Compliance

Artificial Intelligence: The New Superpower for Compliance

By February 20, 2017 No Comments

By: Anant Kale

In our quest for business productivity and cost savings, compliance teams are all too often being given increasing demands to keep the organization out of trouble, but are not being allocated additional budget to achieve this goal.

It typically takes a high-profile violation or industry-wide regulations like FCPA, to kick-start the implementation of risk management and compliance programs. And even then, there’s resistance due to concerns about the cost for these new programs and the potential for additional bureaucracy, slower decision-making and operational inefficiencies. When given the choice, today’s business executive tends to err on the side of speed over process.

Today’s automated ERP systems are designed with the intention of streamlining information delivery and decision-making, as well as providing decision-makers with sufficient information to make informed decisions and then providing electronic decision-making and audit tracking. The best of both worlds: speed and process accuracy, plus compliance.

However, reality is far different. Business decision-makers are pressed for time and have to act quickly. There is simply not enough time to review every piece of information – from paper documents and electronic records to contracts and other collateral – and understand all implications, let alone enough to conduct additional external research and retrieve historical information, including industry-wide comparisons and analytics. The result is that managers routinely approve requests without this background diligence, trusting that their employees are doing the right thing.

This gap in controls is something many companies try to fill by setting up large audit teams (often offshore) to review and manage business processes like accounts payable, expense reports and procurement. However, throwing more people at the process is not eliminating the problem. Companies find their compliance violation detection rates are very low, with most of the team’s time spent on rudimentary checks and “following the process,” while failing to proactively detect real violations. When an issue does crop up, it’s usually in the form of a high-profile escalation, leaving the compliance team to clean up after the fact.

Systemized processes and ERP systems are absolutely essential for basic business workflows. However, new advances in robotic process automation (RPA) and artificial intelligence (AI) can dramatically improve their effectiveness. By automating the activities of human review, research and decision-making, AI can improve compliance effectiveness and reduce costs without sacrificing operational efficiency.

How does AI actually improve business processes?

It begins with “Natural Language Processing” (NLP) – technologies enabling the AI to have an understanding of written text and determining its meaning within the context of human language. As you can imagine, this is fairly difficult. It’s critical that the NLP be accurate. Today, this means RPA AI is most effective when restricted to a specific business process or domain. This enables the AI to go deep in its understanding and allows the AI’s developers to build extensive capabilities for the AI to research and understand external information sources – from proprietary databases to web and social information – just like a human researcher would.

Having artificial intelligence-powered robots is like having a team of hundreds of people, all equally trained and with the time and resources to read through and understand every piece of available information – from paper documents and pictures to contracts and emails. These robots also have the ability to seek out additional information by researching millions of data points on people, places and businesses in data sources external to the company, as well as historical trends, laws and policies – all performed in a matter of seconds.  By combing through immense amounts of data, the robots are able to learn and identify patterns and to detect problems.

AI empowers rather than replaces decision-makers

By embedding artificial intelligence-powered robots within their core business processes, organizations don’t have to modify or replace existing gatekeepers and controls.  Rather, they empower these individuals to make the right decisions – from both a business and compliance point of view.

For example, imagine a Sales VP who has to approve a planned entertainment expense in Asia, where the company wants to do business. The plan includes inviting business prospects and influencers. The Sales VP wants to quickly give a go-ahead for the expense. Meanwhile, the AI robot embedded within the approval process also analyzes the information provided to the VP and conducts its own research to immediately warn the compliance team about a potential FCPA violation. How did this happen? Because the robot read through the names of the people on the event invitee list, then went and researched each one of them by combing through newspaper articles, government directories and social networking information. It found one of the individuals to be a politically exposed person – with whom business dealings could lead to potential violations of FCPA laws. All of this happened in real time while the decision to approve was being evaluated by the Sales VP, enabling her to avoid a business liability without slowing her decision-making process.

That’s the power of real-time compliance that can be achieved today through artificial intelligence. Artificial intelligence-powered robots have the potential to disrupt how companies conduct back-office business operations, bringing in new levels of productivity improvements, cost efficiency and compliance and risk mitigation.

 

Anant KaleAnant Kale is Co-Founder and Chief Executive Officer of AppZen. Anant is responsible for the development the company’s vision, building the team and execution. Anant has more than 15 years of experience in developing complex software. Prior to AppZen, he served as Vice President of Applications at Fujitsu America, where he was responsible for strategy, product management and delivery of Fujitsu’s mission-critical applications and infrastructure for enterprise, mobile and commerce. Anant earned an MBA from the University of Mumbai in Finance and Engineering.

Published by Conselium Executive Search, the global leader in compliance search.  
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