The Growing Importance of AI in Business
The business world is evolving rapidly, and a noticeable divide is emerging. Over the past year, many CEOs and board members have shifted their views on artificial intelligence (AI). What once was considered just a technical tool is now seen as a key strategy for business success. The big question has changed from “Will AI transform our industry?” to “How can our company stay ahead of the competition in this AI-driven landscape?”
However, not all businesses are keeping pace. While over 80% of organizations worldwide utilize AI in at least one area, a recent global survey revealed that 66% of corporate directors feel their boards know very little about AI. Alarmingly, nearly one-third reported that AI does not even make it onto their meeting agendas. In fact, only 39% of Fortune 100 firms have any board oversight on AI in 2024, with just 15% receiving any AI-related performance metrics. This creates a significant gap in governance, and in Malaysia, companies are beginning to pay the price for this oversight.
In many boardrooms, there’s still an outdated belief that AI is just an IT issue. Once the procurement approves the tool and the chief technology officer sets it up, board members view the job as finished. This mindset, however, is falling behind the times. AI systems already influence major decisions, such as job candidate selection, credit allocation to customers, and supplier evaluations. These decisions are essential to building trust with customers and employees alike.
The need for robust AI governance has never been clearer. Studies, like one from MIT, show that companies with boards knowledgeable about AI have a 10.9% higher return on equity than their rivals. The challenge lies in finding a practical way for boards to engage with these complex issues, focusing on real business impacts.
To address this need, the ProSocial AI Index has been introduced, offering Malaysian businesses a chance to adopt this structured tool early, before external pressures force them to take action.
Understanding Hidden Risks
Let’s consider a few real-life examples:
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A bank in Klang Valley uses a credit-scoring system based mainly on American data. Although it seems to work well overall, it fails to accurately assess young Malay women in semi-urban regions, a flaw only revealed when a journalist highlights the issue.
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An e-commerce platform implements a customer service AI that is proficient in English and somewhat understands Malay, but struggles with Mandarin and Tamil, languages spoken by a significant portion of its user base. Customer dissatisfaction grows, but the blame falls on market conditions rather than the technology itself.
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A logistics firm automates its supplier evaluations without considering environmental factors. When it seeks to showcase its sustainability efforts to a potential partner, it is confronted with tough questions about how it measures its ecological impact.
These examples illustrate a crucial lack of routine processes to examine the real effects of AI systems. Most AI governance frameworks in Southeast Asia are still voluntary, leaving many organizations to manage accountability on their own.
Introducing the ProSocial AI Index
The ProSocial AI Index presents a straightforward approach to evaluate AI systems. It hinges on two main axes:
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The 4T Framework: This includes Tailored, Trained, Tested, and Targeted, which assesses whether an AI system is truly suitable for its intended context.
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The Quadruple Bottom Line: This framework evaluates Purpose, People, Profit, and Planet, addressing whether the system is empowering and equitable, creating appropriate economic value, and accurately accounting for its ecological footprint.
Combining these frameworks gives organizations 16 assessment points, which are scored using a simple traffic-light system: green gets two points, amber one, and red zero. The highest score is 32. If any score is red in the Targeted section, it triggers an independent review to ensure accountability.
Benefits for Organizations
Adopting the ProSocial AI Index can enhance stakeholder management internally. Employees may have concerns about AI tools that often go unvoiced. Questions like “Does this technology make my role obsolete?” or “Who takes accountability if this system fails?” can now be systematically addressed.
For HR teams, the Index provides insight into how AI affects the workforce. Legal and compliance teams can ensure alignment with international regulations. As Malaysia’s AI governance framework is largely non-binding, companies that establish strong internal standards now will be in a stronger position when regulations tighten.
Getting Started
Organizations can start by identifying three AI systems that affect the most people, be they employees, customers, or suppliers. Evaluate them using the Index’s metrics and share the results within the company.
Next, incorporate the four pillars into criteria for selecting vendors. If a supplier cannot clearly address the Targeted questions, it’s a red flag before entering into a contract.
Set a target score for the upcoming year and appoint someone responsible for improving the score. Taking thoughtful, documentable steps can uncover hidden risks. Organizations that proactively measure and address these impacts can navigate potential issues swiftly.
Malaysian businesses have a unique opportunity to take the lead in AI governance. The choice is between acting now or waiting for someone else to set the standards.
Dr. Cornelia C. Walther is a humanitarian expert with over two decades of experience at the United Nations. She is an associate professor at Sunway’s Institute for Strategy and Competitiveness and a senior fellow focusing on hybrid intelligence and ProSocial AI.
