Artificial Intelligence- The New Trend In Corporate Governance
Author: LawSphereX
Category: Corporate & Insolvency
Published:
Updated:
ARTIFICIAL INTELLIGENCE- THE NEW TREND IN
CORPORATE GOVERNANCE
Shubhi Jain, Amity Law School, Noida Adit Kudeshia, Amity Law School, Noida
ABSTRACT
Artificial Intelligence which was known popularly for its use as chatbots, virtual assistants, content creation, etc. is now occupying a wide variety of more complex roles and being assigned increased responsibility. It is being introduced in new spheres such as automated vehicles, healthcare, business, governance, etc. Many corporations are extensively exploring the role of AI in boosting productivity and efficiency of the company. Progressive businesses are also looking into employing AI in managerial and administrative roles which includes but is not limited to giving artificial intelligence a seat on the board of directors. This paper aims to study the important considerations that must be addressed before assigning such responsibilities to artificial intelligence whose decisions can have very real monetary and social consequences.
It also compares the nature of decision making between humans and AI in terms of ethics, morality, rationality, etc. in addition to explaining the various obstacles that are associated with governance roles of AI such as accountability. It further studies the legal implications of employing AI and the various legislative hurdles including the lack of legal personality. While the extent to which AI is beneficial or detrimental to governance is not the question present, but rather it aims to explore the potential of artificial intelligence in promoting good corporate governance.
1. INTRODUCTION
Modern world belongs to technology and it has enabled humans to accomplish things that at a point of time seemed nothing less than an unobtainable aspiration. Artificial Intelligence (hereinafter referred to as AI) is just one the technological progress crafted by the human brain that has penetrated every aspect of human life. AI, coined by John McCarthy, explained it as the science and engineering of making intelligent machines, especially intelligent computer programs, has certainly developed over the period of time and aided individuals to achieve their goals with greater efficiency and productivity. With AI and its enhanced capabilities being termed as the Fourth Industrial revolution, it is increasingly being leveraged to new spheres and corporation is just one of them.
Initially explained out as just an association of people to carry on business for profits, corporations and its interpretation have evolved and is now recognised as a legal entity engaged in mobilizing resources for productive uses in order to create wealth and other benefits for its multiple constituents. 1 Managing a corporation is indeed a task of prime significance, it must be conducted in a way that not only increases efficiency and productivity of the corporation but also reassures the faith of the various stakeholders of the corporation. In all, it must practice a system of good corporate governance. AI, with its enhanced developments aids in managing the firm and achieving the objectives.
It has been quite common for AI to be employed at administrative levels of corporate governance or just the normal routine functioning of corporations, such as managing and replying to emails, forecasting sales and business, acting as smart personal assistant among others, but over the period of time it has undergone massive development. A new period of technological revolution in AI is being witnessed, particularly in reference to
the field of corporate governance, where AI tools such as VITAL, being introduced as an AI director, or where a Finnish IT company, Tieto, appointed AI as a member of the leadership team or where an AI tool, Einstein, has been introduced for staff meetings. They are being envisioned to be developed and modified upto such an extent that they become autonomous and the need of human intervention reduces.2While the thought of AI being autonomous and 1 Stanford University Press, https://www.sup.org/books/pages/1967/Chapter_1.pdf (last visited Sept.10,2023)
reducing human load seems impeccable, but it must be understood and highlighted that corporations and related aspects such as laws, have been developed and amended keeping mind the humans and introduction of AI in corporations demands great amends not only in modus operandi of the corporations till date but also a radical change in the laws governing them. It also needs to be mentioned that while AI is being constantly developed, what needs to be understood is that it is still in the development phase and unleashing it in corporate governance or in any field for that matter can have drastic effects. Especially, in context to corporate governance, the researchers firmly believe that AI has not reached that phase where it can independently take decisions that demand ethical, experiential, logical and most importantly human mind considerations.
Thus, developing AI is no doubt an advantage but before utilizing it to its fullest capacity, we need to understand and develop it accordingly in the utmost proper way, so that we can put to use the benefits of AI rather than looking for ways to get rid of inappropriately applied AI.
