An annual survey of some 600 public company directors finds boards rating the AI information they get from management as fair to poor across nearly every category, from risk controls to ROI to workforce readiness. CCI’s Jennifer L. Gaskin digs into what the findings mean for the compliance community, including the boardroom-culture tension between valuing “fit” and still speaking up and why directors are hesitant to use AI for their own oversight work.
More than nine in 10 board members PwC polled for its annual corporate directors survey said their audit committee spends the right amount of time on legal and compliance matters, a higher rate than sustainability, cybersecurity, AI and workforce risk. Just 5% say the audit committee needs more time with legal and compliance issues.
They weren’t surveyed for this report, but there’s ample evidence that executives, especially chief compliance officers, might take issue with the sentiment. After all, CCI’s survey from last year found that compliance officers rated reporting lines to the audit committee and the board as more effective than others.
The disconnect is real. Ariel Smilowitz, a director in PwC’s Governance Insights Center and one of the report’s authors, told CCI similar issues show up in other areas of subject matter expertise that executives have and boards could use more of, such as cybersecurity (where 23% said the board is lacking skills), technology (31%) and AI (71%), she said.
“Not a lot of boards get that line of sight into management below the CEO or the CISO or the general counsel,” Smilowitz told CCI.
The survey of about 600 US public company directors sees boards wrestling with a changing risk oversight portfolio, an unsettled regulatory environment and AI’s promise/peril challenge.
Compliance & culture
Other findings of note for the compliance community include cultural issues, both inside the board and in the board’s work assessing organizational culture.
In addition to identifying areas where board members need to strengthen their skills in order to provide more effective oversight (AI was the leading area there), a majority of board members (55%) said at least one of their fellow directors should be replaced.
Perhaps paradoxically, though, directors don’t prize specialized expertise in choosing board candidates, with just 27% saying experience in areas like cybersecurity, AI or sustainability are “very important” for board candidates. They were much more likely to say aligning with the board’s culture is one of the things they look for, with 81% saying that is “very important.”
And while 51% said their board doesn’t have a problem with members being hesitant to speak their minds, 27% said a desire to maintain a collegial atmosphere contributed to directors’ reluctance to voice dissenting views.
The culture of the board is unique, Smilowitz said, given that the group is small and directors are often not full-time employees.
“I understand why board members, when they’re thinking about who they want to recruit, why they would want to prefer cultural alignment and fit,” she said. “I think that what we’re trying to say based on these survey findings is that culture and fit should not be distinctly separate from or mutually exclusive from still needing to speak up if there is an issue or address an issue if a problem arises.”
Assessing the culture, though, is where the board and the rest of the organization have much in common: Half conduct individual director assessments and 36% incorporate skills gaps into board succession planning to address underperforming board members, while 68% say their board has used the results of employee engagement surveys to assess the organization’s talent and culture. That’s higher than turnover (60%), informal interactions with management (54%) and hotline data (34%).
What’s Next on the Board’s Agenda? Geopolitics
Research points to moves that are helping directors effectively govern in unstable environment
Read moreDetailsAI
While AI is the skill directors are most likely to say they need to build, they’re also signaling to executives that information quality about how organizations are approaching AI is lacking.
Directors largely rated information quality relating to AI as fair to poor. AI strategy and value creation is the area board members rated the highest for information quality, but those rating info as fair or poor (47%) outnumbered those rating it as excellent or good (46%) by one percentage point. In every other case, the gulf was at least five percentage points and in most cases in double digits — risk management and controls (50% vs. 43%), workforce readiness for embedding AI (61% vs. 31%), AI investments and ROI (59% vs. 25%) and metrics linking AI outcomes, risks and business performance (66% vs. 18%).
While these numbers don’t break down by industry or how companies are using AI (meaning whether they are selling it or simply adopting it), the survey indicates a clear delta between what the board needs and what it’s getting, Smilowitz said.
“Regardless of whether you’re thinking about AI from an efficiency standpoint or because you’re thinking about completely changing your strategy, there’s just a long way to go for management and the board in terms of how do you have the right information to assess your effectiveness, assess value creation, assess how it’s impacting your workforce.”
The survey also indicates that organizations have mostly not yet integrated AI into board oversight, with 60% saying AI isn’t part of that yet. Of ways boards are using AI, the most common was staying informed on emerging trends, cited by 28% of participants.
Anecdotally, Smilowitz pointed to a few factors that may play a role in directors’ hesitancy to use AI for their board roles. For one, most of those surveyed are not currently public company executives, so their day-to-day experience with AI may simply not be as robust as someone working in a full-time executive role.
Whether they don’t use AI because they don’t know enough about it, want to wait for a policy or, as Smilowitz said, because they view it as a crutch, the bottom line is human judgment remains paramount in the boardroom, she said.
“I just don’t see how [AI] could replace needing to have humans in the war room who need to exercise judgment to oversee management,” Smilowitz said.
ESG & regulation
ESG, a one-time corporate it-girl, landed at the bottom of the list of skills directors feel the board needs to build, with less than 1% citing ESG and sustainability, well behind even stragglers like international expertise (6%), regulatory and public policy (7%), investor relations (8%) and crisis management (8%).
Smilowitz cautioned not to interpret this finding as indicating ESG and sustainability don’t matter. For those with material reasons to care about any of the letters in the acronym, it’s still on the agenda — just maybe under another name.
“These issues are still very much material for board members,” Smilowitz said. “They’re still very much material for the management that we’re speaking to … as well. And they’re still very much material for investors, I can assure you of that. … I see the conversation becoming more company-specific and idiosyncratic to whatever the company’s circumstances are versus it kind of being a blanket conversation.”
Indeed, for companies that are facing regulatory obligations around climate and sustainability, ESG is likely to stay top of mind. For US boards, which this survey covers, federal regulation may be softening, and 49% said the regulatory environment hasn’t affected the board’s role or effectiveness. At the same time 42% said the cost/benefit ratio of being a public company is becoming less favorable, a signal that what might be weighing on directors is not strictly about regulation, and 21% said the regulatory environment is increasing scrutiny from regulators, investors and other stakeholders.
That last part, increased scrutiny, is an area Smilowitz flagged as a potential board member recruitment problem.
“It’s becoming increasingly difficult for [boards] to find directors that are willing to take on leadership roles, like committee leadership, it’s been harder to recruit for some of those because of the amount of work, but the scrutiny, frankly,” Smilowitz said.
Jennifer L. Gaskin is editorial director of Corporate Compliance Insights. A newsroom-forged journalist, she began her career in community newspapers. Her first assignment was covering a county council meeting where the main agenda item was whether the clerk's office needed a new printer (it did). Starting with her early days at small local papers, Jennifer has worked as a reporter, photographer, copy editor, page designer, manager and more. She joined the staff of Corporate Compliance Insights in 2021 and also hosts the CCI-produced podcast "Queering Compliance." 
