Artificial intelligence technology is now widely impacting business strategy, daily life, commerce, data governance, and corporate compliance. All areas that could greatly benefit from big data insights.
The evolving capabilities of AI also pose many compliance and operational challenges. These include ethical use of analytical models when applied to sensitive or personal information, and security and privacy controls for ever-growing data pools.
Employee use of personal devices, collaboration applications, and temporary messaging tools for business communication increases data volumes, information governance, and compliance team access to information or activities that may put the organization at risk. affect.
As organizations leverage big data and analytics to accelerate their business goals, regulators are also leveraging these resources to support enforcement. The Department of Justice, Federal Trade Commission, and Securities and Exchange Commission recently stepped up their hiring of private sector talent with experience in applying technology to compliance and leveraging data to understand patterns and behavior.
With more agents understanding this area, regulators are empowered to monitor and implement guidance on the effectiveness, accuracy, and sophistication of corporate compliance programs.
main problem
Legal and compliance teams first need to understand how big data is being used within the organization (in and out of control). Data hygiene is essential to determining and cataloging communication tools, the governance controls that apply to them, the associated data privacy guardrails, and how communications are accessed, stored, and queried.
With this clarity, establishing strong data and information governance, as well as policies and procedures, becomes essential. A technical function must be able to retain and dispose of data in accordance with its policies and to authenticate, protect, retain or store that data. A strong governance framework also ensures that data management, and the subsequent application of analytics to the data, aligns with the organization’s compliance risk profile.
When implemented, AI enters the equation in powerful ways. Using analytics and AI in specific areas can accelerate and enhance compliance by identifying key details and revealing anomalies in the noise of massive data stores. Such programs ultimately provide a return on investment through risk reduction and insights that improve compliance effectiveness and coverage.
Investing in prevention
Legal and compliance teams often compete with other business areas for resources and budgets for new technologies. As such, you should clearly prioritize which programs and tools most effectively meet your compliance needs.
Most organizations already have policies, training, whistleblowing procedures, and data hygiene controls in place. But today’s data is more complex and poses greater regulatory risk than ever before.
New laws, standards, and regulations require timely reporting and response when problems arise, and reward or penalize businesses accordingly. In this environment, organizations should prioritize more sophisticated efforts that support prevention and response.
AI Can Navigate Patchwork Regulations
Companies are often forced to adopt the strictest forms of compliance to simplify their operations in global markets. However, jurisdictions with lower regulatory requirements may also be overly risk-averse.
AI offers a range of promising solutions. Used judiciously, these enable compliance functions to proactively use data to avoid risks and identify problems. Similarly, analytical models can be designed to monitor communications for red flags that indicate fraud or other behaviors that increase risk.
These are the main areas where companies could be fined globally, and responsible individuals could face personal criminal penalties. Issues can be effectively identified quickly, cost-effectively, and compliance teams can respond, investigate, and mitigate.
Additionally, AI as a tool for monitoring compliance allows organizations to adopt different strategies in different regulatory environments without fear of non-compliance. A variety of compliance regimes allow you to maximize your potential when it’s right.
Organizations new to big data and AI can start by implementing a pilot program in the context of investigative or eDiscovery. This is how you start testing the behavior of the tool and its output. Findings from these use cases can uncover markers of fraudulent or risky behavior and enhance compliance programs.
technical obligations
Legal and compliance teams have the difficult task of monitoring big data and investing in AI to support proactive compliance and communications oversight. This is done while navigating the internal employee culture and change management.
Employee attitudes towards compliance controls either reinforce or undermine the program. Leadership support has a significant impact on the success and optimization of AI investments that enhance compliance.
Leaders should add another task to their plate to stay ahead of the risk curve: advocate for alignment between compliance needs, business objectives, and corporate culture while embracing the role of AI. .
Compliance teams don’t have to be technical experts, but they should be able to assess employee behavior and identify tools that can enforce compliance goals. If necessary, compliance leaders should engage professional consultants.
As with all high-impact technologies and applicable laws, corporate compliance departments need to look at AI holistically. Compliance teams should strive to build a broad community of AI learners and adopters, invest in technology that aligns with corporate and compliance goals, and use AI in ways that foster trust and transparency.
This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., publishers of Bloomberg Law and Bloomberg Tax, or their owners.
Author information
Angeline Cheng is an attorney at DLA Piper, a cyber and national security attorney with experience as General Counsel and Chief Compliance Officer.
Al Park is the Senior Managing Director of the Technology segment at FTI Consulting, specializing in overseeing technology solutions to address risk and compliance for global enterprises and enterprises.
Ilan Scherr is an antitrust attorney with over 20 years of experience, executive director and founder of Aiscension, which uses artificial intelligence to identify and manage risk.
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