2. NEXUS BETWEEN AI AND CORPORATE GOVERNANCE
Artificial Intelligence can be defined as the ability of machines to perform cognitive functions generally associated with human intelligence such as perception, problem solving, reasoning, among others. 3 It is not merely a thing of the future rather AI is already being employed by corporations for various roles in conducting business. It is being used for logistics, finance, marketing and even for data driven decision making. It can therefore be said that AI is already playing a pivotal role in enterprises. Looking at the efficiency and undiscovered potential of AI, corporations are now looking to introduce its application in corporate governance. It is being used to fill various managerial positions and some companies have even experimented with integrating artificial intelligence into the decision making of the board of directors.
In order to understand the extent to which AI can perform governance functions, it is first important to examine the various forms of AI and the level of autonomy they can practice which further determines the scope of their decision-making capacity. Presently, three types of AI can be employed in corporate governance- (a) Assisted AI- This type of AI holds very low autonomy and requires a great deal of
human input. It is merely a tool that assists in increasing the accuracy of tasks that need to be performed but does not hold any decision-making power of its own. It is usually employed for well-structured tasks where the output is predetermined. It harnesses the power of “big data, the cloud, and data science” in order to automate basic processes, the output of which helps humans with ultimately making a decision. 4 In corporate governance, assisted AI can be used to make notes, compile data, schedule meetings, prepare minutes of a meeting and write reports. 5 (b) Augmented AI- This form of AI has an increased level of autonomy and at this level both humans and AI collaborate in order to make a decision wherein AI generally plays an advisory role.
It is capable of advanced analysis of data and has the potential for visualization and model building making it possible for AI to prompt possible solutions 6 which significantly improves decision making as processing large amounts of information can be time consuming and erroneous when relying only on humans. Hence, augmented AI can be employed in more complex corporate governance roles such as for wealth management, legal due diligence and financial advice. 7 (c) Autonomous AI – This category of AI is currently the most advanced and can function without control and intervention from humans. It can evaluate various options and make decisions independently without requiring constant inputs.
Autonomous AI is being used for decision making but cannot be relied on completely when dealing with complex issues influenced by intangible factors such as morale, ethics, cultural appropriateness, etc. Here, the role of humans is limited to oversight. This form of AI has the potential of completely revolutionizing corporate governance as it is practiced today by taking over core governance powers and perhaps eventually earning a seat on the board of directors. These aspects of AI can be employed independently or in overlapping roles to perform a wide range of corporate functions which result in good governance.
3. CONSIDERATIONS FOR AI
3.1 GRANTING LEGAL PERSONALITY
AI systems are constantly taking great strides in the technological sphere and are becoming more advanced and sophisticated. With the increasing technological development, it continues to challenge the existing attributes related to it and legal implications is just one of them. Even among the legal implications, debate whether it should be granted legal personhood or not has gained significance. While there have been instances where non-human entities have been granted legal personality, for instance a river in New Zealand, temples in India among others but granting legal personality to ever-developing AI, can have serious implications and certainly demands a serious thought. European Parliament especially enacting a resolution and requesting a commission for inputs on this debatable issue very much highlights the significance of this aspect.
Although there are rare instances of AI systems being granted legal personality, such as the humanoid robot Sophia, but inclusion of even the Autonomous AI, especially within the context of Corporate Governance, within legal personality needs some serious consideration. Theoretically there is no hindrance in granting AI a legal personality but despite all the impressive exploits of AI, the author(s) believe that AI should not be granted legal personhood, a belief resoundingly shared Internationally by European Commission and even Estonia, believed to be the boldest member in technology sphere. 8 Inculcation of AI in the Indian and majority of global corporations is restricted to Assisted and Augmented AI, as only any natural person can be appointed as director, thus excluding AI from substantial key managerial decisions.
