Hi, enjoy this weeks curated risk update.
Weighing the Risks
Artificial Intelligence - Corporate Governance and Enterprise Risk Management
ChatGPT (a large language model-based chatbot developed by OpenAI) burst onto the scene on November 30, 2022 and hit 100 million users in less than 60 days. AI quickly shot to the top of the Board agenda and is an area of risk that few companies feel like they have under control.
Ironically, corporate governance risks over the use of AI have been highlighted by OpenAI itself over the past two weeks. On November 17, Sam Altman, the co-founder of OpenAI, was terminated from his role as CEO. This decision led to internal turmoil within the company, with many staff members threatening to quit in solidarity with Altman. During this period, Microsoft, a major investor in OpenAI, announced its intention to hire Altman to lead a new AI research team, and invited OpenAI employees to join him.
However, following these developments:
OpenAI reached an agreement to reinstate Altman as CEO.
The Board was restructured to stabilize the organization by adding Bret Taylor, Larry Summers, and Adam D'Angelo.
Altman's return was supported by Microsoft CEO Satya Nadella, indicating a continued strong partnership between Microsoft and OpenAI.
The Wall Street Journal has published its guide to OpenAI’s recent events.
Responsible Artificial Intelligence
In August, Norway’s $1.4 trillion sovereign wealth fund urged boards and companies to get serious about managing artificial intelligence related risks. Robust risk management processes should:
Identify, assess and mitigate risks to business, people and society.
Key risks include privacy, security and non-discrimination.
Ensure effective human oversight and control.
Evaluate systems limitations and potential consequences of failure.
Independently verify and regularly audit AI systems, guidelines and risk management processes.
How Auditors Can Use Generative AI For ESG Audits
One area that shows a lot of potential for GenAI is in the audit landscape, particularly in streamlining the intricacies of environmental, social and governance (ESG) audits.
Automate research and planning stage of an ESG audit.
Identify and map the stakeholders from whom to collect the right information and analyze stakeholder sentiments.
Help auditors identify qualitative and quantitative risks more easily from documents such as CSR reports and 10-K reports.
What ChatGPT says about its own Governance and Risk
Just for fun, we asked ChatGPT to “Summarize OpenAI’s corporate governance situation”:
OpenAI, known for its advancements in artificial intelligence, operates with a unique corporate governance structure designed to balance profit motives with broader ethical and societal concerns.