H. Pierson

The success of an organization depends on its strategy. The higher-level strategic planning and the ability of the company to implement its strategy determine how well the organization performs and remains successful in the long run in today’s fast-paced and competitive business environment. Strategy implementation is crucial because you must execute a strategy well to achieve your company’s objectives and goals, and you will miss opportunities and lose revenue.

In contrast, if you can execute your strategy well, your company can gain a significant competitive advantage. It will allow you to achieve your goals and remain ahead of the competition for a long time. As a result, companies are increasingly looking for ways to improve their strategic implementation and enhance their ability to execute their plans better.

Rising Usage of AI

Artificial Intelligence (AI) is among those emerging technologies that have gained focus in the business world in recent years. AI has gradually chipped away the inefficiencies in various aspects of operations and enhanced customer experience. Companies have been exploring and identifying numerous ways to use AI to drive growth and improve business outcomes.

One area where the use of AI is gaining momentum is strategy implementation. AI technologies enable companies to understand and leverage data better, gain valuable insights and optimize their strategy implementation. It leads to better decision-making and resource allocation and brings improved business outcomes. In this article, we will explore how companies use AI for strategy implementation to gain a competitive edge.

Manage the top line: your strategy, your people, and your products, and the bottom line will follow
Bill Gates

What is a Strategy?

Strategy is a blueprint and a high-level plan created by the management for achieving the long-term goals of an organization.

A business strategy is based on a detailed assessment of the following.

The current situation in the company
Strengths and weaknesses of the organization
New opportunities and threats
Current market conditions
Developments in the industry you operate in
Competitors and competing products
Risks that you may need to manage

Creating a strategy involves making decisions based on these factors, creating a roadmap for operations, and formulating an action plan to achieve the objectives. The business strategy governs the goals, targets, activities, outcomes, and resource allocation for various processes and operations of the organization, such as the following.

Market segmentation
Product development
Product positioning
Pricing
Sales
Marketing
And more

Strategy implementation involves creating ownership of the business strategy amongst employees, achieving strategic alignment across the organization, and fine-tuning processes and systems to deliver desired outcomes per the strategic plan.

When executed right, a business strategy will create desired outcomes at all levels, which will snowball into organizational growth, success, and fulfillment of the organizational objectives. It creates a sustainable, long-term competitive advantage for the organization.

How does AI help with strategy implementation?

Artificial Intelligence (AI) is a replication or a simulation of intelligence required to perform human tasks that involve perception and cognition. AI-powered machines perform tasks that require human intelligence, such as data analysis, visual perception, image processing, facial recognition, speech recognition, decision-making, translation, etc. These AI systems are constantly learning. They can update themselves, improve functionality, and adapt to new situations and environments.

In the business scenario, integrating AI in various aspects of the business enhances your ability to execute your strategy more effectively. Following are some of the ways AI helps in executing business strategy.

1. Automation of repetitive tasks

AI helps companies automate repetitive tasks, such as inventory management, which humans previously carried out thoroughly. For instance, AI helps in warehouse management and automation of procurement by managing purchase orders, maintaining the vendor database, sending purchase orders to concerned vendors at the right time, etc. Through this automation, the warehouse management system ensures the availability of crucial components, materials, and products just in time when you require them. It helps companies manage demand and supply better. AI is used similarly in various operations to reduce labor costs and increase productivity and efficiency.

2. Data analytics and insights

AI helps companies gain comprehensive insights by analyzing vast amounts of data to identify patterns and trends. For instance, AI can constantly track the number of leads generated through every marketing channel and compare them with the amount you spend in those channels for your marketing efforts. It helps you allocate resources better for different marketing efforts and get more out of reduced spending.

3. Predictive modelling

AI can help businesses build predictive models to anticipate future outcomes and trends. For example, you can predict product demand based on patterns identified from historical sales data and customer behavior. For instance, if the holiday season is nearing, AI can help you analyze and predict the surge of demand and make critical business decisions, such as setting higher production targets, running extra shifts, having a specific amount of products in stock, adjusting pricing, designing marketing campaigns and offers to attract customers, etc.

4. Personalization

AI helps companies personalize the customer experience. For instance, it provides product suggestions based on customer preferences. It enables personalization in other areas, such as emailers that can be customized and personalized with content based on certain predefined conditions. For instance, companies have abandoned cart reminders automatically sent to customers who add products to the cart but leave the site/app before making a purchase. Through these personalizations, AI makes it possible to cater to every customer better based on their preferences and improve customer experience drastically. It also helps to increase conversion and retain customers better.

5. Automated decision-making

AI can automate decision-making processes. For example, chatbots can cancel orders and initiate refunds upon request. In a variable pricing scenario, AI helps to determine the pricing based on predefined rules and criteria. It helps reduce human errors and make data-driven decisions to achieve success consistently.

5. Automated decision-making

6. Risk management

AI analyzes data and identifies business risks to help companies prepare for these eventualities and avert risks. For instance, AI can analyze patterns and save insurance companies from false claims by assessing historical data and finding the correlation between connected events and a spike in claims, such as the connection between the loss/damage of smartphones and the launch of next-generation models. The use of AI in risk management is gaining popularity in recent times.

A Step-by-Step Guide to Integrating AI into Your Strategic Execution

AI needs to be set up and customized to your use cases. Before you can start integrating AI, you need the following.

A clear understanding of the business goals and objectives
In-depth understanding of the data and systems required to support the strategy
Human resources and infrastructure to support the development and deployment of AI models and systems

You can start integrating AI and enhance your strategy execution by following these steps.

1. Encourage the adoption of data analysis

While AI can provide insights that can lead to business-critical decision-making, the stakeholders and decision-makers need to realize the importance of data. They should build a deeper understanding of how to decode insights and rationalize decisions and actions based on that. Otherwise, your team won’t be able to leverage the data for the organization’s benefit. So it is essential to train your workforce, management, and leadership team on data analytics and ensure they have the analytical skills to drive business outcomes. A consistent understanding and interpretation of insights go a long way in driving sustained change.

2. Identify your use cases

While implementing AI Can bring efficiencies and ensure better strategy implementation, it also costs a lot. So it is essential to study how your competitors and the leading companies outside the industry implement their strategy using AI. You can draw inspiration from them, but identify your unique use cases and analyze the feasibility of integrating AI. It is crucial to discuss with all the stakeholders, including concerned teams, and analyze if the benefits outweigh the costs.

3. Select the areas of opportunity

After you can identify the use cases, you have to select the areas in your business operations that will benefit the most from AI integration and get a quick return on investment. You can forecast this using various metrics to analyze the potential impact of AI implementation in these areas.

4. Audit your capabilities

You have to thoroughly analyze and identify the human resource and technology requirements to implement artificial intelligence in the identified areas. You need to identify the gaps in existing technology and the lack of skills required to leverage AI. Based on this analysis, you have to organize training and workshops for concerned employees and seek the expertise of consultants and other third-party associates, to leave no stone unturned regarding AI implementation.