Proponents of granting legal personality to AI may argue that granting AI with legal personality aids in holding someone accountable, rather blaming someone, in situations of any wrongdoing, thus enshrining the one of the most important principles of Corporate Governance, Accountability. But what actually needs to be highlighted is that AI is just a technology and even after supposedly granting it legal personality, it won’t achieve any
physical existence so much as to be punished as humans. If any civil or criminal liability arises, AI can only be held accountable, but it cannot be punished, at the most it can be dismembered or suspended but what actual purpose of punishment would it serve. Rather this would not only encourage the natural person to commit any wrongdoing substantially involving the AI as well and escape from liability, blaming the AI but also pose serious hindrances in suspending or shutting down as AI, if granted legal personality and myriad human-like rights accompanying it, thereby excluding everyone from the liability.
No doubt it can be argued much that much like the legal entity of a Corporation, AI can also be held accountable for its civil and criminal wrong doings, but it must be highlighted that even when a Corporation is held accountable it is the natural person, that in reality serves the punishment and liability. 9 Recognizing and advocating AI rights may seem to be of prime significance but in reality, it only serves the purpose of an escape route for natural persons from their liability. Legal personality for AI is often advocated for and argued on its comparison with a corporation that has been granted the status of a legal entity but what needs to be highlighted and firmly re-affirmed is that even a corporation is an invisible and intangible being existing only in contemplation of law.
10 Along the similar line of AI’s comparison with Corporation, it is often argued that since natural persons have a tendency to shield themselves from the liability by transferring risk to legal personalities, for instance the Corporations, that is why there are concepts like corporate veil mechanism and provided that the AI systems, that are present around the time and the more sophisticated ones yet to come, are granted legal personality then even a robust similar AI veil piercing mechanism could be established. This indeed sounds very promising in theory but if a natural person was manipulating AI in order to restrict the exposure of liabilities then the AI system doesn’t actually deserve legal personhood in the first place and further raises substantial questions on its decision-making power.
11 Mere evolution technology of law doesn’t mandate a change in the existing legal system but with a technology like AI that has become a salient feature of the human world, propositions for change in the existing legal systems are bound to and should be raised. 12 Granting of legal
personhood to AI is just one of the prime propositions with arguments of AI being an inevitable advancing technology and AI being just a step behind human intelligence being argued. While this all may be considered true but in the end, just like the creation of AI, it is the humans that have to decide and formulate the policies and path ahead in the particular aspect and granting of legal personality to AI at this stage should definitely not be pursued.
3.2 CAN AI REPLACE HUMANS
There is no doubt that Artificial Intelligence has made big leaps in recent years and developed at a faster pace than any of us could have imagined. The potential of machine learning today has made computers- once thought of as machines only capable of following commands- into intellectual tools capable of performing functions requiring intelligence. AI today has made it possible for computer programmes to suggest solutions, predict outcomes and make decisions in most cases, with more accuracy than humans ever could, due to the vast amounts of data it can process. Does this then mean that Artificial Intelligence is equally if not more capable than humans to perform governance roles in corporations today? First and foremost, it is important to note that AI programmes are considered intelligent due to their ability to learn and make decisions based on the data provided to it.
However, one must consider that AI programmes perform best when the nature of tasks assigned is repetitive and structured, remaining free from external influences. This indicates that AI possesses or seems to possess intelligence but the same cannot be equated with Human Intelligence or Authentic Intelligence which is not only responsive to data but also has the capability to imagine, experience and form opinions that are dynamic and adapt to any given situation keeping in mind the short- and long-term goals. 13 Another major limitation of AI is its lack of subjective experience. Decision making to a high degree is based on conscious and unconscious cognitive processes which are not solely based on information but also takes into account past experiences which are not confined to the happenings but are influenced to a great degree by our interpretation of those events based on schemas.
That is to say, AI might be capable of making the most rational decision based on ‘data training’ but many times fails to take the bigger picture into account. For eg. AI can
provide a solution with minimum risks but it cannot think in terms of calculated risks which lead to profit maximization in enterprises and may result in skewed business decisions. 14 AI is ill-equipped to analyse the reasoning behind its decisions and to gauge the proper context of the actual situation. More importantly, decisions influenced by such intangible factors have very real implications and consequences which present AI models are not capable of understanding and accounting for. This presents a need for constant human oversight and hence it is not possible to eliminate the human role in corporate governance as the situation stands today. This is supplemented by the fact that AI is neither innovative nor creative and hence the ability to come up with novel ideas and solutions remains unique to humans.
