{"text":[[{"start":6.25,"text":"Few companies have benefited from Warren Buffett’s wisdom as a director, apart from Berkshire Hathaway, the financial conglomerate he chairs. But new developments in generative AI make it possible for many more boards to distil, replicate and interrogate the veteran investor’s collected wisdom, simply by uploading all Buffett’s letters to shareholders and other public pronouncements to a large language model. "}],[{"start":30.1,"text":"That suggestion, from a FTSE 100 client of Diligent, prompted the software group to add “long-term value investor” to the list of personas created for its new AI Board Member. Launched last week, this screen-based tool offers directors “a digital colleague in the boardroom”. Trained on board materials, news and research, it can be tailored to offer specialist views, on demand, from personas, including an AI-Buffett (though the company says it is not based on any specific individual’s work), an activist, and experts on cyber security or geopolitics."}],[{"start":64.7,"text":"It is an unlikely-sounding mash-up of Brave New World and the corporate governance code. But Diligent is far from the only provider in this growing market. "}],[{"start":75.2,"text":"Lloyds Banking Group broke cover this month as one of the first blue-chip companies to acknowledge it is rolling out AI board advice, provided by a bot developed by Board Intelligence, the UK board tech group. Mubadala, the United Arab Emirates’ state-owned investment company, has installed a homegrown AI called Maia to assist its investment committee and has pressed its portfolio companies to deploy Maia as an “observer” at board level."}],[{"start":100.9,"text":"Other technology providers offering AI capabilities include Nasdaq’s Boardvantage and Govenda’s Gabii, billed as “the first AI created for governance management”. Such tools already help chairs, directors and company secretaries manage and analyse board papers, prepare for and minute regular meetings, all within a secure system. AI is also offering individuals the opportunity to “clone” themselves. Mark Zuckerberg, chief executive of Meta, is building an AI avatar to interact with staff — an innovation that hard-pressed individual directors could also adopt. "}],[{"start":136,"text":"When Diligent’s chief executive, Brian Stafford, started sounding out boards about their feelings on AI directors last year, “it seemed very Star Trekkie to most people”. Now, he says, he is seeing more openness from board members."}],[{"start":150.4,"text":"Pippa Begg, Board Intelligence chief executive, says that in the past few months, the attitude among FTSE 100 clients has changed from “I’m not going to do anything” to “I think we need to do something. How do we do it safely and securely?”"}],[{"start":164.85,"text":"Begg, and Lloyds, refer to the AI tool as an adviser, used more to support directors ahead of meetings than as an active voice in the debate. But the prospect of “board bots” has still spawned speculation about androids at the board table. Stafford describes Diligent’s new offering as “a fully fledged, independent board member”. The reality, though, is that any digital director must cross some high legal, governance and technical hurdles before being granted a vote on corporate strategy or the next mega deal."}],[{"start":195.5,"text":"As Mark Babington, executive director of regulatory standards at the Financial Reporting Council, keeper of the UK governance code, says: “The definition of a company director in law doesn’t include a black box sitting at the end of the desk.”"}],[{"start":208.8,"text":"Even to consider giving an AI a vote, “we would have to give agency and persona to bots. So far it’s considered to be taboo”, adds Valery Yakubovich, executive director of the Mack Institute for Innovation Management at Wharton Business School."}],[{"start":223.4,"text":"Directors themselves are cautious. Samantha Kappagoda sits on the board of UBS’s US-listed Credit Suisse Funds and has contributed to a recent KPMG and Insead paper offering AI governance principles for boards. “There are certainly some directors that are enthusiastic about having an AI director but my question is: can the duty of loyalty and care really be delegated?” she asks."}],[{"start":248.35,"text":"So far, the answer is a firm no. “No doubt a machine can set out matters to be considered and make a recommendation — but directors with fiduciary duties cannot outsource them to other humans let alone computers,” says Patrick Sarch, partner and head of UK public mergers and acquisitions at global law firm White & Case."}],[{"start":268,"text":"For now, the discussion is academic, because even Stafford admits Diligent’s new AI Board Member is more like the director “at the back of the room, who waits for their subject to come up”. Voice technology is not yet quite advanced enough for the AI to join the cross-talk of rapid human debate. "}],[{"start":285.2,"text":"In the US, and some other jurisdictions, some directors are unsettled by the idea that an always-on AI’s memory bank could be subpoenaed by prosecutors or accessed by litigious shareholders. Directors that prefer the selective recall of board minutes (which AIs are already adept at preparing) can opt to have the chatbot’s memory wiped after each meeting, Stafford says."}],[{"start":309.4,"text":"AI is already helping board members take better-informed decisions. Simply loading past board minutes, decisions and outcomes into an AI allows directors to quiz the record and test their hypotheses against it. Boards are using AI to help diagnose governance strengths and weaknesses, or even assess the conduct of the meetings by monitoring whose voices were heard and whose ignored. José Parra Moyano, professor of digital strategy at IMD Business School, adds that “boards can use AI tools to tell them all the things that could go wrong if they make the decision. The AI might not be right, but it might help them to reflect once again once the risks are presented back to the board”."}],[{"start":351.09999999999997,"text":"Critically, a private, ringfenced board AI deters non-executives from using non-secure public LLMs to analyse confidential documents."}],[{"start":359.9,"text":"“The best boards that I’ve had a chance to witness value diverse opinions and they view AI as another different opinion,” suggests Stafford. Begg adds: “I think we’re going to get to a point where it’s almost more negligent to say that you don’t want it than you do use it.”"}],[{"start":376.75,"text":"Could AI boards outperform human ones? Wharton’s Yakubovich and others posed that question in an experiment they ran last year. Given the same business case, bots beat humans on “decision quality, evidence use, inclusivity and implementation planning”, the researchers wrote in the Harvard Business Review. Unsurprisingly, the AI struggled with the “informal, interpersonal and cultural aspects of governance”. As Yakubovich points out, “board members are chosen not just because [of] how well they can make decisions. It’s also about their connections, about their access to resources and so on”."}],[{"start":410.3,"text":"“Being able to ask for information [in a meeting] without having to manually look it up — that could be really helpful,” says Kappagoda. “But the question is judgment. Is it mechanical or is there judgment?”"}],[{"start":422.45,"text":"Or, as Buffett put it in his 2019 letter to shareholders, reflecting on the qualities of an ideal board member: “Thought and principles, not robot-like ‘process’, [should] guide their actions.”"}],[{"start":439.84999999999997,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1777270766_7302.mp3"}