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The Case for AI Risk Appetite Reviews
Directors face a complex challenge in overseeing artificial intelligence. While traditional fiduciary duties demand both safety and value creation, AI introduces inherent trade-offs that defy simple "both/and" expectations. New NACD research reveals a significant increase in board discussions around AI, yet a notable gap in established governance frameworks.
This article delves into the critical need for boards to define their AI risk appetite explicitly. Using examples from health care, it illustrates how seemingly technical decisions about AI accuracy are, in fact, fundamental governance choices with profound implications for stakeholders, operational costs, and reputational risk.
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Tom Petro, NACD.DC®, is a board member of the NACD Philadelphia chapter and has served as a panelist at the NACD Directors Summit™ and a presenter on artificial intelligence governance. He is the author of AI in the Boardroom: Preparing Leaders for Responsible Governance.
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