Perhaps the most crucial consideration yet is the technical feasibility of automating corporate governance. Even if we assume that Artificial Intelligence is as intellectually capable as humans, there is still a question whether the hardware, raw materials, power, etc. are sufficiently available for such automation at present capacity. Additionally, such change is only efficacious if the cost for automation is less than the cost for labor which is in abundant supply. Sustainability, transparency, verifiability, privacy and security are corresponding issues that are to be expected. 15 It can then be concluded that AI will not replace humans in the foreseeable future but can be inculcated into the corporate governance process to boost productivity and ensure good governance.
3.3 ETHICS AND MORALITY OF AI
Ethics, Morality and Emotional quotient are another set of parameters that have time to time raised substantial questions about Artificial Intelligence and its inclusion, not only in Corporate Governance but also in myriad applied fields and most importantly, the human lives. As much as technological advancement and autonomy, Artificial Intelligence may achieve, rather be granted by the humans, but at the end it is merely an artificial person, it doesn’t have any 14 Joe McKendrick and Andy Thurai, AI Isn’t Ready to Make Unsupervised Decisions, Harvard Business Review, (Sept. 15 2022) https://hbr.org/2022/09/ai-isnt-ready-to-make-unsupervised-decisions
physical existence and this highly incapacitates it in many aspects, ethics and emotional quotient, are just one among them. The rationale behind introducing Artificial Intelligence within the Corporate Governance structure was to ease the workload and assist the company in making better and informed decisions that aid in the growing of the company and no questions are raised that at certain level, mainly through Assisted and Augmented Artificial Intelligence, it has been very much instrumental but not all decisions are required to be taken along the hard lines of statistics and probabilities, a thing AI is programmed to excel at. While some decisions require impartiality, fairness and non-discrimination, some integral decisions demand crucial human intervention and thought, which a programmed and algorithm-based entity is not very much capable of.
Efficiency of Assisted and Augmented AI in assisting the corporate was never in question but with the advent of much self-governing AI, the Autonomous AI, partially in theory and partially in paper, it is much more imperative to understand and assert that as much as autonomy it may have achieved, it still lags behind in taking decisions fiercely demanding emotional and ethical considerations because it cannot replicate human thought process and emotions. 16 Ethical consideration of AI is an important consideration, which has been well recognized and addressed, prompting even the European Commission to frame ethical considerations for the evolving technology.
In fact, numerous International organizations and Institutes, including the World Economic Forum, have highlighted the particular aspect and have commonly agreed to ethics as a set of moral principles aiding in discerning between right and wrong. 17 The consequences and usage of AI powered creativity tools that facilitate in competition of work, like ChatGPT, AlphaCode, doesn’t take into account the ethical ruminations of infringing some third persons intellectual rights, hardwork and creativity. While the mentioned instance is in reference to Assisted and Augmented AI but with the emergence and development of the selfgoverning or Autonomous AI, coupled with its usage in Corporate Governance, the gravity of ethical decisions manifolds.
AI Ethics, the emerging coordinated discipline between AI and Ethics, while protecting individuals and groups at the most basic level also somewhere stimulates new kinds of 16 Aashirwa Baburaj, Artificial Intelligence v. Intuitive Decision Making: How Far Can It Transform Corporate Governance? Vol 8 Issue 2, TGLR,233, 239-251, (2022)
innovations, by fostering ethical values, that aid in achieving the UN Sustainable Development Goals. 18 Application of AI into companies and Corporate Governance is on the rise, and given the reach of even a small decision, from a majority shareholder to the lowest level grade employee, ethical issues are certain to rise. Corporate Governance entails ethical concerns like Intentional and Unintentional use of biases. It needs to be highlighted that AI has been created by humans and it functions on the data or research of humans only and thus various discriminations or stereotypes or other unethical aspects prevalent in the society can unconsciously be a part of the AI decision making sphere. Bias favoring men over women by Amazon's hiring algorithm entity and bias in facial technology disfavoring minorities because of lack of unrepresentative data are just some of the prime instances.