5. Narrow down your choices

While you can choose broad areas of business where artificial intelligence makes sense for your operations, you have to narrow your focus further. For instance, if you want to implement AI in marketing, you can do it in many ways. You can use AI to automatically segment customers based on their preferences and behavior on your e-commerce website and create categories in the mailing list accordingly; you can automate sending of emailers based on certain pre-determined conditions; you can use AI to track the performance of marketing campaigns and optimize marketing efforts; you can use AI to provide personalized experiences by sending personalized offers to customers and creating loyalty programs optimized to increase conversion rates. You can narrow your focus to specific operations and processes in your broader use cases by identifying inefficiencies in operations, finding suitable AI solutions to address them, and doing a cost-benefit analysis.

6. Implement a pilot project on a small scale

When integrating AI for strategy implementation, you can first test it on a smaller scale. You need to gather data, develop customized algorithms and release it on a smaller scale in a controlled test setup involving experts in artificial intelligence, data analytics, and the concerned business processes. It helps to measure the impact, foresee the risks and tweak your AI models before scaling them up.

7. Establish a baseline understanding

Document your learnings and establish a baseline of understanding. Compare the results with the forecasts and see whether your small-scale pilot project met its objectives. It helps to build on your experience and knowledge of AI and fathom its impact on your strategy implementation.

8. Scale your AI integration

Once you verify the effectiveness of your AI on a small scale, you can gradually scale AI deployment. As you scale up the AI integration, you may need to continuously tweak the algorithms and business processes. Ideally, the impact of AI on your strategy implementation will show up in your metrics and help build confidence across the organization. It will convince the stakeholders to experiment with AI integration in other aspects of your business and broaden the influence of AI in your strategy implementation.

9. Complete the AI integration

Integrating AI is one thing, but gaining a competitive advantage in the long run and achieving long-term growth by improving its lifecycle, testing, and deployment is another.

You can achieve these by building a modern data platform that enables the streamlined collection, storage, and structuring of data so that the accuracy of chosen metrics and the quality of insights and reporting remain consistent. You can structure your organization in such a way that the development of data platforms and governance based on the priorities of your business power your goals and decisions. You should also build processes and expand the technologies required to manage data elements from various parties.

10. Build on the implementation and find room for improvements

AI models and processes require continuous improvements to keep in sync with the rapid changes in the business environment and quickly respond to changes in the strategy. It would be best to listen to feedback and proactively address the lack of AI adoption or resistance to AI at every level of the organization.

Frequently Asked Questions

1. What is the role of AI in business strategy?

AI helps companies improve strategy execution by analyzing massive data, offering valuable insights, influencing business-critical decisions, and optimizing operations to achieve a sustained competitive advantage.

1. What are the 4 AI business strategies?

AI strategies can be classified into

(a) Effectiveness strategy – to make operations more effective and impactful

(b) Expert strategy – for the automation of decision-making

(d) Innovation strategy – for promoting creativity and innovation

1. What is an example of how businesses use AI?

An example of AI usage by e-commerce businesses is the automation of sending personalized abandoned cart emailers.

Conclusion

AI is transforming the way businesses approach strategy. By leveraging AI to analyze data, automate operations, and personalize the customer experience, businesses can gain a competitive advantage in today’s fast-paced business environment.

Source: profit.co

As risk professionals look ahead into 2024 and beyond, there are a number of key risks they will need to monitor and prepare for. According to Aon’s annual Global Risk Management survey, the following five current risks are of greatest concern for risk professionals and business leaders in 2024, and some of the firm’s top mitigation tips:

1. Cyberattack or Data Breach
Survey respondents ranked cyberattack and/or data breach as the top risk for 2024, with 18% of respondents indicating cyber-related risks contributed to a loss for their organization in the past 12 months. After declining in 2022, ransomware attacks jumped 176% in the first half of 2023, according to the report. On a positive note, 89% said their organization had set up a plan to respond to cyberrisks. To mitigate the impact of a cyberattack or data breach, the report outlines four key strategies:

Identify and assess cyberrisk. Aon suggested collecting and examining data and insights related to any exposures and impacts to inform leaders’ decisions to mitigate, avoid or transfer cybberrisk in the future.

Mitigate cyberrisk. There is a lot that goes into mitigating cyber-related risks, including staying on top of evolving threats, which usually coincide with new technologies, and conducting organization-wide cyber-defense training to emphasize the importance of complying with cybersecurity measures.

Prepare cyber-incident response and recovery. Whether accidental or malicious, cyber incidents are unfortunately inevitable at this point. Every organization should have plans in place for incident response, containment and investigation efforts.

Transfer cyberrisk. Risk transfer is important to ensure financial resilience. In addition to traditional insurance placement, captive insurance and alternative capital are also viable approaches for some organizations to protect their balance sheets.

2. Business Interruption
Whether the cause is a natural disaster, global pandemic or political conflict, losses can be significant and put an organization at risk. With so many complex issues constantly at play, respondents identified business interruption as the second-highest risk. While business interruption claims are often out of an organization’s control, Aon offered a few best practices to help mitigate losses:

Regularly revisit and update crisis management and business continuity plans
To reduce supply chain risk, a related factor in business interruption, use multiple sources for receiving inventory
Stay in regular contact with your insurance broker to keep business interruption plans updated
Maintain any business operations you can while focusing on recovery
3. Economic Slowdown or Slow Recovery
As consumers cut back on frivolous spending or seek out alternatives to their normal purchases, organizations feel the effects of economic downturns in the form of a revenue decreases, supply chain disruptions, financing issues, and labor and staffing troubles. Banking crises and the lingering effects of the COVID-19 pandemic also contributed to the most recent economic slowdown.

Aon research shows that economic slowdowns happen about once a decade, but it is not an exact science. To brace against the impact of economic slowdowns, Aon recommended that organizations:

Increase cash reserves. If possible, focus on increasing the amount of cash your business has on hand so that it can still meet financial obligations during a period of revenue decline.

Implement strategies to minimize workforce disruptions. Conduct skills assessments and job architecture planning, for example, to provide an organization with detailed insights to identify opportunities to reskill or move employees to other areas.

Increase focus on related risks. Focusing on recovery or maintenance during an economic slowdown is great, but do not turn a blind eye to other related risks, such as cyberattacks, supply chain issues and regulatory risks.

Diversify. Switch up investment strategies, supply chains and customer bases to get the most out of your business while the economy is slowing down or recovering from a slowdown.

4. Failure to Attract or Retain Top Talent
Recruiting and retaining top talent has been a business issue for years, and that will not change any time soon. Companies are constantly struggling to balance the need for top talent with the need to be fiscally responsible, and sometimes tough choices need to be made. While recent inflation seems to be nearing its end, businesses are still reeling from the effects of a sustained period of high costs for materials and other major expenditures. As a result, hiring has either halted altogether or positions come with lower compensation packages, making it harder to reach top-tier candidates. Workers are also demanding different working conditions. For example, remote work boomed during the pandemic, and now many workers will not even consider a company requiring in-person office work, especially as many viable employees choose to live where housing is more affordable, which does not always align with where top companies are.

