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Directors must develop a working command of AI, data governance and cybersecurity to steer digital strategy. Three experts outline where boards should focus.
Digital literacy is the new black for directors. Fast-evolving tech tools might feel like fashion items, but make no mistake, AI literacy, data governance, cybersecurity and digital strategy are headline skills that will be required for many years to come.
“Directors do not need technical depth, but they do need disciplined curiosity,” says Chirag Joshi MAICD, founder and CISO of leading consultancy 7 Rules Cyber. “Strong boards bring focus, ask clear questions and ensure ambition is matched with governance, capability and resilience. That is how directors will steer organisations safely and competitively through this decade.”
The opportunities are immense. “Boards are getting to the point of acceptance that AI is going to be significant for productivity gains, for their business processes and for markets they operate in,” says Dr Stefan Hajkowicz, Chief Research Consultant, Technology Strategy, Policy and Foresight at CSIRO Data61.
Hajkowicz cautions that the time is up on organisations allowing “shadow AI” — the proliferation of tools deployed informally by staff. “Not knowing how the tools are being used creates all sorts of risks of data privacy, of not being able to scale up the benefits systematically,” he says. “AI is now like any form of software and the vast majority of knowledge workers are using it. It’s time to bring it out of the shadows.”
Dr Anthea Roberts, Professor of Global Governance at ANU and co-founder and director of AI-driven decision-support platform Dragonfly Thinking, says it is vital that directors actively use AI tools. Relying on podcasts and online articles, she argues, only equips them for “second-hand dinner-party talk”, rather than the visceral understanding that comes from first-hand experience.
However, the skills don’t magically appear. “You have to get your hands dirty using the real tools, don’t go with the free stuff,” says Roberts. “For $20 a month — the baseline subscription — you get to use the proper models and they’re much better.”
She says the next level of sophistication will come from thinking deeply and differently about AI. “It’s this alien form of intelligence and we have to develop a mental model about how it does its work, and then a mental model about how we do our work with it,” explains Roberts. “This is going to be absolutely crucial in the next generation”
It follows that AI expertise is rapidly becoming a distinct role in C-suite teams. “Every government agency at the federal level will now have a head of AI for that agency and companies are starting to appoint CAI (chief artificial intelligence) officers,” says Hajkowicz.
For boards, this often means creating an expert advisory group to help navigate rapid technological change and shape digital strategy.
“I’m part of an advisory committee to a board,” says Joshi. “They brought me as an AI expert to guide the board to help them make those decisions and work with management teams. This is a smart approach because it allows them to upskill while knowing they have some independent advice, as opposed to relying on assessors or auditors. This committee is an extension of their board and essentially serves as their internal brains trust.”
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The 10 digital skills every director needs
Understand your organisation’s digital maturity: “Boards need to have situational awareness of where they’re at in the AI journey and where they want to drive things for the future,” says Hajkowicz. Directors often overestimate maturity, adds Joshi.
Embrace fresh thinking: “Digital strategy demands a shift in thinking,” says Joshi. “The goal is not to approve technology, but to approve outcomes. Directors should interrogate the value case, the problem being solved, the organisational capacity to execute and the measures of success.”
Drive a data-smart digital strategy: Free LLM models will train on your data. Paid tools via an API (application programming interface) will not — or at least you can turn off “training” in the settings. “Boards rightly have a huge concern about data security,” says Roberts. “Absolutely don’t use those publicly available models that train on your data.”
Recognise your cybersecurity responsibilities: “Directors need to understand business-impact scenarios, regulatory obligations and the organisation’s readiness to operate through a disruption,” says Joshi.
Watch for AI interpendencies: “Directors need to be thinking about the resilience of their AI ecosystem,” says Hajkowicz. “They want to know the business process can still operate if one vendor shuts down, becomes unreliable or starts to price irresponsibly.”
Bear down on data governance: “This is an area where directors often overestimate maturity,” says Joshi. “Poor data quality distorts reporting, undermines transformation and creates compliance exposure.”
Get across Australia’s National AI Plan: “It has some really good insights for board directors in terms of where the government’s leaning,” says Joshi.
Know how to correctly set the digital risk appetite: “The board fundamentally sets the tone in terms of establishing a risk appetite for AI, for cyber, for data,” says Joshi. “When the risk appetite is out of whack with your business reality, investments are challenging, because management is trying to solve problems they’re not equipped for, and the board has set a faulty risk appetite.” He encourages detailed discussions around annual loss exposure — putting numbers to it — to help boards better align risk-appetite statements and justify technology investments.
Be open to complexity: “In any large organisation, there will be a fairly wide range of individual set-ups in the tools employees are using — and that’s key to productivity,” says Hajkowicz.
Use AI productively yourself: “The best predictor of whether organisations are successfully implementing using AI is whether their leaders are personally using AI tools,” says Roberts. “I want our boards to play, experiment and understand the technology on a personal level, so that they start to think about what it means within a business context.”
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