19 Misuse of AI for sensitive data often leading to breach of privacy is another ethical issue. Presently, AI, including the partially Autonomous AI, doesn’t have the decision-making ability to make informed ethical decisions, which often leads to abuse of data and what makes the situation worse is the lack of regulations to hold someone accountable, with humans attributing the flaw on AI, who cannot be punished within the present legal system. AI systems pose the ethical issue of exclusion and inclusion as well. There are many AI’s present, like the Microsoft powered Seeing AI, which aid people with disabilities and help them participate in the governance of the corporation. Since even the Autonomous AI doesn’t have any ethics to rely upon, AI acts as a driver of inclusion or exclusion solely based upon the data driven by humans.
Whether be it the intentional- unintentional bias, misuse of AI or the exclusion-inclusion issue among the other unexplained ethical concerns, what needs to be realized is that even the most advanced AI is prone to make unethical decisions until greater human control is exercised. 20 AI is an ever-advancing field and with such ethical issues, guidelines or certain strict parameters needs to be developed and adhered to along which AI should further evolve. Firstly, 18 High Level Expert Group on Artificial Intelligence, Ethics Guidelines for Trustworthy AI, European Intelligence, (2019)
AI should be developed such that there is dignity to and freedom of individuals. Instead of subordination of humans by the AI, it should evolve in such a way that the humans remain free to make their own decisions, maintain effective self-determination over themselves and rather not be treated as some object to be dealt with by the AI. Secondly, equality should be maintained and inclusiveness of even the most vulnerable individuals within the company should be there. AI ethics should be able to free itself from the discrimination and stereotypes prevalent in the society to be called autonomous in the true sense.
Additionally, the principles of fairness and explicability should be inculcated in the AI Ethics of company, in the sense that not only are the decisions should seem to be and be fair but also the decisions are transparent enough to people that are to be affected by it directly or indirectly. 21 Ethics is definitely an integral structural pillar in AI powered Corporate Governance, and it is yet to be developed up to the extent, even in Autonomous AI, where it can operate solely without human intervention. While this may be a possibility, as for now, human intervention seems irreplaceable.
4. ACCOUNTABILITY AND AI
As we begin to assign artificial intelligence with more complex and important roles such as for governance, it becomes important to consider the consequences of AI decision making which affects not only individuals, but also companies and ultimately society at large. Despite the success of AI in improving efficiency in organisations as well as its management and administration, one must consider that artificial intelligence much like humans does not perform with absolute accuracy and is bound to make mistakes, yet unlike humans, AI as it stands today, is incapable of taking accountability for its decisions and cannot be penalised. Additionally, workings of AI systems are opaque which makes it difficult to determine the cause of the error in decision making.
Due to its unpredictability, one cannot say with complete certainty whether the mistake should be attributed to erroneous training, incorrect and insufficient training data, system bugs, misuse of the application, discriminatory bias or a combination of these factors. 22 Nevertheless, when such errors cause companies to lose large
21 High Level Expert Group on Artificial Intelligence, Supra note 18
sums of money, they are inclined to seek accountability and hold someone responsible. So the question arises, who is responsible for the loss caused by faulty decisions made by AI? Should the responsibility lie with the coders who develop AI, the users who ultimately employ the programme, the owners of the AI company, or with AI itself? Given the dynamic nature of artificial intelligence and its rapidly growing role, liability in cases of faulty decision making needs to be decided on a case by case basis on grounds of division of responsibility between individuals and AI. The developer can be held responsible if there is an error in the algorithm which is causing faulty outcomes.
Since AI works predominantly by studying the data it is fed and acts on the patterns it observes in the information it is provided with, the data supplier can be held accountable for an erroneous data set which may be due to insufficient data, typed data, data which is not filtered to remove bias, etc. As the AI cannot act alone and requires a human to provide at least minimum commands the user or operator could be held accountable as he is also the one who must ensure that the AI is functioning correctly and is trained to suit his needs before employing the same. This is complemented by the fact that while AI can suggest a decision the execution of the same is ultimately done by the user who must use his own value judgment for the same, making him responsible for the execution of erroneous decisions.
