Automation records every decision made in its implementation. Compared to when a human makes a bad decision, when something goes wrong, the audit trail has a concrete path back to the board
Everyone’s talking about the benefits of technology and automation, but boards must be aware of the potential downsides as well. The world today is always on and our digital footprint is now long and deep. Even though automation has big potential to enhance how a business operates it also substantially increases the governance risks.
Decisions that were once made by people are now being written into code and implemented autonomously. While this can improve efficiency, when those automated decisions lead to a mistake the code is available to be scrutinised and audited.
This adds a new layer of risk that the board needs to be aware of. Mistakes that were previously “human error” are now potentially specific governance issues.
Take the example of autonomous vehicles. The board may be presented with a proposal to approve a new supply chain that leverages autonomous vehicles and reduces cost. But the board also needs to look beyond the benefits of the new equipment and consider the unintended consequences of implementing it. Every decision made by automated technology increases the potential for liability.
Artificial intelligence enables businesses to store mass amounts of data and sift through it very quickly. In the same amount of time that a human can make one big mistake, smart technology can potentially make many costly decisions.
Closer to the boardroom, even board papers are potentially open to audit and scrutiny. Digital board portals can record who downloads and reads a board paper, leaving individual board members open to scrutiny if they fail to read a critical paper before they vote on it. This could potentially be presented before the courts as evidence of appropriate diligence. This is something board members also need to be concerned about today.
Board members all around the country (myself included) are excited about the potential of automation and artificial intelligence. But at the same time it’s important to be aware that stored deep in the code of those solutions are all the decisions those machines make. When something goes wrong and wreaks havoc upon us, everything in that code will be examinable. The unintended consequences may be catastrophic and they will ultimately end up back on the board table.
Get an unfair advantage, subscribe to the free monthly update
The best of The Resolution, delivered to your inbox every month
Russell Yardley / About Author
Russell is a professional company director. His board experience includes Chairman ASX listed Tesserent, board member ASX listed Powerhouse Ventures, Wunderman Bienalto, the Victorian Government Purchasing Board and the Alannah and Madeline Foundation. He is an experienced director, entrepreneur and innovator, with expertise in technology, strategic & business planning and an extensive knowledge of government.
Russell was appointed a Fellow of the Australian Institute of Company Directors in 2012. His expertise has been recognised by SmartCompany as one of Australia's 12 Most Influential People in Tech and as an Honorary Member of the Australian Computer Society.