Student Classification
Undergraduate
Document Type
Working Paper
Publication Date
Fall 9-30-2026
Disciplines
Political Science
Description, Abstract, or Artist's Statement
Artificial intelligence now drives core corporate decision, such as loan approvals and hiring screens, yet corporate boards have largely treated its governance as a management-level policy questions rather than a fiduciary obligation. This paper argues that this framing is mistaken, using Delaware's Caremark doctrine, as refined by Marchand v. Barnhill, In re Boeing, and In re McDonald's. The relevant cases already impose an enforceable duty on boards to actively oversee mission algorithmic systems, and by applying Marchand's mission-critical standard, this paper demonstrates that AI performs core business functions that expose companies to anti-discrimination, consumer protection, and securities liability.
The paper also identifies a structural problem that existing doctrine has not confronted: unlike the legible red flags at issue in Caremark, Boeing, and Clovis Oncology, AI systems generate outputs without human-readable explanations, allowing boards to receive clean compliance reports from systems that are producing unlawful outcomes. This "black box problem" requires reestablishing what good-faith oversight demands and when the underlying risk bypasses traditional reporting structures.
Drawing on In re SolarWinds and the officer liability extension in McDonald's, this paper proposes a scalable framework for reasonable AI oversight, including board-level AI audit committees, a Chief AI Officer role with reporting duties to the General Counsel and CEO, mandatory governance disclosure, and a safe harbor for compliance. Ultimately, this paper challenges that the doctrinal tools to govern AI already exist within Delaware law, and all that remains is for boards to act before litigation forces the question.
Digital USD Citation
Singh, Samar, "Algorithmic Oversight: Caremark's Fiduciary Framework Applied to Artificial Intelligence" (2026). Political Science and International Relations: Student Scholarship & Creative Works. 2.
https://digital.sandiego.edu/psir-student/2
Creative Commons License
This work is licensed under a CC BY License.