Marsh Urges Company Boards to Strengthen AI Governance
Insurance and risk advisory firm Marsh has issued a clear warning to company directors: artificial intelligence (AI) governance needs urgent attention. Ethical and liability risks connected to AI are becoming a major concern for boards, demanding stronger oversight and accountability.
AI Tops the List of Emerging Issues for Directors
This alert follows the Institute of Directors in New Zealand’s 2025 Shifting Sands of Risk report, which highlights AI as the foremost emerging issue facing directors. This is alongside ongoing challenges such as workplace safety reforms, climate reporting requirements, and cybersecurity threats.
Key Priorities for Boards
- Integrate AI-related risks into governance discussions at the board level.
- Ensure clear accountability for decisions made through AI algorithms.
- Review directors’ and officers’ (D&O) insurance policies to cover AI-related exposures.
- Consider establishing dedicated AI governance or ethics committees.
- Guard against “AI washing”—the exaggeration or misrepresentation of AI use.
Boards face growing scrutiny from regulators and investors about how AI is deployed, especially concerning privacy, bias, and decisions made without human intervention.
Lessons from Cybersecurity Oversight
Jono Soo, head of cyber specialty at Marsh New Zealand, draws parallels between AI oversight and the board adaptations seen with cybersecurity risks over the last decade. He points out that while AI offers opportunities, it also introduces ethical challenges and regulatory demands that raise new questions about insurance coverage.
“A misstep in AI governance may quickly become a reputation issue, which could ultimately impact shareholder value,” Soo said.
Heightened Cybersecurity Risks Linked to AI
As AI becomes embedded in core business systems, it increases exposure to cybersecurity vulnerabilities. Without proper governance frameworks, directors risk legal, financial, and reputational consequences.
For insurance professionals and company boards, this means AI governance is no longer optional. It must be incorporated into risk management strategies and insurance policies to protect against emerging liabilities.
To build expertise in AI risk and governance, consider exploring targeted training options such as those offered by Complete AI Training.
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