23 There are two popular viewpoints which have emerged around the argument of assigning responsibility for the negative consequences of decisions made by AI. The first argues that AI having intelligence of its own should be the one to take liability for any loss caused by its mistakes. However, this is easier said than done. AI having no legal entity, makes it impossible to penalise. It cannot be fired as any other employ nor can you file a lawsuit against it, how then do you actually punish AI for a fault even if you manage to attribute it? Much like corporations, even if AI gains legal personality, any responsibility accrued to AI will ultimately extend to some degree of neglect by natural persons.
The second viewpoint gives emphasis to the theory of vicarious liability and holds that the principle making the employers responsible for the actions of their employees should extend to artificial intelligence. Since AI is not conscious of the consequences of its actions and cannot
act without human interference, any liability caused should be attributed to the user who makes the decision to employ AI in the first place and further determines the scope of the functions it will perform. The problem with this argument is that the advancement in technology is allowing for a truly autonomous artificial intelligence which will gradually minimise human control over AI.
In conclusion, accountability and liability can effectively be assigned only when it is made possible to identify the root cause of the fault and be able to attribute it to someone, which is currently not possible in case of AI. Yet, sooner or later governments will need to establish some norms and come up with novel legislations in order to ensure that AI systems are not allowed to run rampant which will not only cause losses to those affected but might also discourage its use in the long run.
5. LEGAL IMPLICATIONS OF AI IN CORPORATE GOVERNANCE
Laws and regulations that govern the various spheres of human life are developed around the needs of the society and in the present time, technology has made huge leaps, especially AI. Technology has paved its way in every dimension and corporate governance is one of them. Much similar to other law and regulations development, laws relating to AI trail the societal development. While laws take years to amend, AI is developing almost everyday and this raises significant issues in inculcating the advantages of this technology while at the same time keeping the negative side at bay. While Assisted and Augmented AI are very much in use in corporate governance and are not hindered by the laws, the much-envisioned Autonomous AI, although in rarity, is bound to encounter legal obstacles, much due to human decision centered established corporate governance systems.
Application of AI in corporations is quite centered around key managerial positions and Board of Directors but throughout the majority of legislations globally, only natural and legal persons are allowed to serve as directors, and this proscribes AI to be a director. The Companies Act,
201324 and even Corporate Law of Hong Kong only permits a natural person to serve as a
director while countries like the UK mandate on having at least one director as a natural person but even that doesn’t qualify AI to be director. Even the much argued VITAL was only granted an observer status while being a part of the board of director. If AI has to be inculcated in the
core decision making group, provided it achieves substantial informed decision-making ability, then this legal aspect would have to be amended. Corporation, being a complicated entity, often indulges in delegation of work by the board of directors or by directors. While the Indian laws don't allow delegation of work by directors, board of directors are competent to delegate work but only to natural persons, again restricting AI. 25 While Company law of UK does allow delegation of work by directors but only to person and committee and that too if incorporated in the Articles of incorporation, thus restricting AI.
26 Recently, much needed emphasis has been there on the inculcation of women in the board of directors and other key managerial positions, for not only bringing the different female perspective on key issues but also contributing significantly to efficiency and gender diversity of the corporation. Indian Company law27 also mandates presence of at least one-woman director but with the inclusion of AI in the corporations or the much desired and envisioned all AI led board of directors, how will this balance be achieved? Is it enough and prudent to designate an AI as female just based on their name and expect all the diversity that a natural female would bring to the table? AI works on the hard line of only mimicking human intelligence and it cannot bring different perspectives accompanied by different people of different sex and backgrounds.
Similar questions are also raised on the mandate of an Independent director28, since human- made and programmed AI is not immune to biases of the society and individuals. 29 If inculcated as director or board of director, not only would it be harmful and against the core principles and purpose of establishing an Independent director but would also contravene Section 166(3) of The Companies Act,2013. Corporations and related laws were formulated with relation to natural persons and primarily that’s why more questions are raised than answered when the liability of defaulters in case of AI led board of directors or AI director is brought up, among the many discussed legal implications of introducing AI in corporate governance. We still do not have a dedicated provision in the existing Company Act and laws, let alone a specific legislation, and with AI
25 The Companies Act, 2013, § 179(3), No. 18, Acts of Parliament, 2013 (India)
advancing rapidly, it is time we address the various legal issues involved, so that it can be regulated in the way that it promotes AI as an aid rather than an enslaver of humans.
