Impact of AI on VC Board Responsibilities

The rise of Artificial Intelligence is not just a technological revolution; it's also a governance challenge. For venture capital firms and also the boards of their portfolio companies, AI introduces new layers of complexity and responsibility. Here's a checklist to help boards navigate this evolving landscape.

AI Governance Checklist:

1. Structure

Designate one existing Board member responsible for AI: This person will be the go-to for all AI-related matters.
AI topic should be a standard point in the Board Agenda: Consistent discussion ensures ongoing attention to AI issues.

2. Governance

Develop a Board-endorsed framework for responsible AI governance: This sets the tone for how AI will be managed.
Allocate Conducting Officer responsibility for AI: This ensures someone in management is also accountable for AI.
Develop effective AI compliance and reporting structures at management-level: This helps in tracking AI's impact.
Draft an AI Policy to be approved by the Board: A formal policy provides a governance backbone. Download a template here.
Board summaries on material/operational incidents related to AI: Keep the board informed on AI-related incidents.
Update Data Protection Policy & Data Retention Policy to reflect new AI key changes: Using AI tools might involve sharing data; make sure policies are up-to-date.
Research into biases and its impact on AI: Understanding biases helps in ethical AI deployment.

3. Board Training

Implement ongoing training for Board knowledge and awareness of AI: A well-informed board is a more effective board.

4. Risk

Update Risk Management Policy to add AI as a separate risk, titled "AI Risk": This ensures that AI risks are specifically addressed.
Make sure that the Investment process reflects the AI topic and integrates the related risks: AI can be both an opportunity and a risk for new investments.
Create new scenarios and test assumptions for the Board to gain strategic insights: Scenario planning helps in better decision-making.

5. Marketing

Perform market analysis relating to investor appetite and portfolio companies' approach/trends: Know where you stand in the AI landscape.

6. Compliance

Prepare for increased regulatory activity and stay on top of devlopments: As AI grows, so will the regulations around it.
Ensure that disruptive technology and innovation inputs stay inside the boardroom and compliance is outside the boardroom: Keep the focus on innovation while staying compliant.

7. Strategy

Look for and address biases concerning Portfolio Management: Biases can skew investment decisions.
Use AI to test biases regarding investor approach towards AI: AI can help you understand your own biases as well.

8. Shareholder Agreement

Anticipate stakeholder & AI community expectations with a plan to address these publicly: Transparency is key.
Make your AI Company Framework and Policy available to the public: This builds trust and sets an industry standard.

By proactively addressing these points, boards can better prepare for the challenges and opportunities that AI presents. It's not just about leveraging AI for success; it's also about governing it responsibly.