By using generative AI, compliance and risk management professionals can enhance their capabilities and deliver more value to their organizations
Compliance and risk management are essential in-house functions in any organization, as they help to ensure that the organization follows the laws, regulations, standards, and ethical principles that govern its activities. However, compliance and risk management are also challenging and complex tasks that require a lot of time, resources, and expertise to conduct effectively.
Indeed, many compliance and risk management professionals have to deal with a constantly changing and evolving regulatory landscape, as well as a growing volume and variety of data sources on which to base their decisions and risk assessments. They also have to balance the needs and expectations of multiple stakeholders, such as regulators, customers, employees, investors, and society at large.
Generative artificial intelligence (GenAI) serves as a powerful instrument for compliance and risk management professionals to augment their capabilities through data-driven automation, enhancing their contribution to their companies. In fact, 89% of professionals in risk, fraud, and compliance see the advantages that AI offers in their sector, according to the Thomson Reuters Institute’s recent Future of Professionals Report. This finding underscores the potential impact of AI’s role in sifting vast datasets and boosting productivity and efficiency in internal corporate functions, like compliance and risk management.
The report further indicates that this change will likely be one of the most transformational factors impacting the current work force over the next five years, especially as individuals entering the workforce will be interacting with future iterations of GenAI.
GenAI applications in compliance and risk management
GenAI is already being used in various domains and industries, such as healthcare, education, entertainment, and marketing. However, GenAI also has a lot of potential and opportunities for use in compliance and risk management functions. For example, GenAI can generate compliance and risk reports, such as audit reports, regulatory filings, risk assessments, and compliance dashboards, based on the data and information available. GenAI can also generate summaries, highlights, and insights from these reports, to help the compliance and risk management professionals and their stakeholders to understand and act on the key findings and recommendations.
GenAI can automate and streamline the data collection, analysis, and validation process, by using natural language processing, computer vision, and machine learning techniques. GenAI can also identify and flag any anomalies, errors, or inconsistencies in the data, and suggest corrective actions or improvements. Further, GenAI can improve and optimize the compliance and risk management processes and workflows, by using reinforcement learning, optimization, and simulation techniques. GenAI can also monitor and evaluate the performance and outcomes of the compliance and risk management activities and provide feedback and suggestions for improvement.
Beyond the immediate impact on current work processes, GenAI can innovate and create new products, services, and solutions that address the needs and challenges of compliance and risk management functions, by using generative adversarial networks, deep learning, and neural networks techniques. GenAI can also test and validate the feasibility and viability of these products, services, and solutions, and provide feedback and suggestions for improvement.
In addition, GenAI can enhance and augment the skills and knowledge of compliance and risk management professionals themselves, by using natural language generation, natural language understanding, and question-answering techniques. GenAI also can provide relevant and timely feedback, guidance, and recommendations to compliance and risk management professionals, based on their queries, goals, and preferences.
The effectiveness of GenAI depends on human supervision, of course. Professionals are required to monitor their use of GenAI closely, guaranteeing that the technology performs as intended and maintains its usefulness. Outputs generated by GenAI should be evaluated, checked, and confirmed by specialists to ensure their precision, pertinence, and suitability. Additionally, the involvement of experienced individuals in crafting, creating, and rolling out GenAI solutions is crucial to matching ethical, legal, and societal norms and values.
Challenges and limitations of GenAI
While GenAI can offer many benefits and advantages to corporate compliance and risk management functions, it also comes with some challenges and limitations that need to be addressed and overcome, including:
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- Quality and accessibility of data — GenAI’s performance is dependent on substantial data to function and produce results. The data must be precise, comprehensive, consistent, and pertinent to guarantee the effectiveness and dependability of its outputs. Additionally, the data must be readily available, safely stored, and made to adhere to data privacy laws and protection guidelines.
- Transparency and explainability — GenAI is often seen as a black box, as it is not always clear how and why it generates certain outputs. However, GenAI outputs need to be transparent and explainable, to ensure their trustworthiness and accountability. Moreover, GenAI outputs need to be interpretable and understandable to various stakeholders, to ensure their usability and usefulness.
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Conclusion
GenAI is a powerful and promising technology that can transform the corporate compliance and risk management function in many ways. It inevitably will enable compliance and risk management professionals to leverage the power of data and automation to enhance their capabilities and deliver more value to their organizations.
However, GenAI also comes with some challenges and limitations that need to be addressed and overcome. Companies will need to ensure the quality, reliability, trustworthiness, and accountability of their GenAI outputs. Moreover, compliance and risk management professionals will need to prepare for GenAI, by embracing and adopting the technology, learning and developing needed skills, and staying updated and informed about any new iterations and developments of GenAI.
You can download a full copy of Thomson Reuters 2nd annual Future of Professionals Report, here.
