Is AI a boardroom issue?

AI is no longer a next-generation technology at the edge of business strategy. In July 2026, ONS statistics reported that the use of AI has increased three-fold since late 2023. AI is now deeply embedded in strategic decision-making, influencing stakeholder engagement, talent acquisition, risk management and operational strategy. While its productivity benefits are well documented, AI-assisted operations and strategy require significant consideration and oversight, raising a fundamental question: how do corporate governance frameworks apply to the use of AI in the UK?

Practical implications for boards

Governance structures and risk management

Boards may wish to review their corporate governance structures to determine how the use of AI can be incorporated, rolled out, monitored, and reviewed. Boards should be aware of the risks of relying on AI, particularly AI-generated outputs that may contain hallucinations or bias. Boards may delegate AI functions to senior-level experts to oversee AI management and risk, but delegation does not discharge directors of their statutory duties – the duty to monitor and supervise remains with the directors.

Training and competence

AI outputs are only as reliable as the data used to train and operate them. Poor input quality, biased datasets, or unlawful processing practices can lead to significant legal and reputational risk for a company. Directors should therefore have sufficient training on and understanding of AI systems before deploying them operationally or asking their teams to do so. They need to understand what they are supervising.

Outsourcing decision-making to AI systems

AI is transforming the boardroom by enabling directors to analyse reports, interrogate data and summarise complex documents in a fraction of the time previously required. As these tools become increasingly sophisticated, they provide executive directors with real-time, granular visibility into the businesses for which they already bear primary responsibility. For non-executive directors, it may reduce the information mismatch that has traditionally justified an implied lower level of oversight, given their reliance on board papers and their comparatively arm's-length involvement in the day-to-day management of the company. In this context, AI's capacity to enhance directors’ access to information and risk analysis may lead to a corresponding increase in expectations surrounding their oversight, decision-making and accountability.

AI systems cannot substitute human oversight, independent judgment, care and skill. AI output should be curated and monitored to ensure decision-making is subject to adequate supervision, so as to ensure accuracy and completeness and to prevent bias or hallucinations. Reliance on AI output does not negate directors’ statutory duties. Decision making can be informed by AI, but it must not be outsourced to it.

How AI use may impact directors' duties

Although there are no AI specific duties dedicated to governing its use, its use falls within the existing duties. The Companies Act 2006 (CA 06) imposes statutory duties on directors that are broad enough to apply directly to AI-related decision-making. Boards that focus solely on the benefits of AI without analysing the wider implications may unintentionally risk being in breach of their statutory duties. Further detail on directors' general duties can be found in our ‘Handy Guide to Directors’ Duties’, available here.

Section 172 CA 06 - duty to promote the success of the company 

The successful deployment and governance of AI should be considered under the duty to promote the success of the company. Directors must consider not only the commercial benefits AI offers to the long-term success of the business, but also whether AI strategies align with organisational purpose and governance and the broader risks and consequences of deployment. Examples of section 172 considerations might include:

• Would the deployment of AI strategies create unfair outcomes for stakeholders?
• What reputational risks are associated with an AI failure?
• Would AI affect workforce planning and/or employee well-being?
• Are there any environmental footprint impacts associated with the AI deployment?

Section 173 CA 06 - duty to exercise independent judgement

Section 173 obligates directors to exercise independent judgment on decision-making issues for the company. Directors cannot make decisions or act on the wishes of a shareholder or another director without having exercised independent judgment, although section 173 does not preclude directors from seeking or relying on third-party advice as part of that exercise. This duty becomes increasingly important as more organisations adopt or deploy AI systems in their strategic decision-making. As with third-party advice, AI output can assist the decision-making process, but directors should not simply rely on AI without question or verification; to do so may risk breaching their duties under section 173.

Section 174 CA 06 - duty to exercise reasonable care, skill and dilligence

Section 174 requires directors to exercise the care and skill of a reasonably diligent person with the general knowledge, skill and experience reasonably expected to carry out their functions. As AI adoption increases, expectations of directors’ competence and understanding of AI are likely to evolve. Directors are unlikely to be expected to become AI experts, but they will be expected to have sufficient understanding to:

• implement sufficient AI management and auditing within the organisation;
• manage the material risks associated with AI output;
• ensure that appropriate policies and controls are in place such as human oversight; and
• develop the ability to challenge AI output.

Conclusion

AI is now a current boardroom issue. As AI continues to evolve, the expectations around governance and accountability are likely to increase. In the coming years, courts and regulators may have to consider how boards oversee and use AI. The question may not be whether a company experienced an AI-related failure, rather whether directors have taken reasonable steps to anticipate, monitor and govern the risks involved.

The key message for directors is clear: AI does not create a new set of duties, but it does change what needs to be taken into account to comply with their existing duties.

If you wish to discuss any of the topics raised in this blog, please reach out to a member of our corporate team.