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As AI continues to graduate from helpful assistant to enterprise actor with autonomous agency, corporate boards are sharpening their focus on risk, strategy, and accountability, according to Matt Johnson and John Rodi, KPMG leaders in AI Assurance and Board Leadership. Key to effective oversight is empowering management teams to leverage AI for both value creation and value preservation.
Part One of the two-part series covered what they’re doing and why. Here, Johnson and Rodi reveal how successful directors steer and track the AI-driven transformation within their leadership teams.
Effective directors learn AI fundamentals – without compromising their vantage point
Johnson says that proactive oversight begins with ownership and accountability, and that requires directors to understand the basic types of artificial intelligence and how they’re applied to with use cases. “It may not be very exciting at first, but learning the many use cases within the context of risk assessment empowers the board and informs their governance philosophy, which is their foundation,” he says. “Clarifying where AI will be deployed, what types of data it will access and use, whether a model is deterministic or probabilistic, and if the use case is intended to be individually assistive, automating part of a workflow, or agentic, can be enormously helpful in understanding an initial risk profile.”
Rodi agrees, pointing out that AI is one of the first technologies that people use both as consumers and in enterprise-level leadership roles, so directors have a duty to self-educate and become fluent in AI at an oversight level.
“Proactive directors are asking how AI is being used meaningfully, how it fuels growth, improves margins, and answers customer demand,” says Rodi. “Once they have a basic grasp on AI mechanics, it’s their job to encourage ambition while upholding guardrails.”
Effective directors view guardrails as a strategic advantage, not a bottleneck
Boards are known for prioritizing risk management, and AI is no exception.
However, Rodi notices that effective directors are flipping that narrative. “Smart boards are asking management teams not just to refresh, but to entirely restack their view of risk,” he says. “They encourage ambitious value preservation by asking where AI is changing mission-critical processes, where sensitive data may be vulnerable, and where AI is embedded in third party models.”
Johnson adds that explainability empowers faster and safer AI deployment and adoption. “The tension at the intersection of value creation and value preservation is AI’s proving ground for opportunity,” he says. “Because when management teams can articulate ROI from their AI deployments from a foundation of good governance, they effectively adopt a ‘risk-adjusted’ ROI which implies innovation with the right mix of speed and assumed risk.”
Effective directors help foresee and preempt challenges
Rodi says every corporation faces three major AI-created challenges: internal culture, “pilot paralysis,” and funding.
Culture
Most companies know that their internal AI usage spans a spectrum. The pendulum swings from employees who fear or malign AI to those who use it too freely, without oversight, independent from sanctioned use cases. “Successful boards engage with the workforce transformation, approving AI-driven HR strategies like training, reskilling, and even restructuring,” Rodi explains.
Pilot paralysis
Secondly, leading directors get ahead of the ways AI will inevitably transform their entire business model by steering leaders away from unprofitable modeling and pilot programs.
The ever-evolving AI capabilities and related risks tempt otherwise effective management teams toward unending (and undue) AI “activities.”
“Wise boards and audit committees help ensure that management is ambitious enough to rethink major elements like how products are made and how services are delivered,” says Rodi. “If you're not staying on top of that as a board, then you’re reacting instead of leading the transformation.”
Funding and ROI
Finally, both Johnson and Rodi recommend simply treating AI investments as strategically as any capital allocation. “This is familiar footing for boards, who are used to voting yes or no when management presents capital decisions,” Rodi says. “It’s what they’re particularly good at.”
Today, the investment in question is AI, an unfamiliar and unpredictable variable. Effective directors reorient themselves by applying ageless standards –- milestones, performance metrics, and return targets –- to AI transformation.
Effective directors prioritize human judgment
As AI handles more tasks – and begins to make decisions and work autonomously – boards must help the organization keep its “human judgment muscles” exercised and robust. And that includes those in the boardroom.
As an illustration, Johnson offered a personal anecdote. “As a licensed pilot, it reminds me of a similar challenge in the aviation industry. he says. “While advanced auto flight systems (autopilot, autothrottle, flight management systems) have dramatically enhanced overall aviation safety, continuous reliance on automation can lead to the atrophy of core "stick-and-rudder" handling skills and instrument cross-check habits. The industry emphasizes that pilots must maintain the tactile feel and proficiency needed to manually control the aircraft without hesitation if automation fails or degrades. And just like the aviation industry, the best boards and management teams will adopt specific strategies to maintain that human-on-the-loop proficiency and maximize the incredible potential of AI.” The rise of AI will bring a similar challenge. Boards that insist on human-in-the-loop controls today will be glad they did.”
