The AICD Essential Director Update series is a great way to stay in touch with legislative changes and advances in technology that impact Australian businesses. This year I attended the Gold Coast event, held at the JW Marriott.
As an owner director myself, and a consultant to boards, it can sometimes feel daunting to get across the legal requirements and risks associated with leading businesses in today’s complex market environment. How much risk is too much? What will I be held liable for?
However, the AICD has our backs with step-by-step guides that the demystify the legal and corporate jargon.
In this year’s series, several key reports and tools were highlighted as topical to the challenges that business leaders face today. I’ve referenced these below. I hope you find this week’s blog a helpful guide to sharpening up your governance knowledge.
Generative AI
Did you know that a ChatGPT query utilises 10 x the energy of a Google search?
This was a surprise to me and highlighted just how important it is to be educated about the risks and opportunities of AI. The advice from the AICD is that Directors should understand how AI us currently being used in their organisations and gain an awareness of both the risks and opportunities associated with using AI. Some of the risks highlighted were:
· The risk of unreliable results
· Unlawful or discriminatory outcomes, and
· Impact on climate.
The AICD provide several resources to support Directors getting up to speed on AI:
· A Directors Introduction to AI
A great suggestion was for Directors to improve their AI literacy, much like Financial Literacy. The AICD is offering an online short course: AI Fluency for Directors Sprint (in partnership with the University of Sydney & Deloitte)
Climate reporting
The legislation on mandatory climate reporting passed both houses of Parliament in September 2004. From 1 January 2025, the largest emitters and corporations will be mandated to produce a ‘Sustainability Report’, with smaller organisations required to jump in from 1 July 2026 and 1 July 2027, respectively. However – let’s not see this as a burden – let’s see this as another important step towards a healthier planet and more optimistic future (AICD Directors guide to mandatory reporting.)
Cyber security
Whether you are an owner director, executive director, or serve on a board as in a volunteer capacity, ensuring appropriate cyber risk treatments are in place is a legal and ethical requirement of the role. However, you do not need to become an expert on cyber security. In the Cyber Security Handbook for Small Business and Non-for-Profit Directors, the AICD has detailed reasonable, low-cost steps that can be taken to ensure your organisation is cyber resilient.
Governing for company culture
Recent Royal Commissions in Australia into the Financial Services, Aged Care, and Disability sectors have highlighted the important role boards play on influencing company culture. Boards have both an indirect and a direct impact on culture, through both their interactions with each other and with management, and with their culture governance practices. To protect the organisation from the risk of corporate misconduct the AICD has published a paper on governing corporate culture.
If you’d like more detail on policies and tools highlighted, you can catch a more detailed recap here.