Governance at the speed of Artificial Intelligence

Posted: 29th August 2023 Jo-Anne Morgan, Director of Governance

By now, I’m sure most of us are at least aware of the recent developments in AI and tools such as Chat GPT, Mid-Journey, Anthropic and Dall-E. Even after only a cursory look, you can see that the potential applications are incredible and impact likely to be vast.

Whilst there are unlikely to be many AI experts sitting on the Boards of housing associations (there aren’t many anywhere!) across the country, Boards still have a critical role to play in navigating the topic of AI and supporting the Executive Team.  AI is a cross-organisation issue and therefore the Board has a pivotal role.

So, what should a Board and Board Members be doing now on AI? In our view, there are  two key things to focus on right now, firstly make sure it is on the agenda / being discussed and secondly ask questions to stimulate discussion.

In this article, we provide some thoughts on what we think Boards should be asking their executives now on the topic of AI. And whilst none of the answers are perfectly fixed, starting the discussion is the first step in ensuring good governance.

What is AI, why is Generative AI different to what we have seen earlier and what tools are available?

Seems an obvious starting point, but it is an important one. Running a briefing session for a Board (and an Executive Team) on this single question would be a great first step to upskilling all in knowledge on what AI is and what its impacts could be, both in terms of opportunities and risks.

There should also be no fear in asking this starter question. Generative AI has emerged from almost nowhere in the last 12 months, and the rate of development is exponential, and we all need to start our learning from somewhere. By asking the starter question, Board Members would not only increase their own knowledge of the topic, but also get some assurance that the Executive Team is also considering it.

How will AI shape the housing sector over the short and medium term?

Once a baseline understanding of AI is in place, Boards can then start to move on to consider what the potential implications are for the sector (and by implication their own organisation).

We are already starting to see the impact of AI in the way we all work, but there are a broad range of potential impacts for organisations in the sector to consider over the short to medium term, not least; enhanced productivity, 24/7 service delivery, combating loneliness, improve customer interactions / services, personalised customer service etc. Whilst these are unlikely to be implemented immediately, starting to get a view on how AI can shape the sector is important.

What are the key risks of AI to us as an organisation and the wider sector?

This is likely to be the key area of focus from a governance perspective in the short-term. This should particularly be seen through the lens that it is likely that staff in most organisations are already using AI, with limited managerial oversight, in one form or another.

The risks of AI are well-known (potential for hallucinations, biases, loss of data, fraud etc.) so getting on top of your exposures / risks, and ensuring mitigations are in place, is critical.

How will you gain assurance on the information presented to you? This is key question for Boards going forward, and changes will be required in the way we test, assess, and understand information provided to us and onwards up through the change of governance and regulation.

What is the usage of AI in our organisation right now?

Linked to the above point, few organisations (across any sector) will be able to answer this right now. AI isn’t like another technology solution (which requires a large and expensive centrally co-ordinated specification, procurement, and implementation), many AI tools are freely available or available at minimal cost. This means that many employees will already have signed up to tools such as ChatGPT, Claude, Midjourney etc. and will already be using them in their day-to-day work.

As detailed in our other articles on AI, we encourage organisations to adopt an open and transparent approach to the use of AI. This should, however, include getting a policy in place to provide guidelines for use and should encourage a culture of openness and honesty in the use of AI tools.

What is our short- medium- and long-term plan on AI?

The impact of AI on sectors across the economy is well documented, and whilst in the short term some sectors will see the impact more than others (e.g. research from McKinsey suggests that software engineering, marketing, customer service etc. are likely to be at the forefront of the first wave of AI impacts), over time it will impact on all sectors, including housing.

And even if organisations in the sector are not likely to be seeking to make significant investments in AI right now, there are still actions to be taken such as understanding current risks, ensuring policies for use are in place, mapping the risk to customers etc.

What skills do we have available now, and what will we need in the future?

As a starter, we will need to upskill our understanding of AI and its potential uses. This is critically important at Board and Executive levels, as much as at other levels in an organisation. Boards and Executives in the sector should challenge themselves to determine what gaps they may have in their own knowledge and experience around AI.

Likewise, at an operational level over the medium term, it is likely that most will seek to invest in resources to develop, manage and use AI within their organisations. In the short-term Boards in the sector may wish to encourage their Executives to set up cross-working project teams to map the impact and risks of AI at an operational level, to help feed into the development of wider medium term AI strategies.

Boards in the sector have a critical role to play in shaping the way that their organisations respond to a range of challenges. And there are lots of them in place at the moment for the housing sector – balancing financial pressures, achieving net-zero, building safety, consumer regulation etc. AI is another challenge to add to the list.  It is, however, a significant opportunity which, if managed correctly, can help positively shape the way organisations operate. Governance around AI is crucial and there are significant risks to manage. Ignoring AI isn’t an option; the questions set out in this article aim to help get the discussion going within your organisation and ensure there is sufficient focus by Boards going forward.

As the topic of AI continues to gain momentum in the coming months, acquiring a robust understanding of Generative AI in its present state will prove to be invaluable.

For deeper insights into Generative AI or its implications for the sector and housing organisations, and to include a discussion on AI into a Board or Executive strategy session – taking into account the governance aspects highlighted in this article – please contact:

Jo-Anne Morgan
Director of Governance

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