According to Aon, one way to ensure your organization is not missing out on recruiting and retaining top talent is to recognize increases in cost of living and improve salary packages, whether in the form of higher base salaries or stock options.

5. Regulatory or Legislative Changes
Constant activity from regulators and lawmakers impacts thousands of businesses. Organizations must stay on top of the latest changes and make sure they remain in compliance with regulations or risk hefty fines, among other potential consequences. Organizations have a few options for mitigating the impact according to Aon, including:

Set up an in-house team to track regulatory and legislative changes and implement compliance measures
Find ways to influence the development, passage and implementation of new laws and regulations and
Clearly communicate the new rules to employees

Source: Jennifer Post is an editor at Risk Management.

Trends reshaping risk management include use of GRC platforms, risk maturity models, risk appetite statements and AI tools, plus the need to manage AI risks.

Enterprise risk management has taken center stage in many organizations as they grapple with the lingering effects of the COVID-19 pandemic, economic uncertainties, the rapid pace of business change and other potential business risks.

Forward-looking corporate executives recognize that stronger risk management programs are required to remain competitive in today’s business world. For example, one aspect of the current enterprise risk management (ERM) landscape that companies must contend with is the connectivity of risks between different organizations.

Businesses are increasingly interconnected with partners, vendors and suppliers across global markets, complicating various types of risks they face, explained Alla Valente, an analyst at Forrester Research.

“We find that when there is significantly more risk in one of those categories it can have a ripple effect that impacts other categories,” she said. The business impact of a local natural disaster, the ongoing wars in Ukraine and Gaza, higher interest rates or other developments can cascade across an entire supply chain worldwide. Along with other factors, that makes effective risk management a prerequisite for continued business success.

But there’s a lot for risk managers to keep up with. Here are 12 security and risk management trends that are reshaping the ERM process and influencing business continuity planning and risk mitigation efforts.

1. Risk maturity models consolidate workflows
More enterprises are considering a risk maturity model as a way to manage the growing interconnectedness of risk vulnerabilities, Valente observed. This method mirrors other frameworks like the capability maturity model widely used in software development. Adopting a risk maturity model requires addressing risk management processes and technologies that can support them.

On the process side, risk management leaders must put together a team of risk stakeholders. This team should combine the technical and business expertise necessary to make fast and intelligent risk-based decisions, establish ERM policies and procedures, and implement the proper controls. Risk managers also need to establish processes for consolidating ERM workflows across disparate entities.

The technology side includes the IT infrastructure for centralizing and contextualizing information about risk management and automating risk policy enforcement.

2. ERM technology stacks expand into GRC
Enterprise risk management has expanded beyond financial issues to also reach into cybersecurity; IT; third-party relationships; and governance, risk and compliance (GRC) procedures. A comprehensive GRC platform can be a critical integration tier for all types of risk management activities. An organization can use one to create and manage policies, conduct risk assessments, understand its risk posture, identify gaps in regulatory compliance, manage and respond to incidents, and automate the internal audit process.

CIOs need to confirm that their risk management technology stack is adequate for each task and used proactively, not just reactively, Valente said. Consider integrating the following functions into a more comprehensive technology stack:

Risk intelligence tools to analyze geopolitical risks, natural disasters and other incidents.
Third-party risk assessment tools to track sanctions, security incidents and financial health in other organizations.
Cybersecurity systems to assess the potential impact of security vulnerabilities, data breaches and cyberattacks.
Social media monitoring capabilities to identify sudden changes in brand reputation.
3. ERM seen as a competitive advantage
Organizations now often view risk management as a way to increase their competitive advantage instead of simply a risk avoidance exercise, especially since the onslaught of COVID-19.

“Although many companies suffered economic losses during the pandemic,” Valente noted, “we also saw many companies pivoting to new opportunities that did not exist before.”

Valente’s research team has been exploring the differences between traditional chief risk officers who are laser-focused on minimizing risk and so-called transformational CROs who see risk management as a competitive differentiator that can prevent risks from interfering with business strategy and limiting revenue streams.

“Companies with a transformational approach to risk can mobilize their teams and business leaders quickly to jump on a new gap in the market,” Valente explained. When, for example, Ikea’s store traffic plummeted during the initial pandemic lockdown, the furniture retailer quickly implemented a new contactless pickup system that let customers securely pick up their purchases, according to Valente.

4. Wider use of risk appetite statements
Risk appetite statements emerged in the financial industry to improve communication with employees, investors and regulators. Some risk is required to expand a pool of loans, but if too many customers default, a bank needs a program in place to trigger decisive action. For example, banks might establish a safety baseline for mortgage defaults or fraudulent transactions that still lets them turn a profit.

Risk appetite statements are starting to gain popularity in other industries to replace rudimentary “check the box” exercises with a process that more definitively guides day-to-day risk management decisions, observed Chris Matlock, vice president and advisory team manager for the corporate strategy and risk practice at Gartner. There’s a caveat, though.

“It is difficult to do,” Matlock warned, but “the payoff for organizations that do it is extremely high.”

He explained that companies face numerous challenges in creating an effective risk appetite statement. Some executives believe it could limit their ability to pursue new business opportunities, while others are concerned that a poorly worded statement might be misinterpreted as condoning unacceptable practices.

5. Subject matter experts expedite risk assessment and response
Bringing all the risk information together is important, but experts are also required to make sense of it. Enterprises are increasingly using their GRC platform to create an informed network of subject matter experts for critical projects, Matlock said. When issues spanning multiple departments emerge, such as a security incident involving IT, legal and HR, an appropriate panel of experts in those areas can quickly assess the risk and take required actions.

Risk assessment at the beginning of a new project is table stakes now. Devising the best plan and creating a process that supports a timely risk response yields the best results. “It is the maintenance of risk and the timely response to risk throughout a project’s lifespan that has the biggest impact on success,” Matlock said.

6. Risk mitigation and measurement tools multiply
Tools for actively measuring and mitigating risks are getting better, said Keri Calagna, a principal at Deloitte who is the professional services firm’s advisory leader on strategic risk and resilience in the U.S. Among the improvements are internal and external risk-sensing tools that help generate the risk intelligence needed to detect trending and emerging risks.

In addition, Calagna reported that enterprises are turning to more integrated tools that do the following:

Present a holistic view of risks across the organization.
Capture leading risk indicators to show how a risk is trending.
Promote accountability for the actions taken to mitigate risk.
Provide real-time risk reporting to aid in management decisions.
Expect a rise in scenario planning and assumption testing capabilities, Calagna said. Companies are also using simulations, war games, tabletop exercises and other interactive workshops to promote more cross-functional thinking about risk management and help assess the impact of different future events on corporate business plans and strategies.

7. GRC meets ESG
Another enterprise risk management trend is connecting the dots between business risk and environmental, social and governance (ESG) agendas.

