In less than two years since the launch of the artificial intelligence (AI) chatbot ChatGPT, AI technology has revolutionised the global industrial landscape. The uptake of AI by companies has surged, driven by increasing recognition of its potential to create business value through automating routine tasks, forecasting market trends, and detecting fraud.

In a 2024 survey conducted by McKinsey Global Institute, 65 per cent of respondents reported that their organisations regularly use generative AI – nearly twice as much than the previous year.

The global survey, which provides a snapshot of AI uptake across a wide range of regions and industries, also found that AI usage has increased across all management levels. Eight per cent of mid-level managers and 12 per cent of senior managers said they now use AI regularly for work, up from 7 per cent and 10 per cent respectively in 2023.

The most significant increase was at board level, with the percentage of C-suite executives who use AI regularly for work doubling from 8 to 15 per cent over the past year.

“The board of directors’ multidimensional role encompasses strategic planning, legal compliance, fiduciary duties, financial oversight, governance oversight, and risk management – all areas where AI's influence is poised to be significant,” said Bopana Ganapathy, vice president for data science and analytics at the American advertising services firm Epsilon, in a
recent opinion piece.

“With its ability to process vast amounts of data quickly and efficiently, AI can assist directors in making more informed decisions,” Ganapathy added.

Despite the rapid pace of AI uptake in organisations, regulation of its usage remains low, with just 18 per cent of respondents reporting that their workplace has an enterprise-wide council or board with the authority to make decisions on responsible AI governance.

As such, global regulators have stepped up development of new standards and policies to govern the use of AI and address pertinent security risks, such as leakage of sensitive information, algorithmic bias, misinformation, and a general lack of transparency with AI models.

In May this year, the Council of the European Union gave final approval to an Artificial Intelligence Act that aims to foster safe and trustworthy AI systems across the EU. In 2023, the Organisation for Economic Cooperation and Development (OECD) reported over 930 policy initiatives developed across 71 jurisdictions based on its AI principles.

Malaysia’s National AI Standards

Among Southeast Asian nations AI governance remains nascent, with Malaysia being one of the first few in the region to have developed a national AI governance framework.

The federal government has accelerated Malaysia’s efforts to embrace AI and establish the country as one of the region’s leading digital economies stemming from its understanding of AI's potential to spur economic growth, noted Ganesh Kumar Bangah, executive chairman of Australia-listed digital marketing solutions provider Xamble Group.

Bangah is also an advisor to the National Tech Association of Malaysia (PIKOM), one of the collaborating organisations for the country’s first national guideline document – the Malaysian National Artificial Intelligence Roadmap 2021-2025 (AI-RMAP).

Launched in August 2021 by the Ministry of Science, Technology and Innovation (MOSTI), the AI-RMAP set out frameworks for the integration of AI into different sectors of the economy through policy initiatives; and serves as a blueprint for the nation’s AI trajectory over the next five years.

Bangah believes the AI-RMAP is a timely development and noted that companies have responded proactively, indicating an increasing recognition of the importance of responsible AI usage, and the importance of guidelines to enhance trust and credibility among all stakeholders.

To achieve the objectives of the AI-RMAP, MOSTI has also developed an AI Governance and Ethics (AIGE) Framework launched on 20 September this year. Focusing on the ethical development and deployment of AI, the AIGE establishes a national code of ethics and governance that aligns with global standards for sustainable development and corporate responsibility.

Ong Chin Seong, PIKOM chairman and spokesperson, told Bursa Sustain that he looks forward to engaging with MOSTI to enhance AIGE further. He welcomed the rise of a nationwide AI governance framework but added that industry self-regulation must be deployed alongside government regulations.

Ong also noted that regulations are generally slower than the development of new technologies, so companies may not move ahead to tap into the latest advancements if they are overly focused on compliance.

“Burdensome regulations can make it expensive and time-consuming for companies to develop and implement AI. This could stifle innovation, particularly for small businesses,” he warned.

Presently, the implementation of AIGE remains voluntary for stakeholders.

Earlier this year, PIKOM published their own AI Ethics policy paper, also developed based on AI-RMAP policies. The policy paper aims to provide additional policy guidelines on continuous education and multi-stakeholder collaboration.

According to Ong, this set of ethics-centric policies focus on a risk-based approach, which should be reviewed regularly to align with industry needs and technology maturity in Malaysia.

Ganesh Kumar Bangah, executive chairman of Xamble group	Ong Chin Seong, chairman of the National Tech Association of Malaysia (PIKOM)	Dr. Matthew Wong, co-founder of CarbonGPT

As Malaysia works towards setting up a national AI office, as announced by Prime Minister Anwar Ibrahim in October, boardrooms that choose to harness the power of AI in decision-making should be prepared to step up on governance to ensure ethical, sustainable, and responsible use of the technology.

The latest set of guidelines states how key principles for responsible AI can be translated into strengthened governance, and includes guidance for better data governance, data sharing, evaluation of AI use and performance as well as management of risks.

Upskilling Boards for Responsible AI Adoption

Directors should foster a culture of learning and adaptation towards AI, so that they can stay abreast of the evolving technological and regulatory landscapes said Bangah.

His view was echoed by Dr Matthew Wong, co-founder of sustainability reporting AI platform CarbonGPT. Wong expressed concern that more than half of the Malaysian directors he has spoken to have never used ChatGPT, either due to a knowledge gap or resistance towards the uncertainties surrounding cost and implementation. “Public awareness is still rudimentary,” Wong told Bursa Sustain.

To overcome the initial hurdle towards AI adoption, board members could consider investing in training so employees can learn about the technology’s capabilities, limitations and risks.

Some of the key skills employees should develop include data analysis, an understanding of machine learning, basic programming, and project management. Acquiring the knowledge to develop AI use case strategies, as well as interpret and present results derived from these tools, is also equally important.

According to Wong, supportive communities for AI adoption are becoming available for senior managers and board members who wish to access resources and content for upskilling. For example, the World Economic Forum launched a series of upskilling platforms and materials through a global AI Governance Alliance to ensure an equitable AI transition within the workforce.

When it comes to the adoption of AI technology, directors ultimately have a fiduciary duty to act in good faith and in the best interests of the company, as well as to exercise reasonable care, skill and diligence in their roles. As an artificial entity, AI cannot fulfil these fiduciary duties and so cannot be held liable the same way human directors can, said Ganapathy.

In 2023, global consultancy Deloitte found that most boards do not have primary oversight for AI within the company, and of those which did, the responsibility was entrusted most often to the audit committee. Forty-four per cent of companies had yet to discuss AI-related topics.

As such, boards must establish robust AI governance frameworks that clearly articulate the company’s approach to using and governing AI, emphasised Ganapathy. These frameworks should also demonstrate compliance with ethical and regulatory on AI guidelines to reassure customers, regulators and partners that the board and the company are responsible AI users.

To guard against risks, Bangah and Wong suggested using explainable AI (XAI) techniques coupled with regular internal audits on AI applications and data privacy risks. XAI is a set of techniques that describes an AI model in terms of prediction accuracy against training data and traceability by limiting decision pathways through narrowing down rules and features.