Akhil Bhardwaj, from University of Bath, will present "Avoiding Disasters: AI Integration as a Strategic Decision".

Abstract: This paper develops a governance theory for evaluating artificial intelligence (AI) integration in complex socio-technical systems, using the Boeing 737MAX case as a focal example. Strategic decisions are defined as those exhibiting interdependencies across contemporaneous decisions, actors, and time, and which generate super-additive value. Although typically examined through game-theoretic lenses, we maintain that AI integration presents a coordination challenge better addressed through a decision-theoretic perspective. Consequently, AI integration constitutes an internal strategic decision with significant implications for system integrity, particularly in nearly decomposable systems where subsystem interactions can produce non-linear ripple effects that push the system over its limits. Drawing on strategic management, complexity theory, and design science, we propose the creation of an organizational unit—the AI Risk and Governance Office (ARGO)—tasked
with evaluating and mitigating risks associated with AI integration. ARGO addresses two core challenges in strategic decision-making: bounded rationality and opportunism. It operates independently of operational units, reports directly to the Board of Directors, and is led by a system steward who embodies fiduciary leadership. We detail ARGO’s governance dimensions and compare its effectiveness to centralized and decentralized governance models. Our framework contributes to strategic management theory by offering a novel organizational design for safeguarding system integrity in high-risk, AI-integrated environments. The findings of this paper can be generalized to the evaluation of strategic decisions.