“As companies begin their ESG risk planning, they should ensure that the actions they are taking are significant and genuine,” cautioned Cliff Huntington, general manager of software vendor OneTrust’s GRC and Security Assurance Cloud product suite. Organizations need to demonstrate that they aren’t just greenwashing and are instead making measurable progress as part of their ESG strategies and programs, according to Huntington.

“Business leaders,” he said, “are realizing that ESG risk is a business risk and are taking steps to mitigate it in conjunction with their enterprise risk initiatives.”

8. Extreme weather risks grow in importance
With crisis events like extreme weather growing in impact and frequency, CEOs and boards of directors will be called on to implement risk management strategies to mitigate the impact on employees and business assets. In 2023, there were a record 28 billion-dollar weather and climate disasters in the U.S. that caused a total of at least $92.9 billion in damages, according to the National Oceanic and Atmospheric Administration.

“With extreme weather now a norm, CEOs will need to learn about risk mitigation to protect their assets, employees and bottom line,” said Mark Herrington, CEO at OnSolve, a software vendor that offers a critical event management platform.

9. Integrating risk management with digital transformation
As business operations increasingly go digital and IT environments become more and more complex, enterprises are increasingly adopting an integrated GRC, or IGRC, program to simplify their risk management activities, said Elizabeth McNichol, a principal at PwC and enterprise technology leader in its U.S. cyber, risk and regulatory consulting practice.

“Due to decentralized, overly complex systems, many companies are not aware of all the kinds of data they have, how it is organized or even if it may be noncompliant with the law,” she said. Rules for how organizations handle data and comply with regulations should be clear, straightforward, universal and grounded in a risk-based approach, McNichol added.

IT plays a critical role as both a driver and enabler of IGRC. CIOs and other IT leaders must work with business managers to identify, assess and mitigate risks in accordance with a company’s risk appetite. An integrated governance model can help by coordinating strategy, people, process and technology objectives across the enterprise. These steps are crucial for ensuring the risk management component is successfully integrated into broader digital transformation plans.

10. Enhanced and contextualized risk monitoring
Kumar Avijit, practice director for cloud and infrastructure at technology research firm Everest Group, is seeing increased demand for risk management monitoring tools tailored for various roles and personas, such as CIOs, CISOs and business managers. This is because various executives and business users are defining new risk management priorities and mandates. These tools enhance traditional risk analysis with drill-down views that provide the right level of granularity.

Examples of some of the growing risk priorities for different roles include the following:

CEOs want to drive secure business transformation.
CFOs want to reduce business risks and the cost of data breaches.
COOs want to run resilient business operations.
CIOs want to make security a foundational element of IT strategy.
CISOs want to quantify cybersecurity risks to aid in decision-making.

11. AI augments risk management initiatives
AI will play a growing role in risk management initiatives. Abhishek Gupta, founder and principal researcher at the Montreal AI Ethics Institute, said he expects the following to be some of the most common manifestations of this trend:

AI-driven risk identification and prediction. Machine learning is beginning to be used to identify risks more accurately and faster than humans can. That’s especially the case in dynamic risk management processes for cybersecurity, in which heuristic- or rule-based approaches can become outdated because adversaries are using AI themselves to mount novel attacks. AI and machine learning tools can also monitor risks and predict how they might develop in the future, enabling mitigation strategies to become more proactive.
Use of chatbots. They can answer risk management questions from employees, customers, business partners and other parties that would otherwise need to be addressed by risk managers. Chatbots can also navigate internal knowledge bases to surface risk-related scenarios and incidents that were previously encountered in an organization, thus saving time and preventing redundant investments in resolving issues.
AI in legal and model risk management. AI tools are being used to ensure legal compliance and mitigate related risks. They can also be used for model risk management and stress testing of quantitative and qualitative models to meet regulatory requirements in financial services, insurance and other industries.

12. AI introduces new risks that need to be managed
On the flip side, the surge in interest in AI being driven partly by the emergence of generative AI technologies also threatens to burden enterprises with various new risks that haven’t been widely considered before now. Gupta predicted that organizations will adopt the following measures to help manage AI risks:

AI risk management frameworks. Progress is expected on case studies and tests to determine whether new AI risk management frameworks, such as one developed by the National Institute of Standards and Technology, are effective. If they are, that would remove a big impediment for organizations in getting started on managing AI risks.
Responsible AI programs. A cohesive responsible AI strategy will be an important component of AI risk management. But some companies likely will struggle to balance idealistic commitments to responsible AI principles with the level of resources required to support and sustain a program. Organizations will need to think seriously about how to achieve that balance.
AI governance policies. This involves establishing guidelines that align the governance of AI systems with an organization’s values and objectives. Without such alignment, the implementation of an AI governance policy could fail due to internal friction, resulting in limited adoption and an inability to effectively manage AI risks across the organization.
Management of third-party AI risks. Organizations also must address risks that stem from the use of externally developed AI tools. Incorporating these third-party AI risks into existing risk management strategies will separate companies that are successful in their approaches from those that aren’t.

Source: TechTarget.com

Risk management plays a crucial role in the corporate governance of public sector organisations. It involves building structures and mapping out processes that contribute to both strategic and operational success.

This article will provide a thorough explanation of what risk management in the public sector is, why it’s so important and highlight examples of potential challenges linked to public sector risk management.

What Is Public Sector Risk Management and Why Is It So Important?

Public sector organisations will always face different risks that could potentially impact their operation and reputation. These risks can be divided into areas such as financial, compliance, technological and political.

To effectively identify these risks and have suitable measures in place to cause minimal impact; public sector organisations should create a risk management strategy.

A dedicated risk management team should coordinate a strategy. Their role is to capture relevant risks at each organisational tier and monitor the completion of planned mitigating actions to decide whether to escalate the risk.

Change is one of the most critical elements of potential risk and the public sector is currently undergoing an era of significant change. This era of change has accelerated by digital transformation, Brexit and the challenges caused by the pandemic.

Risk management enables public sector organisations to become more reactive to change and make better decisions on how they can operate more effectively in the future, ultimately leading to better citizen outcomes and improved internal efficiency.

However, there are several challenges linked to having an effective risk management strategy in place and public sector organisations must overcome these.

What Are the Associated Challenges Linked to Public Sector Risk Management?

The fast-changing landscape of the public sector can make it difficult for public sector organisations to mitigate risks both efficiently and effectively. However, there are some specific reasons why organisations might find the subject even more challenging than it needs to be:

Lack of Integration

Risk management should play a vital role in the overall strategy of any organisation. Its importance should be embedded into every department so they become more risk-aware when making decisions.

Many organisations find it challenging to integrate risk management into their operation at a departmental level. Instead, the risk management team becomes a silo, leading to poor communication and an abdication of responsibility from individuals.

A Misunderstanding of Risk Management

A lack of employee understanding of the purpose and relevance of risk management can also lead to challenges.

Some may just regard it as a compliance exercise without fully appreciating its importance to the organisation and how it can contribute to overall success. This leads to employees continuing to continue working using old approaches that can’t meet today’s expectations of minimising disruptions.

