Insight report: AI, Emerging Tech and Governance
Published: 3 October 2023
3 minute read
AI, everywhere…all the time…
Emerging Tech and Artificial Intelligence (AI) are areas that the Lab have been following since our early work on technology and corporate reporting and most recently in our work on digital security risk reporting. The emergence of ChatGPT, various global AI regulations and developments in expectations around how companies manage and govern data and AI, has seen AI, Emerging Tech and Governance move up the agenda of many.
To better understand stakeholder thinking, we held a round table in Manchester hosted by the Centre for the Analysis of Investment Risk and the Centre for Financial Technology at Alliance Manchester Business School. The roundtable attracted a diverse group of stakeholders across companies, academics, accounting bodies, investors and others. The interest in the event and the breadth of discussion illustrate how important the topic has become.
At the roundtable, we asked three key questions:
- How does emerging technology challenge the current ways of thinking about governance?
- How can regulators, professional bodies, companies, directors, auditors, and others best respond?
- Where is more research needed, and how can the academic community better support business?
Throughout the event, AI emerged as the primary focus in the discussions. Notable takeaways have been divided into three categories: governance, response and academics and research.
- Existing aspects of the Corporate Governance code and S172 regulations provide the framework for considering the implications of new technologies, including AI.
- Though these technologies present challenges, the goal remains to effectively manage risks and opportunities, benefitting the company and its associated stakeholders.
- The skills diversity of boards and their training are important considerations for companies. This is not unique to emerging technology and AI, however.
- All stakeholders are encouraged to engage in the debate, no one group has the answer, nor can they develop ‘the answer’ alone.
- There is a need to build and support the developing skills on the topic at all levels, from trainee accountants to the board; the board does not need to be seen as experts. Rather, they can seek to enhance their understanding of the topic and to challenge management and external experts through use of considered questions and follow-ups.
- Regulators can help by providing more examples of how technology impacts current frameworks.
- There are significant parallels to ‘Cyber Security’ in terms of skills needed, the types of support, and the guides and toolkits that can assist.
- Investors are an important stakeholder group to challenge and question management on AI from a risk and opportunity perspective and understand the technology's social impact.
On academics and research
- AI and its impacts are difficult to research because of a lack of available, quality data.
- The academic community is crucial in providing skills relevant to the area and equipping the workforce with practical AI and tech knowledge.
- Companies, regulators, and academics may wish to adopt a more collaborative approach to AI and tech topics.
We are now considering how best to reflect these key messages, and others obtained in from other engagements, into our work. By the end of the year, the wider FRC plan to publish case studies that explore the intersection of AI and tech with guidance and frameworks. The Lab aims to analyse how companies include AI in annual reports and consider emerging good practices. If you would like to discuss these topics with the Lab, you can contact us by email [email protected] or sign up for the FRC newsletter.
We would like to thank the Centre for the Analysis of Investment Risk and the Centre for Financial Technology at Alliance Manchester Business School for hosting the event and to members of their faculty and representatives from ACCA for providing provocations for some of the sessions.
This insight is part of the FRC Lab’s insights into current market issues. You can find out more about the our current projects and how to get involved on the FRC Lab page.
Where to go for more resources
- The FRC Lab report on Artificial Intelligence and corporate reporting investigated how different technologies, specifically AI, might impact corporate reporting production, distribution and consumption.
- AI was frequently raised by participants in the FRC Lab’s Digital Security Risk Disclosure report. Many of the findings, some specifics highlighted above, are relevant to emerging technology and AI.