Insurance and risk advisory firm Marsh is urging company directors to strengthen oversight of artificial intelligence, warning that ethical and liability exposures are becoming a critical concern for boards.
The call follows the Institute of Directors in New Zealand’s 2025 Shifting Sands of Risk report, which identifies AI as the top emerging issue for directors, alongside existing challenges such as workplace safety reforms, climate reporting obligations and cybersecurity.
Marsh outlined several priorities for boards, including integrating AI into risk discussions at the governance level, ensuring accountability for algorithmic decision-making, reviewing directors’ and officers’ insurance coverage for AI-related exposures, and establishing dedicated governance or ethics committees.
The firm also cautioned against “AI washing,” where companies exaggerate or misrepresent their use of artificial intelligence. Regulators and investors are increasingly scrutinising how businesses deploy AI, particularly regarding privacy, bias, and automated decision-making.
Jono Soo, head of cyber specialty at Marsh New Zealand, said boards should treat AI oversight in the same way they adapted to the rapid rise of cybersecurity risks over the past decade.
“AI undoubtedly brings opportunity, but also opens the door to ethical missteps, social impacts and emerging regulatory scrutiny, all of which are increasingly posing coverage questions regarding D&O insurance,” he said. “A misstep in AI governance may quickly become a reputation issue, which could ultimately impact shareholder value.”
As AI becomes embedded in core systems, Marsh noted, it also heightens cybersecurity vulnerabilities, creating potential legal, financial, and reputational consequences for directors if governance frameworks are not in place.