Instead, organisations need to gain buy-in from their employees during the initial stages of risk management implementation. This can be done by supporting them in embracing new technologies such as AI-driven threat analysis and orchestration.

Growing Privacy Concerns

The introduction of Data Protection (GDPR) has also presented risk management challenges for the public sector.

Data plays a crucial role in minimising risks in areas such as cybercrime and terrorism. However, data protection laws have made it much easier for organisations to breach privacy.

To overcome these challenges related to privacy, public sector organisations need to invest in updating their security solutions, which play a crucial role in managing data safely and using it to aid organisational decisions.

By Piers Kelly

With 2022 underway, employers of all kinds are reckoning with a challenging Human Resources landscape. Increased competition for skilled workers, constantly changing COVID safety protocols, hybrid and remote workplace hurdles, and a competitive hiring space where top talent is setting their own terms have all added a new complexity to hiring and retaining workers. If that wasn’t enough, increased turnover and still-high levels of resignations have countless HR departments scrambling. And that’s true of both public and private sector employers, experts said.

“Like their counterparts in the private sector, [public sector organizations] are facing staff shortages, unmet customer demands, employee stress and burnout, increased resignations — including a higher than typical number of age- or retirement-related resignations — [difficulty] retaining talented staff, and competition for new hires,” said Jack Wiley, Chief Scientific Officer at management consulting firm Engage2Excel and author of The Employee-Centric Manager: 8 Keys to People-Management Effectiveness.

Disproportionately impacted by furloughs, budget cuts, and service stoppages for health-related safety reasons, public sector employers have lagged in relation to the private sector in recovering from pandemic job losses, according to public policy nonprofit Pew Charitable Trusts. And that slower recovery is magnified given the immense impact the public sector has on day-to-day life, as well as the significant size of the sector. Public sector employees include federal, state, and local government employees; public transit and public education workers; law enforcement officers; and more. According to October 2021 data from the US Bureau of Labor Statistics (BLS), government workers alone make up 21.9 million employees, or 14.8% of the non-farm workforce in the United States.

But while the challenges are real, experts say there are concrete steps public sector HR professionals can take to tackle the most pressing public sector HR issues head on — and to position their organizations for growth and increased employee engagement going forward. Here’s what they recommend.

The Challenges

Finding, hiring, and retaining qualified candidates for open positions is at the core of Human Resources, but for public sector employers, making sure jobs are filled takes on an additional urgency.

“When there are vacancies within public sector positions, it has a direct impact on the communities those agencies serve,” said Greg Preece, principal and senior consultant at Human Resources consultancy FireHR and a former firefighter and paramedic. “This ranges from solid waste collection and police, fire, and EMS responders, to Head Start [program] delivery, street repairs, 911 call takers, and beyond.”

“The mission of [these] agencies is literally…critical,” agreed Gary Leikin, CEO of government workflow automation platform SimpliGov. “Administration of health and human services, particularly for displaced populations; child support applications; emergency rental assistance; and related safety-net type of services is of utmost importance. It’s not like a glitch in a streaming service where you can’t download the next episode of a series — life literally depends on it.”

With stakes this high, confronting and overcoming pressing challenges is essential. These are the issues experts say Human Resources teams should be prioritizing.

4 Public Sector Issues HR Teams Need to Prioritize

1. The Bureaucracy Bind

Experts said that the stereotypes about government bureaucracy don’t necessarily come from nowhere; there’s a grain of truth to them in that many public sector and government jobs have more layers to navigate than comparable private sector positions. And when it comes to hiring, that can cause problems, they cautioned.

Hard-to-find job listings, difficult-to-parse job titles, and cumbersome application processes can weed out promising candidates before they even complete their applications, and slow response times can mean the candidates that do apply can be snapped up by faster-moving firms before they’ve even been offered a first interview.

The solution? Public sector firms that want to compete for and keep sought-after candidates need to make applying easier — immediately, experts said.

“The public sector needs to make it easy to apply for roles and make opportunities visible to citizens [of the community],” Leikin said. “It’s also important to ensure the application and candidate review process is efficient and timely [so] candidates [aren’t] hired by other organizations or companies [first]. The government is often competing with the private sector for the same candidates and needs to move at the same speed to hire the best [people].”

“With the job market as competitive as it is, applicants have little patience for overly burdensome and lengthy hiring processes,” Preece agreed. “Public sector employers should review their hiring processes and work with all stakeholders to make reforms that will allow for more efficiency and streamlining.”

2. On-the-Job Opportunities

Similarly, the same issues — which can manifest as frustratingly rigid job parameters, hidebound work processes, and constrained opportunities for promotion or increased compensation — can show up as challenges in the retention of employees, too. “One of the biggest issues that HR departments face in the public sector is that there is a lack of engagement due to the bureaucratic systems and budgetary constraints that many organizations have in place,” said Paola Accettola, principal and CEO of HR services firm True North HR.

While some elements aren’t changing anytime soon (overhauling pay scales and job classifications may not be within HR’s mandate), forward-thinking Human Resources departments can work with management to increase job satisfaction where they can. A major factor in the satisfaction employees feel in their day-to-day jobs and careers overall is how much opportunity they’re being offered for training and development and learning new skills.

“In the context of the current war for talent, an organization must make an appealing statement about what it has to offer a new hire in terms of experiences and rewards in exchange for what the prospective employee brings in talent and commitment,” Wiley said.

3. More Visibility

A rigid, unchanging hiring process can go hand in hand with insularity in some public sector positions, which keeps potential hires from even knowing a job (or an employer) exists. To maximize the chances of finding the best possible candidates, governmental organizations and public enterprises need to make sure they’re meeting job seekers where they are, with a special focus on outreach to younger workers.

“Public agencies must do a better job of getting into the community and in front of high school and college students and other community organizations to tout the benefits of working in the public sector and the ability it provides to serve the common good,” said Preece.

4. Communicating the Benefits

A continual problem, experts said, is the perception that public sector jobs underpay relative to the private sector. And while it’s not always the case that public sector employers pay less than their private sector counterparts, there are fields and positions where public sector employers simply can’t match the compensation and benefits packages that for-profit firms offer. In the current race to win over top talent, even highly motivated public departments may find that they can’t move as nimbly to adjust salary offerings, or be as flexible with other benefits, as less constrained private firms can.

So what can public sector HR departments do? Preece said the key is to play up the benefits they do offer. “While the public sector may not be able to compete with some of the compensation and perks of the private sector, it is imperative to communicate the benefits they do provide, such as a defined pension and deferred compensation plans, and the sense of service [that] working within the community provides.”

In fact, it’s that last element — the appeal to a sense of service and of working within a community — that can be a uniquely compelling selling point for public sector positions. The work of the public sector is crucial, and the pandemic only highlighted for many job seekers just how vital the roles that local government employees, public safety officers, healthcare workers, and social service providers are in supporting our collective well-being.

“At the top of the list of what employees most want [are] recognition for a job well done; interesting, challenging, and exciting work; job security; fair compensation; opportunities for career growth; positive working conditions; and confidence in the truthfulness of leaders at all levels,” Wiley said.

