The increasing use of AI by CEOs is creating a new oversight challenge for boards, namely how much of decision-making is being done by man or machine.

The Board’s New AI Blind Spot

The acquisition checked all the boxes. The numbers were solid, the cultures meshed, and the identifiable risks were minimal. Yet something felt off. It wasn’t the decision that directors were questioning. It was who made it—the CEO or AI.

CEOs are turning to AI more and more to help analyse industry trends, redesign operations, pressure test strategy, and more. One recent study found that CEOs spend up to eight hours per week thinking about, working with, or learning about AI. Another study found that CEOs are using AI more than CFOs and other C-suite leaders. For boards, it brings up a whole new oversight challenge, namely how much of the thinking and judgement that goes into decision-making is being done by AI versus the CEO. “From a governance perspective, it’s a real concern,” says Claudia Pici Morris, leader of North America Board and CEO succession solutions at Korn Ferry.

Part of the concern has to do with the science of decision-making. According to a report from the Global Association of Applied Behavioral Scientists, 85 percent of mid-to-senior level professionals, including CEOs, have never received training in decision-making, and 45 percent do not have a structured process to make decisions. Put another way, the more CEOs—and their lieutenants—use AI, the more difficult it is for boards to determine whether AI is informing decisions or indirectly making them.

That line is only going to get blurrier as AI gets smarter. New AI models are increasingly capable of taking on high-level thinking, decision-making, and judgement responsibilities. So much so, in fact, that AI has already been shown to outperform human CEOs at running a company, and companies run and staffed exclusively by AI agents are being started every day. Moreover, AI learns from the data it is trained on, meaning that it can eventually mimic the thinking of the CEO using it. “That’s the real scary part for boards,” says Jane Edison Stevenson, global vice-chair of Board and CEO services at Korn Ferry.

Stevenson says AI’s tendency to affirm rather than challenge user prompts can create confirmation bias that could lead CEOs down a wrong path. Or, as Bryan Ackermann, head of AI strategy and transformation at Korn Ferry puts it, “The probability of making bad strategic decisions based on AI inputs is growing exponentially.”

For now, at least, decisions, and accountability for them, still rest with the CEO. But AI is taking on more of the heavy lifting. Against that backdrop, it’s not unreasonable to assume some leaders may be susceptible to taking the advice of AI without proper vetting, which could expose firms and boards to all sorts of fiduciary, regulatory, and legal liability. Going forward, that means boards need to evaluate not just the outcomes of decisions, but also the processes behind them, says Tierney Remick, co-leader of Board and CEO services at Korn Ferry. “The inputs behind major decisions are only going to get harder for boards to unpack,” she says.

The article was first published by Korn Ferry.

Photo by Nahrizul Kadri on Unsplash.