucial for boards to reach resilient, well-rounded decisions in today’s demanding environment,” he added. — Revin Mikhael D. Ochave