Much has been made of the generational preference of both millennials and Gen Z to have jobs that they find purposeful, meaningful, and impactful. So for many of these motivated, younger workers, working for the civil service or one of the many public organizations that keep society running could be highly appealing. There’s an opportunity for public sector employers to connect with employees who believe deeply in their mission and want to apply their talents in service of it. But HR needs to make sure they’re giving those candidates a chance to find them — and a reason to stay.

By Jennifer Ernst Beaudry

Strategic development is a joint board-management responsibility. It is the key stage of the strategy process where the board and senior management team work together to develop the organisation’s strategy. At this stage, the attention is on the top-level strategy; the overall corporate strategy and, depending on the size of the organisation, the business strategies of the major divisions.

It is now common for the board and management team go off-site for a board retreat to discuss the current strategy in detail. If the strategy is working and is well understood by both directors and managers, this stage might involve nothing more than an annual review of progress, discussion of changes in the strategic landscape and a reaffirmation of the core strategies. On the other hand, if current results are poor or if major changes are forecast for the external environment, a far more searching review and re-evaluation of strategy might be required. This may take a longer than one retreat and may require a number of follow-up workshops.

The advantage of the retreat is that by isolating the board from regular distractions and spending a significant time delving into the organisation’s strategy, the quality of any decisions is likely to be enhanced. A strategy retreat also provides an ideal opportunity for team building and encourages active participation from all board members. It is also a major opportunity for discussion and development of shared views about strategy both among directors and between the board and senior management.

The decision to hold a retreat is an important one, because it represents a significant time commitment for board members and in many cases management. Retreats commonly occur over one or two days, generally on a weekend. If directors are to spend this much time dedicated to strategic issues, it is important to plan the weekend to ensure that optimal results are obtained.

The importance of planning

But strategy retreats do not always live up to their potential and can fail to meet the board’s objectives without proper planning and commitment from both the board and management. From personal experience, boards that are not engaged in the planning and committed to the process can very easily derail a board retreat. For example, it is not productive to have three directors delay the start of the afternoon session by an hour on the first day of a retreat because they were unhappy with the lunch menu approved by the CEO without board input and demanded alternate meals be prepared for them.

As such, planning should include:

Date – it should be in the board’s calendar at the earliest opportunity, as having all directors attend can be vital to the acceptance of the decisions made during the retreat;
Objective(s) – this will depend on whether it is it an annual strategy retreat to develop a new strategic plan, review the current strategic plan or in response to a major change in the organisation’s environment, e.g. funding cuts, loss of a major customer;
Duration – this will depend on the objectives;
Budget for the retreat – this will influence many of the other decisions;
Responsibility – allocate responsibilities, e.g. organising bookings, preparing discussion papers or presentations;
Attendees – will it be the board only or the board and management? Are spouses invited?
Facilitator – an external facilitator can often help to keep the agenda on track; ensure all attendees are given a chance to participate; and deal constructively with any conflict that arises without becoming emotionally involved;
Location:
- Meeting facilities – size of the room (it should allow participants to spread out for group work), whiteboards, projector, internet access, printing, photocopying, etc.;
- Accommodation;
- Catering; and
- Recreational activities;
Data – what input/information is required from directors and managers prior to the meeting?

As noted above, I have witnessed a number of board retreats go awry for a variety of reasons. Too much to drink at the previous evening’s dinner or during lunch can see directors or senior managers falling asleep or obviously intoxicated during a session. Lower level managers may be reluctant or not interested in participating because they have not had previous exposure to the board and have no idea what they are doing there. Directors being rude to the managers present or each other. Just as in regular board meetings, clear ground rules about what is expected for the retreat in terms of behaviour and participation is a good start, so too is gaining buy-in from the attendees to the outcomes of the retreat so that it adds value to the organisation rather than draining its resources, which are often scarce in the case of not-for-profits.

To ensure that optimal results are obtained. Board retreats are most effective if the following steps are followed:

Before the retreat – management should collate and develop materials such as competitor analyses for discussion well in advance of the retreat, while both directors and managers should do pre-work (see below for the benefits of pre-work).
Conduct targeted analysis prior to the workshop, and then develop a clear agenda focused on achieving specific outcomes and resolutions in key decision areas.
During the retreat – management presentations at the retreat should be concise and factual. The objective of the retreat is to stimulate discussion of strategic issues, not to spend your time listening to lengthy presentations by managers or invited guest presenters. A note taker should be appointed to capture agreement succinctly.
After the retreat – management will incorporate the decisions made at the retreat into strategic options, detailed objectives and strategies for board review and approval. This will then be followed by the annual implementation plan and budget.

For those organisations without the time or resources to conduct a retreat, there are other options. For example, a review of the board’s strategic plan can be included as part of the yearly board agenda, and has the added advantage of regularly concentrating the board on strategic issues. Another option for the board is to hold a number of special board meetings to review particular strategic issues. As part of this process, the board may wish to consider a one-day facilitated session with senior management to consolidate previous board discussions and decisions to guide management.

The benefits of pre-work

The benefits of pre-work include:

Sets the ‘climate for strategic change’ within the organisation;
Establishes a ‘strategy mindset’ for participants prior to attending the workshop. They are now ‘ready to learn, listen, contribute and participate’ – after all, they are the ones who have to make it work;
Frees up the retreat for discussion;
Saves time – reduces the threat of ‘time-pressure’ facilitation;
Enables facilitators to present the ‘group view’ or ‘invisible group consensus’, rather than their own views;
Participants are more likely to respond openly in pre-work than in front of their peers;
Identifies topics for debate.

Compiling a databook

To get the most from a strategy retreat, the board must ensure there is a real understanding and agreement as to the major issues facing the organisation that is based on facts. As noted above, a solid understanding of the organisation’s strategic landscape comes from gathering relevant data and allowing directors and senior managers to consider and discuss this data using a sound framework. I always recommend compiling a databook that includes the results of the survey (collated and themed) and the information developed by management. For example:

External data
- Industry trends
- Competitor analysis
- Market trends
Internal data
- Current strategy and goals
- Financial
- Operational
- Markets

The data book will be used in conjunction with this workbook to guide the discussion throughout the retreat. The databook should be circulated to directors at least seven days before the retreat to give them time to prepare.

Incorporating risk into the strategy retreat

Risk and strategy are totally interrelated. Consequently, any discussion or decision by the board concerning strategy also involves a discussion of risk. The challenge for boards and management teams is to integrate these two essential roles of the board. For example, considerations of alternative strategies should use the organisations approved risk approach as one technique for analysing these strategy alternatives. Workshops or retreats devoted to risk can be conducted in tandem with a strategy retreat, but at the very least the major strategic risks to the organisation should be considered.

Conclusion

Holding a successful strategy retreat can be a key factor in the achievement of an organisation’s strategic objectives. As discussed, the preparation for the retreat will be the difference between a retreat that achieves little in the way of genuine strategic planning and one that provides a solid basis for management to formulate the detailed strategic, business and implementation plans, and budgets that the board will be asked to approve.

