- January 15, 2025
Board involvement and digital intelligence: A paradigm shift
Boards are often viewed as strategic symbols to build trust among investors and customers. However, the reality behind their constitution is frequently influenced more by the perceived “selling power” of members than by their skills, engagement, or expertise. This misalignment raises critical questions about board effectiveness in ensuring ethical governance and strategic alignment with organisational goals.
For an organisation, confidence, clarity, and honesty are invaluable allies. These principles, embodied in the board, help lay a strong foundation for long-term growth. Beyond a symbolic role, board members must actively provide moral and professional support to the executive leadership, ensure ethical practices, and oversee financial health to reinforce organisational credibility.
Raising the bar: The evolving responsibilities of board members
Traditionally, board appointments have been based on clean reputations rather than specific qualifications. Recent amendments to directors’ rights and duties, however, have heightened the stakes, mandating greater accountability for their actions, decisions, and even omissions. The fiduciary duties of board members now extend to safeguarding company property, ensuring sound governance, and avoiding negligence.
Periodic reporting by committee heads to the board is crucial for informed decision-making. Healthy debates and open communication within the board foster diverse perspectives, ensuring comprehensive and objective discussions. Board members are expected to remain informed of all recommendations, actions, and reports submitted during meetings. Ignorance is no defence against liability unless intentional concealment can be proven.
AI and advanced analytics: Enabling smarter governance
Traditionally, board decisions have relied heavily on limited data manually compiled and interpreted by members. This approach has been fraught with inefficiencies, including time constraints and reliance on individual expertise. Emerging technologies, particularly AI, are revolutionising this process by providing sophisticated tools for real-time data analysis.
AI-driven systems enable boards to sift through vast volumes of information—ranging from financial reports to customer feedback and market trends—delivering actionable insights with unprecedented accuracy and speed. This equips board members to make informed decisions based on up-to-date and comprehensive data, respond proactively to risks, and align strategies with dynamic market conditions.
Balancing technology with governance
The adoption of AI must be underpinned by strict safeguards to ensure data confidentiality, privacy, and security. Boards must also exercise vigilance in understanding the capabilities and limitations of AI, ensuring ethical implementation aligned with organisational values.
Boardroom leadership in ESG and sustainability
Board members play a pivotal role in shaping an organisation’s Environmental, Social, and Governance (ESG) strategies. Generative AI is emerging as a powerful tool to facilitate ESG data collation, measurement, and reporting. By leveraging AI, boards can ensure compliance with ESG frameworks and effectively communicate progress to stakeholders.
ESG has become a key metric for assessing a company’s ethical practices and resilience in managing environmental and social risks. As stewards of sustainability, board members must integrate ESG into core decision-making processes, recognising its growing importance for investors and stakeholders alike.
Towards a digitally intelligent and accountable Board
The modern boardroom demands a blend of digital intelligence and ethical governance. As organisations navigate increasingly complex challenges, board members must go beyond symbolic roles to become active, informed, and digitally empowered contributors. By embracing technology responsibly and prioritising ethical practices, boards can not only enhance organisational performance but also set a benchmark for trust, sustainability, and long-term value creation.
Authored by Ms. Anita Ananthan, Chief Financial Officer – Legal & Compliances at Credence Analytics, a micro-certified MSME software company. Ms. Ananthan is a Certified Independent Director and a distinguished alumna of the London School of Economics (LSE). She is also the founder of ‘Club of Hope’, an NGO dedicated to supporting children and the elderly.
Disclaimer: The views expressed here are personal. The author can be reached at anitakumar@credenceanalytics.com