What is the AI Board Governance Compass?

The AI Board Governance Compass is a proprietary assessment framework developed by Vela Board Advisors. It maps board readiness across 16 governance indicators and four dimensions: Individual (director AI literacy and personal accountability), Board (collective oversight capability), Organization (alignment between executive leadership and board-level AI signals), and Stakeholder (regulatory, insurer, and investor expectations). It produces a scored diagnostic that surfaces governance gaps and a priority queue for action.

What are board directors personally liable for in AI governance?

Board directors can face personal liability for AI governance failures including failure to exercise adequate oversight, approving misleading AI-related disclosures (AI washing), and failing to establish defensible governance processes. D&O insurance often does not cover AI-specific incidents, creating a gap between assumed and actual coverage that boards need to actively map.

How should boards oversee AI deployments?

Boards should establish a baseline of AI literacy among directors, create clear escalation pathways for AI risk, review fairness and bias testing practices, understand the insurance coverage architecture across D&O, cyber, and E&O policies, and maintain a documented governance record demonstrating active oversight. The AI Board Governance Compass provides a structured way to assess and improve across all of these areas.

What is AI washing and why does it matter for boards?

AI washing occurs when a company overstates the capabilities or use of AI in its products or communications. Directors who approve such communications without adequate scrutiny can face personal liability. Boards need the skills to identify AI washing risks in materials brought for approval.

Does D&O insurance cover AI governance failures?

Standard D&O insurance frequently does not cover AI-related governance failures in the way boards assume. Coverage gaps often exist at the intersection of D&O, cyber liability, and E&O policies. When an AI system causes harm, each insurance tower may claim the loss belongs to another, leaving boards exposed. Mapping this coverage architecture is a board governance responsibility.

What is the four-step Vela engagement model?

Vela engagements follow four stages: (1) Assessment, the AI Board Governance Compass maps readiness across 16 indicators and establishes a defensible baseline; (2) Workshop, a facilitated session built around the board's real risks and opportunities; (3) Simulation, a live AI governance scenario where directors make real-time decisions to build instincts; (4) Record, a structured governance record demonstrating active oversight to regulators, insurers, and shareholders.

The Trial the AI Designed | Board Case Study

The situation

A public pharmaceutical company used AI across discovery: the model designed the candidate molecule, selected the trial cohort, and proposed the endpoints. The Phase 2 data are strong enough to support a filing, and the program is central to the company's pipeline and valuation.

The FDA is asking how the model made its choices, cohort selection and endpoint design carry bias and validity risk, and the model's reasoning is not fully explainable. IP questions hang over an AI-designed compound, and the registration trail regulators expect assumes human-traceable decisions.

The board must weigh an accelerated, AI-enabled path to a potential breakthrough against regulatory, explainability, and IP risk, and the duty not to advance a therapy whose basis the company cannot fully account for.

“The model designed the molecule and the trial that proved it works. If we can't explain how it decided, can we stand behind the filing?”
Chair, Science & Technology Committee

The decision on the table

Reconcile AI-driven trial design with the FDA's expectation of explainable, human-traceable decisions.
Address cohort and endpoint bias risk and IP ownership of an AI-designed compound.
Weigh an accelerated breakthrough against the duty not to file what the company can't explain.

The Trial the AI Designed

Run this case with your board.