Source: effectivegovernance.com.au

Genius Boards, UK and H. Pierson Associates Limited are delighted to formally announce their Boards Development partnership. This combines H. Pierson’s industry-leading management consulting services with Genius Boards over 2 decades of empowering directors to perform better through the provision to them of cutting-edge governance solutions.

The partnership is focused on supporting boards of organizations in Africa and select emerging market institutions.

Speaking on the partnership, H. Pierson’s Executive Vice Chairman & Founder Mrs. Eileen Shaiyen had this to say: “we are delighted with the Genius Boards-H. Pierson partnership, and are certain that t will deliver very superior solutions to our clients’ boards of directors across Africa and other select emerging markets.”

While speaking on the partnership, the CEO of Genius Boards, Sharon Constacion said that both firms were very aligned in the type of work they do – “we are thrilled to partner with one of the continent’s leading firms, H. Pierson, to support their clients’ Boards in accelerating positive change”.

Tomorrow’s boards of directors will face a host of new issues and challenges. How should today’s CEOs and boards plan appropriately for the future?

Tomorrow’s boards of directors will face a host of new issues and challenges. How should today’s CEOs and boards plan appropriately for the future? Chief Executive sat down with Peter Gleason, the incoming CEO of the National Association of Corporate Directors, who will take the reigns later this month. Here, he provides insight on the dramatic change to come in corporate governance as a result of constant business disruption and why boards need to value diversity, information flow and long-term vision.

Q: What are some of the biggest issues boards are currently concerned about?
A: According to our survey, the greatest concerns, in order of importance, are global economic uncertainty, increased regulatory burden, significant industry changes, business model disruptions, and cybersecurity threats. The recent election seems to have reduced fears about regulation and taxes, but the other issues are likely to linger or even grow as concerns.

Q: How do you foresee boardroom leadership changing over the next five years?
A: It will be one of the most challenging periods in the history of corporate governance. The hallmarks of the current century are volatility, uncertainty, disruption and risk. Directors and boards collectively need to help companies meet these challenges head on. In response to the volatility, they need to be able to see the long term and the big picture, and ensure good information flow. They’ll also need to strengthen their oversight of risk and know their role in crisis response. At the same time, boards will need to help management look for new opportunities through market expansion and innovation.

Q: What are some trends you’re seeing in board recruitment and retention?
A: Our 2016 survey found that boards are turning more often to professional recruiting firms when looking for new directors. For the first time since NACD began probing search sources, more respondents indicated that the last director their board recruited was identified via a third-party search firm.

Q: Tell me about the importance of all types of diversity, not just along the lines of gender and ethnicity, but also in background and experience.
A: It’s important because without it you can get a think-alike board that lacks a well-rounded perspective. I would also add personality type as a goal, as well as candidates who have the skills needed to fulfill the strategy of the company. To achieve this, a board can proceed step by step. Start with your strategy. Write a wish list and then match your current board against it. If there are skills you need and do not have, then recruit as widely as possible and remove any biases. Directors may believe that only a large company CEO can fill this requirement. By removing this bias and looking more widely, it is likely that the pool of candidates will become more diverse.

Q: Tell me about NACD’s role in corporate director education and the need for standards.
A: NACD educates 20,000 directors every year, through a variety of programs, including our annual Global Board Leadership Summit, our fellowship programs, and regular monthly programs in our 22 chapters around the country. We also just launched our virtual Director Professionalism course and will be introducing a new virtual course on cyber risk in conjunction with Ridge Global and Carnegie Mellon University.

Source: chiefexecutive.net

Governance professionals recently gathered at the Corporate Secretary Forum – Winter in New York, hosted by Governance Intelligence, for discussions highlighting the variety of challenges they face in the coming year and offering practical solutions.

An array of experts, both on panels and in the audience, shared their insights on areas such as boards’ agendas for 2024, preparing next year’s proxy statements, risks facing companies in 2024, building a successful team of directors and how boards should be using and overseeing artificial intelligence (AI).

Boards’ 2024 agendas

The forum began with a discussion about the issues that will feature on boards’ agenda in 2024. As usual, there is a lot to consider.

Kimberly Simpson, COO, general counsel and corporate secretary with the National Association of Corporate Directors (NACD), highlighted the potential effects on some boards of the current geopolitical landscape. NACD members had recently received a high-level security briefing at the Pentagon, followed by a discussion with a recently retired four-star general who described the situation as the most dangerous period in his lifetime.

Simpson noted that Russia’s war in Ukraine and Saudi Arabia being located near conflict in the Middle East raises concerns for boards, particularly energy companies, in areas such as supply chains and economic stability. Elsewhere, inflationary pressures appear to have eased slightly yet there remain fears of a potential recession and how that would affect companies, she added.

She also pointed to the continuing focus on cyber-security, which has been enhanced by the recent introduction of new SEC rules. Those rules, which go into effect at the end of the year, require companies to provide information to investors about material cyber-security incidents and the controls they have in place to protect against such attacks. They have been a source of discussion for audit committee chairs and there remains confusion about what best compliance practices will emerge, Simpson told attendees.

Among issues for boards to consider are other new SEC rules, including potential requirements about climate-risk disclosures, while shareholder activism has not gone away and the universal proxy remains relatively new, added to which is AI, she said.

Fellow panelist Brady Long, executive vice president and general counsel at Transocean, said boards should approach AI in the same way they oversee other risk areas. Boards are hopefully bolstering management’s and their own expertise to ensure effective oversight, he said. Most companies probably don’t have too much in-depth AI expertise and there is an opportunity for boards to bring in expertise or acquire it through learning, he commented.

There is discussion in the governance profession about the extent to which boards should recruit subject matter-specific experts on risk issues such as sustainability, cyber-security and AI. Simpson noted that members of nominating and governance committees say that having bespoke experts on the board may be less preferable than having members who are smart and more generalist. She advised boards that wish to include an AI or cyber-security expert to look for a current chief information officer (CIO) as their knowledge becomes outdated very soon after their retirement. She noted the challenges of finding a CIO who also possesses the necessary board-member skills in areas such as strategy and finance.

Long commented that new risk areas will arise every year. ‘If the way to solve the problem is to always add expertise to the board, you’re either going to run out of seats or you’re going to radically change the nature of governance,’ he told the audience.

Technology, cyber and AI top concerns

Asked to rank the significance of risks facing companies, audience members most frequently named by a large margin technology/cyber-security/AI. This was followed, in descending order, by geopolitical risk, environmental and sustainability risk, regulatory risk, shareholder activism risk and supply-chain risk.

With that array of issues in mind, Brian Short, partner with Ballard Spahr, urged governance professionals to have regular engagements with their boards on risk matters as part of their scheduled meetings. From a reporting perspective, he noted companies’ general obligations to disclose risks, to which have been added the new SEC rules on cyber-security.

Fellow panelist Seth Gastwirth, deputy general counsel and assistant corporate secretary at JLL, also urged corporate secretaries to not only obtain risk assessments for their companies but also comment on them and be flexible with them because they can quickly become out of date.

