When AI hallucinations reach the boardroom

In the last week of June this year, the Bangladesh Bank issued a quiet but unprecedented internal directive. The central bank banned its own officials from inputting sensitive financial data, policy drafts or office notes into generative AI platforms such as ChatGPT, Gemini and DeepSeek. The regulator discovered that employees, eager to use cutting-edge technology, were running unverified financial metrics and confidential files through external algorithms, risking severe cross-border data leaks.

This is not a localised tech glitch. It is a striking symptom of a global boardroom epidemic.

From the commercial towers of Gulshan, Dhaka, to the financial hubs of Wall Street, pressure on corporate leaders to project a hyper-digitised image has reached a fever pitch. In boardrooms across the globe, artificial intelligence is no longer treated merely as a tool; it is flaunted as a badge of corporate modernisation. However, when the rush to adopt technology outpaces the development of human capability, the results can be catastrophic. As HR professionals, we must ask a critical question: are we building resilient institutions, or simply ornamenting our corporate look to appease investors?

The financial and corporate sectors are facing the fallout of uncritical AI adoption. Recent global data highlights a deeply troubling disconnect in executive governance: 84 percent of senior corporate executives trust unreviewed AI output, despite only 11 percent of their organisations having the data quality required to back it up.

This blind trust has created an immense liability. Approximately 26 percent of business leaders admit that critical AI errors and “hallucinations” have bypassed internal audits, reaching the board or public financial disclosures before being caught. AI-related securities lawsuits have spiked internationally, accounting for 73 percent of all disclosed investor losses. When automated fabrications reach the highest levels of governance, it is not a technology failure but a human, cultural and talent failure.

This risk is amplified by the rise of “Agentic Finance”, where autonomous AI agents can instantly shift capital to maximise interest rates. Forbes recently warned that these unchecked systems could trigger high-velocity “AI bank runs”, threatening to drain up to $1.3 trillion from traditional banking institutions in minutes. If the people operating these systems lack the critical thinking to intervene, the institution’s stability collapses.

Paradoxically, while AI risks are slipping through the cracks, the return on investment is dreadful. Some 95 percent of enterprise AI pilots fail to scale or deliver a measurable impact on the P&L. Billions are poured into technology that stalls because leadership treats AI as a plug-and-play marketing asset, ignoring the legacy infrastructure and human capability gaps that kill modernisation. Every HR professional must reflect on these realities and refuse to fall into the “innovation trap”. Embracing modern technology must be driven by caution and organisational purpose, not FOMO (fear of missing out). True digitisation requires a strategic pause.

First, HR must redefine capability frameworks. We must stop hiring for tech buzzwords and start assessing rigorous cognitive scepticism and systemic risk management. Second, we must mandate human-in-the-loop governance. No AI-generated financial model, strategic forecast or compliance report should reach an executive’s desk without verifiable human review and cross-examination. Finally, we must realign corporate culture. Leaders should be rewarded for data accuracy and operational resilience, not for launching flashy, unvalidated pilots.

The illusion of digital sophistication is a dangerous boardroom narcotic. Technology can augment efficiency, but it can never replace human judgment, ethical oversight and strategic accountability. It is time for HR to step up, strip away the corporate window dressing and re-anchor human oversight at the centre of leadership.

The writer is a senior HR executive