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ACCA Strategic Professional · Strategic Business Leader · Machine learning, AI and robotics

Orlan Logistics plans to replace 40% of its warehouse workforce with robots and AI scheduling. The CEO argues the decision is purely commercial. A non-executive director insists the board should also consider social responsibility. Which approach best reflects a mature governance response to the AI deployment?

The best approach is to assess impacts on all stakeholders, adopt an ethical AI policy and plan consultation and reskilling alongside the commercial case. This balances strategic benefit with social responsibility and reputational risk. Ignoring employees or halting automation altogether would each fail the board's governance duties.

  1. AProceed immediately, since shareholder returns are the board's only duty
  2. BDelay all automation indefinitely to protect jobs
  3. CAssess impacts on all stakeholders, set an ethical AI policy, and plan reskilling and consultation alongside the business caseCorrect
  4. DDelegate the decision to the AI system's vendor

Explanation

Good governance balances commercial benefits against stakeholder impacts such as employees and communities, using an ethical framework, impact assessment and change management such as reskilling. A shareholder-only stance ignores stakeholder and reputational risk, while indefinite delay ignores the board's duty to pursue strategic value. Delegating to a vendor abdicates oversight.

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