As an example, he noted that few if any companies would have had pandemics in the top 10 list of risks under their enterprise risk-management programs before the outbreak of Covid-19. Governance professionals need to be conscious that new risks will emerge during the year and should focus on their companies’ systems of controls so that people are ready to respond to new risks as needed, he advised.

Staying on track with diversity

Panelists at a later session discussed the importance of diversity in building an effective board, not just in terms of thinking and skills but also in terms of gender and race/ethnicity. In the wake of the US Supreme Court decision to essentially bar affirmative action in university admissions programs, conservative legal groups have been taking action against corporate diversity programs. A group has also challenged – thus far unsuccessfully – Nasdaq’s board diversity rule.

Leahruth Jemilo, vice president and head of ESG advisory at Corbin Advisors, said she was not concerned that such moves would upend companies’ efforts. She anticipated that the pushback would be short-lived and unsuccessful because younger generations of Americans support increased diversity. Young people want to see diversity on boards and in management, and companies that want to attract the best talent will have to focus on those areas, she told attendees.

Fellow panelist Tina Carew, associate general counsel with Invesco and general counsel and corporate secretary with Invesco Mortgage Capital, also said the pushback has not been a concern for her firm as it focuses on diversity in board recruitment.

A corporate secretary in the audience commented that her board has stopped using search firms for director recruitment because they have ‘limited thinking’ in terms of selecting diverse candidates. Instead, the board has been attending NACD and other events and using its own networks to ask specifically for creative thinkers and women of color as potential director candidates. This has led to a diverse slate of candidates, she said.

Carew said her board is also considering no longer using search firms for director recruitment.

Safety and use-case first on AI

Governance teams and boards are giving a great deal of thought to the opportunities and risks AI presents. Part of the discussion is about how to get started with the technology. Jonathan Yellin, general counsel, executive vice president and chief compliance officer with Charles River Associates, noted that for his firm there had been concern about being left behind as a business by not using AI, but that he was concerned about getting ‘over their skis’. ‘We had to understand what the goal was,’ he explained.

An AI policy is about mitigating risks the technology poses, Yellin said. As part of that, his team asked company department heads about how they wanted to use AI. They now meet regularly to discuss the ways in which it is being used and the developing regulatory framework. He described his biggest fear as confidentiality, but said he was also concerned about ethical issues such as bias in hiring. He acknowledged, however, that people are using the technology, which means he needs to engage with them.

Fellow panelist Marion Lewis, CEO of Govenda, stressed that any use of AI should be tied to a use-case. It poses a risk-versus-reward question and certain uses are inherently riskier than others, she said. For example, using AI in a medical context poses much greater risks than using it as a tool for customer services, so different standards should be applied to different use-cases.

Lewis commented that some of the key questions that need to be asked as part of developing a risk-management system include: where does the data reside? Who owns the data? What’s the track record of the vendor? Asked about uses for AI in corporate governance, she noted that a feature of a tool her firm offers is the ability to take transcripts of board meetings and create drafts of minutes that are added to the workflow. This enables what has previously been a weeks-long task to be completed in hours, she said.

Source: overnance-intelligence.com

As a matter of effective corporate practice, the board is responsible for spearheading the positive growth of an institution. This calls for a strategic outlook that will efficiently meet the overall vision of the organisation while delivering profitability and returns to shareholders as well as balancing the needs and requirements of a wider group of stakeholders.

With at least quarterly meetings to discuss the affairs of the institution, it is paramount that it appoints a competent CEO alongside a Senior Leadership and Management team that will run the day-to-day operations and lead in the growth strategy implementation.

Beyond this, the board should ensure that there is a clear succession plan for each of the leadership positions, including the CEO, and review the plan regularly. To ensure the stability of the organisation, it is advisable to groom successors to these key positions from within the organisation. Only occasionally and when necessary should these positions be filled by people from outside the organisation.

As such, it’s the board’s responsibility to ensure that there is a pool of trained staff ready to fill these positions within different time frames. This includes providing them opportunities to participate in board meetings to allow for a first-hand assessment of their readiness when these positions fall vacant.

Some may be ready for promotion immediately, while others may need capacity building and exposure to be able to perform optimally at senior levels-hence the board need to take charge of the process of developing capacity for future leadership of an institution.

Grooming senior leaders from within is important as it provides hope for career growth within the organisation and motivates staff to work hard and more productively. It also reduces the risk of losing good employees.

There is also the aspect of culture integration which is not necessary with internal promotion as opposed to when recruitment is done from outside the organisation. Lack of culture fit of a senior leader can be detrimental to the goals of an organisation. As Simon Sinek, the venerated leadership expert and author of multiple leadership best-sellers, says, “Corporate culture matters. How management chooses to treat its people impacts everything for better or for worse.”

Other than the leadership aspect, internal controls are key, especially during the various growth phases of a company. When these are overlooked or breached, the growth trajectory could turn out to be a backlash mirage, especially for companies operating in regulated industries.

To mitigate breach of controls, it behoves the board to ensure that there is a competent risk team monitoring existing and emerging risks, both internally and externally. In addition, a strong internal control function and a competent external auditor are key as they provide an independent position. At the governance level, an Audit and Risk committee should be put in place to provide oversight of the company’s internal controls and compliance with laws and regulations.

In the current digital era, the board cannot ignore the role of technology in achieving a growth strategy. It thus has to ensure the acquisition and inculcation of relevant and flexible technology to accommodate the overall future growth of the organisation.

While the roles identified here may not be exhaustive, they certainly form the fundamental qualitative aspects of an effective Board in ensuring sustainable growth and stability of an organisation.

Source: IOD.com

Newer Posts

Older Posts

Rising Usage of AI

What is a Strategy?

How does AI help with strategy implementation?

1. Automation of repetitive tasks

2. Data analytics and insights

3. Predictive modelling

4. Personalization

5. Automated decision-making

5. Automated decision-making

6. Risk management

A Step-by-Step Guide to Integrating AI into Your Strategic Execution

1. Encourage the adoption of data analysis

2. Identify your use cases

3. Select the areas of opportunity

4. Audit your capabilities

5. Narrow down your choices

6. Implement a pilot project on a small scale

7. Establish a baseline understanding

8. Scale your AI integration

9. Complete the AI integration

10. Build on the implementation and find room for improvements

Frequently Asked Questions

Conclusion

What Is Public Sector Risk Management and Why Is It So Important?

What Are the Associated Challenges Linked to Public Sector Risk Management?

Lack of Integration

A Misunderstanding of Risk Management

Growing Privacy Concerns

The Challenges

4 Public Sector Issues HR Teams Need to Prioritize

1. The Bureaucracy Bind

2. On-the-Job Opportunities

3. More Visibility

4. Communicating the Benefits

The importance of planning

The benefits of pre-work

Compiling a databook

Incorporating risk into the strategy retreat

Conclusion

Boards’ 2024 agendas

Technology, cyber and AI top concerns

Staying on track with diversity

Safety and use-case first on AI

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