FROM BOARDROOM ILLITERACY TO ALGORITHMIC ACCOUNTABILITY: WHY AI LITERACY IS NOW A FIDUCIARY DUTY FOR EVERY BOARD

This study examined the emergence of AI literacy as a fiduciary duty for company directors in Nigeria and globally. The background was that boards which were previously judged on financial literacy now governed algorithms that decided credit scoring, recruitment, asset integrity and pricing, yet Diligent Institute (2026) found that only 18% of directors were confident to discuss AI risks. The research adopted a doctrinal legal methodology, using content analysis of primary statutes and codes including CAMA 2020 Section 305, UK Corporate Governance Code 2024 Principle J and Provision 23, EU AI Act 2024 Article 99, NDPA 2023 Section 24, and secondary materials including FTC v Rite Aid (2025), Caremark and Marchand v Barnhill_ on duty of oversight, and ISO/IEC 42001:2023. The findings were that AI risks were not IT risks but core governance risks, exposing boards to regulatory fines up to €35m or 7% turnover under EU AI Act, liability under NDPA 2023, reputational damage from algorithmic bias, and operational leakage from generative AI hallucination and model drift. The study found that lack of AI literacy constituted breach of duty of care, skill and diligence under S.305 CAMA 2020 because directors who did not understand model cards, training data and bias testing could not effectively challenge management. The paper concluded that a board that was governed by algorithms it did not understand had abdicated its role, and AI literacy was therefore the new language of directorship. It recommended (i) amendment of board charters to make AI literacy mandatory, (ii) inclusion of AI competence in annual board evaluation under NCCG 2018 Principle 15, (iii) creation of a Certified AI Governance for Directors (CAIGD) programme by FRCN and IoD Nigeria, (iv) 20 hours annual AI training budget per board, and (v) establishment of a Board AI & Data Ethics Committee responsible for AI policy, bias audit and compliance.