How Compliance Professionals Can Improve Efficiency With AI

Resolver
June 5, 2024 · READ

As global regulations and risks increase in complexity and volume, many Governance, Risk, and Compliance (GRC) professionals feel like they’re constantly playing catch-up. There aren’t enough hours in the week to stay up to date with evolving standards while ensuring compliance. Fortunately, new advances in technology, such as Generative Artificial Intelligence (GenAI) and Large Language Models (LLMs), offer innovative solutions, transforming the speed and accuracy of compliance tasks. The promise of AI in compliance programs lies in automating workflows, summarizing regulatory changes, reducing errors, streamlining compliance testing, and helping you manage your obligations with efficiency, accuracy, and agility.

According to a Thomson Reuters report, 81% of professionals believe AI can be applied to their work, and 44% are hopeful or excited about its potential. Just as leading tech firms and regulatory bodies collaborate to harness AI’s potential, compliance teams can leverage AI to keep pace with the ever-growing volume of regulatory changes.

In this blog, we’ll explore the helpful role of AI in regulatory compliance, how it can improve compliance team efficiency, and highlight practical examples of its application in doing compliance well. Learn how AI tools for compliance management can benefit your day-to-day and your organization, making your processes more effective and less time-consuming.

Understanding compliance challenges

Compliance professionals face numerous challenges in ensuring their organizations adhere to regulatory requirements: tracking regulatory changes and meeting obligations for reporting, testing controls efficiently, and managing vast amounts of data can be overwhelming.

Common regulatory requirements, such as Anti-Money Laundering (AML), General Data Protection Regulation (GDPR), and the Sarbanes-Oxley Act (SOX), require continuous updates, vigilant monitoring, and detailed reporting to regulatory bodies. These regulations evolve constantly, making it essential for compliance teams to stay updated. According to a McKinsey report, the fragmented and evolving nature of AI regulation globally further complicates compliance efforts.

Traditional methods often fall short. Manually reading large volumes of regulatory text is time-consuming and prone to errors. Tracking regulatory changes and testing controls manually can lead to inefficiencies and missed deadlines. Additionally, using spreadsheets and disparate documents creates data silos, complicating a comprehensive view of compliance status.

As regulations become more complex, the limitations of traditional methods become more apparent. This is where using AI in compliance provides a significant advantage. AI tools can automate and streamline processes, allowing compliance professionals to focus on strategic tasks and insights to ensure better adherence to regulatory requirements.

Also read: What is Agile GRC? How Risk Teams Can Move Faster

The role of AI in compliance

Artificial Intelligence is transforming compliance operations by incorporating advanced technologies such as machine learning (ML) algorithms and natural language processing (NLP). These innovations enable AI to analyze vast amounts of data, identify patterns, and generate insights in moments that would be impossible for humans to achieve manually. Regulatory Technology, or RegTech, leverages these AI capabilities to streamline regulatory compliance management, automate compliance processes, and enhance overall regulatory effectiveness.

A significant advantage of AI in compliance is its ability to handle large datasets and quickly process new regulatory texts, updating compliance requirements in real-time. This helps to ensure organizations remain compliant without exhaustive manual reviews. AI tools like requirements summarization can automatically condense complex regulatory documents into clear, actionable insights and tasks, saving compliance professionals countless hours and reducing the risk of missing critical updates.

By leveraging AI, compliance teams can deliver better outcomes, staying updated with new regulations, and saving their company from unwanted regulatory fines.

Image of graphs from cm status report by compliance framework

How to use AI in compliance

AI has been successfully implemented in various compliance functions. For example, some organizations use AI to monitor transactions for AML compliance. By analyzing transaction data, AI can identify unusual patterns and flag potential money laundering activities more effectively than traditional methods. Similarly, NLP can be used to scan and interpret regulatory documents, extracting relevant information and summarizing it for compliance teams.

To effectively use AI in compliance, start by identifying the areas where it can add the most value. Common applications include automating data collection, monitoring transactions, and tracking regulatory changes. Next, choose AI-enhanced Regulatory Compliance Software that integrates well with your existing systems, content libraries, and processes. It’s important to ensure that the software is user-friendly and provides comprehensive support for implementation.

Training your compliance team on how to use AI in compliance is also crucial. While AI tools for compliance management can automate many tasks, human oversight is still necessary to ensure that the technology is applied correctly and ethically.