6. CONCLUSION AND SUGGESTIONS
In the present day, artificial intelligence has proven efficient in boosting productivity and promoting good governance by taking up a variety of roles in corporations if employed correctly and with a well-planned vigil mechanism including human oversight. One can look forward to the technological revolution in the corporate sphere or be vary of it but AI has integrated itself deep enough that no one can ignore the changes that it is bringing into the traditional corporate governance structures. Keeping this in mind, it is important to evaluate the strengths and weaknesses of AI in order to understand which roles are most suitable for automation and how it can be implemented into pre-existing structures. Additionally, the legal provisions need to be amended in order to allow for the smooth transition to AI and increase public confidence in the new way of doing things.
Given the nature of roles assigned, AI also needs to be held accountable in some manner in order to ensure that corporations feel secure when employing AI and have a recourse in case of any unforeseen damage. Any new technology brings with it uncertainty and doubts, and AI is no exception to this. In contemplation of the benefits of AI the following suggestions may aid in incentivising the automation process may urge more enterprises to experiment with artificial intelligence and unleash its true potential. AI systems could be introduced through small pilot projects before being tasked with major governance roles. This will allow for a check of the system and ensure that the programme fulfils and targets the goals that the company aims to achieve. It will also aid in boosting confidence in the system and allow the employees to adjust around the changes made.
Furthermore, it will bring forth the shortcomings that might be expected and permit the timely formation of a contingency plan. Corporations may need to set up collaborative teams including members holding expertise from various fields such as IT, management and legal. This will allow for consideration of all novel facets and make it immune to growing challenges such as compliances, financial goals, ethical standards, etc, allowing for dynamic adaptations according to requirements brought about by unique situations. A set of professional standards must be created through practice. The same
should be objective and precise in order to ensure the strictest adherence of norms and should aim to address grey areas surrounding the nexus between the two disciplines. It is also necessary that an efficient vigil mechanism be put in place which in order to ensure constant human oversight and make certain that the AI programme conforms to these standards. The importance of AI is not subject to skepticism but in the process of applying it to corporate governance, especially Autonomous AI, what is often neglected is that it currently does not possess the ability to make key managerial decisions. Having said that, at whatever level of technology is Autonomous AI available, corporations can do their best to apply it in execution of various assignments in corporations.
It can be inculcated as a member of the executive team, taking decisions of small caliber, well within its processing capability, till, if, it develops enough to make independent decisions that takes into considerations all the aspects as a human does, after all AI mimics human intelligence. AI is emerging fast and yet the laws and regulations that are required for its check and balances are not present, as they are in conceptual stage, it is the right time to to formulate them in such a way that not only the importance of AI is recognised and used but also the potential harm of AI is recognised and dealt with effectively. One among them is accountability, as already discussed, no one in real life can be held accountable for a harm caused by AI involving humans as well, especially in Autonomous AI.
Convincingly, it would be unfair to hold developers of AI accountable for an action of AI, that is apparently, not operating under and subject to their will but at the same time it may be argued that it is those people only who have programmed AI. On a similar note, it would be unfair to hold the director accountable for the actions of Autonomous AI but it may be argued that it is the director who is vicariously responsible for the actions of AI. Given the conundrum, it is imperative for the policy and lawmakers to take this into consideration. A proposal of limited liability to directors in case of any accident or mishap may be considered. These measures can safeguard human interests and prove beneficial to AI as well by promoting its use in enterprises.
The most important factor in encouraging the use of AI is perhaps the introduction of novel legislation which not only recognises and allows for the use of AI in management but also provides for relevant security measures. With these changes AI can prove useful in automating enterprises and bring about profit maximization along with shareholder satisfaction, hence advancing good governance.