17/09/2025

BIZ & FINANCE WEDNESDAY | SEPT 17, 2025

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How boards should tackle AI risks and rewards

DISCUSSIONS, debates, associations and businesses built around artificial intelligence (AI) or the desire to learn more about AI, have grown exponentially since the public release of ChatGPT on Nov 30, 2022. While AI itself was not a new concept or technology, mass access of powerful tools in the hands of the public-at-large for free marked a turning point. Three years on, many businesses and boards are still catching up. Having attended countless workshops, dialogues and conferences for board members – including those hosted by the Institute of Corporate Directors Malaysia (ICDM) – I have had many conversations with board members and company leaders around this very topic. Most are still deliberating the approach or treatment of AI and have not made tangible decisions or plans. Despite the growing interest and discourse around AI, the translation of that enthusiasm into concrete decisions and actions remains slow. Also, technology (including AI) often still ranks low among board priorities, even as digitalisation continues to be a necessity in today’s landscape. ICDM’s research shows that only 15% of boards currently prioritise technology risks, and just 26% have taken tangible steps to strengthen digital oversight. Meanwhile, the Khazanah Research Institute has flagged real concerns: slow adoption of AI, unintended consequences like job losses, cybersecurity and privacy concerns, and the risk of malicious uses like deepfakes and fraud. Despite all this, AI is still treated in many boardrooms as a technical concern that is for the IT or operations teams to handle. This raises the critical question: Who is responsible and therefore, concerned about the impact of AI? How should boards and directors approach AI? AS Malaysia celebrates Malaysia Day, we are reminded of how unity has shaped our nation and how it has grown stronger through the years. Just as the country continues to evolve to meet the changing needs of its people, insurance has also progressed, playing an important role in safeguarding lives, livelihoods, and futures. Looking back to as far as the 18th century and tracing the journey of today, Liberty General Insurance reflects on how protection has adapted throughout its time in Malaysia. Pre-Merdeka era (18th century – early 20th century) Insurance may seem more of a mod ern perk, but its history in Malaysia surprisingly, goes as far back as the late 18th century through the British trading system. Managed by British companies, protection was catered to colonial businesses and trade. However, local endeavours like agriculture and fishing were largely excluded. Any risks were shouldered by families or communities, reflecting how insurance in its early form was more of a colonial safeguard than a protection for its people.

to protect the businesses built that support family livelihoods. It was also an era where technology was starting to grow rapidly in the age of smartphones, computers, and e commerce. Malaysians faced new risks including cybersecurity, online scams, and vulnerabilities of digital entrepreneurs, freelances, and gig workers. By introducing the Financial Services Act 2013, Malaysia ensured that financial regulations were fit for the modern era. It made sure consumers were protected, bringing fairer business practices to stronger consumer rights. Additionally, protection had to expand beyond the physical, so insurance companies evolved by offering flexible safety nets and innovative solutions for the modern Protection has become an everyday part of Malaysian life, woven into fami lies, businesses, and communities. From daily commutes to flying abroad, from running a business to providing for your loved ones, insurance stands as a constant partner that helps Malaysians thrive with peace of mind. world. Today are monitored. Just as we have done with ESG and cybersecurity, AI governance must now become part of the board’s core agenda. its occurrence rising with the advent of AI. As such, the board’s preparedness has to evolve ahead of current state. Regular reviews, tests and updates on governance frameworks are a start, but they must hold up under scrutiny and pressure. This shows how fast AI risks—flawed algorithms, misinformation, deepfakes, and data breaches—can escalate into real damage, highlighting the urgency for boards to prioritise preparedness. Boards must look and plan ahead to prepare themselves and include these risks into business continuity and crisis planning to ensure survival. Agility and resilience in the face of these emerging threats is the only way forward. Asking hard questions now is a necessary step to ensure our organisations can react quickly and effectively when it matters the most: Where are our weak points? Are our safeguards strong enough? Are protocols up-to-date, clear and well tested? Are we prepared and equipped to respond swiftly and effectively? Have we done sufficient stress testing and scenario planning to prepare ourselves? It is not just about investing in the right technology. Effective governance especially in the age of AI requires the right people, capabilities, structures, and forward thinking mindsets in place. Planning for disruption Disruption is inevitable,