Potential Applications of AI in Compliance Software

Some promising applications of utilizing AI in compliance include:

  • Text Summarization: AI can summarize large volumes of regulatory text, making it easier for compliance professionals to quickly grasp essential information. This application could save time and reduce the risk of missing critical details buried in lengthy documents.
  • Controls Suggestion: AI has the ability to analyze data to suggest appropriate risk controls. By understanding patterns and historical data, AI might provide insights into which controls are most effective for specific compliance requirements.
  • Policy Generation: Creating comprehensive policy documents can be a daunting task. AI can assist in generating these documents by pulling relevant information from regulatory texts and existing policies, potentially ensuring that all necessary elements are included.
  • Compliance Risk Assessment: AI excels at analyzing vast amounts of data to identify potential compliance risks. By continuously monitoring and evaluating data, AI could detect anomalies and flag risks that may not be immediately obvious to human analysts.
  • Regulatory Reporting: Generating detailed regulatory reports is a time-consuming process. AI in compliance can aid by creating report summaries and handling the reporting process, potentially streamlining it from start to finish.

Challenges of AI adoption in compliance

AI systems, while powerful, come with significant risks, particularly concerning data privacy. They often require large datasets, which can include sensitive information. Ensuring this data is secure is crucial.

Other challenges in adopting AI in compliance, such as data quality and integration issues, directly impact the effectiveness of features like requirements summarization. Ensuring accurate and reliable summarization of complex regulatory texts requires high-quality data and seamless integration within existing compliance frameworks, highlighting the need for robust AI strategies to overcome these barriers.

Requirements Summarization is an AI-powered feature that simplifies complex regulatory texts by automatically summarizing them into clear, actionable insights. This capability allows compliance professionals to quickly understand and implement necessary regulations without the need for exhaustive manual reviews. This can have highlighted significant benefits, such as a 75% improvement in compliance testing efficiency.

Download: Forrester's TEI study to uncover Resolver's 75% efficiency in compliance testing! DOWNLOAD THE STUDY!

Organizations must have robust data privacy measures and regularly review AI outputs to mitigate these risks, such as:

  • Ethical Considerations: Using AI in compliance requires adherence to legal frameworks and regulations. Ethical concerns also arise, especially regarding biases in AI models. Large Language Models (LLMs) can inherit biases from their training data, leading to unfair outcomes. Organizations must establish internal policies to address these ethical issues, ensuring responsible use for AI in compliance.
  • Regulatory Uncertainty: Different regions have varying standards for AI deployment. For example, the European Union’s AI Act and Canada’s Artificial Intelligence and Data Act (AIDA) set specific guidelines for AI use. Compliance teams must stay informed about these regulations to ensure their AI systems meet all legal requirements.
  • Integration Challenges: Integrating AI into existing compliance frameworks can be challenging. Issues such as data quality, system compatibility, and maintaining human oversight are critical for the safety of customer and organizational data and information. Integrating AI tools with current systems requires careful planning to avoid disruptions.
  • Overreliance on AI: Compliance professionals should use AI as a supportive tool, ensuring that human expertise guides the interpretation and application of AI-generated insights. For instance, generative AI has a “hallucination rate” of anywhere between 3-27% when summarizing facts. This issue occurs when the AI produces outputs that are factually incorrect but sound plausible, which is why it’s imperative to not completely eliminate the human element.

Discover Resolver’s AI-enhanced Regulatory Compliance Management Software

As we look ahead, the future of compliance is bright with AI. We’re not far off from AI predicting regulatory changes and automating updates accordingly. Future AI tools could take on new tasks such as real-time compliance monitoring and more intuitive data analysis.

Resolver offers comprehensive Regulatory Compliance Management Software to enhance your compliance programs. Stay fully informed thanks to integration with comprehensive regulatory content libraries like Ascent and Lexis Nexis and Resolver’s built-in regulatory summarizations.

Seamlessly integrate policy and regulation mapping, target efforts with compliance risk assessments, and gain instant insights with real-time compliance metrics. With Resolver, compliance teams can move away from tedious tasks, unlocking risk intelligence that drives enterprise resilience and business value.

In Forrester’s recent  Total Economic Impact™ (TEI) study of Resolver, customers surveyed reported $1.4M prevented in regulatory penalties and reputation risk. Resolver’s compliance management software helped to improve collaboration, data accuracy, risk analysis, and decision-making, reducing the likelihood of regulatory fines.

Ready to see how Resolver’s AI-enhanced Regulatory Compliance Software can transform your operations? Register to watch a short, commitment-free video walk-though today!

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