misinformation, or failure? And when something goes wrong, can we explain what happened and justify the outcome? Are we ready to be held accountable for decisions made with the help of AI? Or are we ready to accept people who need AI to do their work? These are not abstract concerns but real-world examples of the practical impact of AI, especially the related risks which may result in discriminatory outcomes, privacy breaches, to reputational damage. It starts with clear oversight Once we understand the potential impact of AI, we need to take ownership of how it is addressed and governed. Developing a clear framework that outlines the organisation’s risk appetite around AI, board priorities, accountability to alignment of usage with company values, strategy, and stakeholder expectations, the process needs to start with a clear view from the top. This means proactively embedding AI conversations as a regular and critical point in board discussions and planning, and integrating the priority in charters, risk registers, and audits or ethics reviews. Some boards form

and leadership skills, with a growing emphasis on digital literacy, ESG expertise, are essential. Today, AI literacy is also a core leadership competency. All leaders and boards need a working understanding of how AI is used across the organisation, the risks it introduces externally and internally, and how it connects with broader responsibilities – from ethics and compliance to reputation and stakeholder trust. Deepening the knowledge beyond the superficial to ask focused, incisive questions such as: Where is AI deployed in our business? How robust are the plans we have to guard the organisation/business against impersonation, especially deep fakes? How confident are we in the quality of our data? What checks are in place to reduce bias,

Building on this journey, Liberty General Insurance continues to stand alongside Malaysians as a trusted partner in protection. With solutions designed to meet the diverse and evolving needs of Malaysians – whether it’s safeguarding homes, protecting businesses, or supporting drivers with digital-first services, Liberty remains a constant presence in everyday life. By continuing to innovate with flexible motor, home, and business solutions, Liberty ensures that protection keeps pace with the way Malaysians live, work, and move forward. Safeguard Malaysia’s tomorrow, together From colonial-era Malaya to the fast paced nation of today, insurance has come quite a long way. It has safe guarded families, enabled local busi nesses to flourish, and adapted to pro tect Malaysians as they progress through life. As the country commemorates Malaysia Day, building on the recent National Day celebrations, Liberty reflects on how unity and progress continue to shape the nation – and how protection has grown alongside it. Are our boards ready? Board members will not always have all the answers, but they should be confident to engage with AI-related topics. That starts with assessing whether the board has the right mix of expertise. Does the board have directors who understand digital systems, ethical implications and cyber risks? Where gaps exist, rebalancing should be considered. AI governance is not a solo effort, and it requires diverse perspectives, shared responsibility and a culture that supports ongoing learning. Directors do not need to become technical experts overnight, but they do need continuous exposure to real-world examples, case studies and a sense of what’s coming next. Given the pace of change, it is about building the confidence to engage constructively and making informed decisions. Looking ahead AI will shape the future of every organisation. That is certain. It is also certain that boards must proactively respond quickly and strategically to be in a position of strength to lead with clarity, confidence, and credibility. Our role as directors is not just to manage what is in front of us today, it is to prepare our organisations for what is ahead and still unknown. That future now includes AI— and we cannot afford to sit on the sidelines. This article is contributed by Institute of Corporate Directors Malaysia president and CEO Michele Kythe Lim ( pix ).

dedicated subcommittees or appoint a lead director for digital and technology oversight. What matters most is consistency. Boards should receive regular reporting on AI usage: what tools are in place, who are using them for what purpose, why they are used, and how the usage and outcomes

AI belongs in the boardroom For boards and directors – strategic thinking, financial acumen, risk management, governance knowledge, From independence to unity: The growth of insurance in Malaysia Innovation matters, but without accountability, it can become a liability.

and motor coverage to health and business protection. In the 1990s, the legal framework continued to evolve. The Insurance

As Malaya moved towards its independence in 1957, the insurance industry went through a change to suit the country’s growing economic needs. Still, insurance in Malaya was fragmented as it was still l a r g e l y managed by f o r e i g n companies with minimal regulation. Post-Merdeka to Malaysia Day era (1960s–1990s) Following independence and the for mation of Malaysia in 1963, the coun try experienced rapid urbanisation – from car ownership to homebuilding. With the growth comes a demand for protection of the people’s belongings and family security. The Insurance Act 1963 ensured more local ownership and opportunities, laying the founda tions of a more Malaysian insurance landscape. By the 1980s, insurance was seen as a necessity for the growing urban population. Products became more diverse ranging from life insurance

Act 1996 was a game changer for the country’s insurance landscape at the time, introducing a m o r e structured,

transparent, and consumer-focused industry in the name of financial stability. Additionally, insurance started to play a role in enabling social mobility. The right form of protection helped families secure homes through mortgage protection, ensured children’s education through savings linked policies, and provided financial security in times of illness or death. The modern era (2000s – early 2020s) This era saw a growth in SMEs and entrepreneurs, as they became vital for Malaysia’s growing economy. Insurance companies adapted to pro tect not just family assets, but sought