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Harnessing artificial intelligence for managing risks

 
 
 

In today’s business environment, detecting and managing risks is becoming very complex, costly and time-consuming. But managing those risks – whether they are business risks, regulatory risks, cyber risks, financial risks or compliance and integrity risks – is essential, as the cost of failing to detect and efficiently manage these risks can be humongous.

Because of this, some companies are taking drastic actions to manage their risks in a more cost-effective manner in order to remain sustainable and profitable.

One of the main contributors to reduced productivity in many companies is the overdependence on human beings. Companies are racking up huge overhead expenses paying employees to do simple but time-consuming risk-management tasks.

To cut down this dependence on human resources, and therefore cut costs, companies are adopting processes driven by technological advancements using ‘the next big thing’ in compliance: artificial intelligence (AI). The fast-paced growth and innovation surrounding technology-enabled systems has allowed companies to take advantage of AI to assess, monitor, remediate and manage their risks for a reasonable cost, while at the same time increasing productivity.

One way companies are utilising AI is by removing human employees from call centres, hotlines, chatrooms and information desks and replacing them with virtual assistants. Virtual assistants are able to provide the same services as a human being, but at a fraction of the price of a salary. The other advantage is that they can respond immediately at any time of day, given that the intelligent robotic machines operate around the clock with no interruptions.

Scientific studies have proved that virtual assistants are now able to make human-like decisions with precision and, through the use of holograms, they are even able to appear as humans. Humans cannot be completely discounted in all of this, however, as the virtual assistants still need to be turned on, programmed to specifications and periodically serviced by human beings.

 

Industries actioning AI

Various service providers in different industries are already using AI in their processes.

For instance, embassies have AI-supported hotlines and chatrooms where visa applicants are attended to by virtual assistants and chatbots at any time of the day and in the language the applicant understands. These virtual assistants can guide the applicants through the visa application process just like a human visa officer would.

Educational institutions are using a combination of AI and augmented reality to offer interactive e-learning courses. Learners are able to interact with superimposed images in an environment that feels like a classroom from the comfort of their own home. Unlike in an ordinary school setting, learners are able to study at their own convenience and pace. They can interact with ‘virtual teachers’ and ask questions when they need to.

Dulles International Airport, Glasgow Airport, Dubai International Airport, Macau International Airport and Istanbul Atatürk Airport all now use virtual-assistant holograms to advise travellers what to include in their carry-on baggage and guide them on where to find their respective gates.

Several customer-service call centres are also manned by virtual assistants and chatbots. If a customer has a problem with a product, they can easily interact with a virtual assistant or chatbot to help them solve their problem.

Finally, financial services institutions are using AI to conduct ‘know-your-customer’ screening as well as monitor complex financial transactions. Conducting these screenings or monitoring the suspicious transactions often means following long trails of documents, which can take months or even years if done manually, so some financial services institutions are now adopting the use of AI to assist them with financial crimes compliance and anti-money laundering investigations.

 

How AI can be used in the compliance space

Border authorities around the world are increasingly using a combination of AI, the Internet of Things and biometrics to confirm people’s identities – even those that have undergone cosmetic or medical facial reconstruction. This same technology is available in compliance and can be used to ascertain the identities of interest targets, especially those on watchlists. Thanks to big data, it is now possible for compliance practitioners to use AI to run immediate searches of watchlists or blacklists. Another benefit of using AI-enabled systems for this process is that there is less chance of false-positive hits, as these are mainly caused by human error.

Using AI-powered hotlines, whistleblowers can report corruption and fraud without fear of retaliation or exposure. This instils confidence and assurance among whistleblowers who are afraid to report wrongdoing to fellow human beings because they fear that they may be recognised if they talk to people.

There are also smart solutions on the market that can monitor and analyse business risks using unique algorithms, then recommend steps to take to remediate any identified risks – all without engaging human beings.

Regarding ongoing monitoring, companies are deploying hi-tech solutions and game-changing technologies that can independently breeze through millions of online entries daily at supersonic speed then send out alerts to desktops or handheld devices when targets of interest are flagged. This is a tedious task that could not be performed at this rate by human beings.

Another use of AI in the compliance sphere is for the handling of sensitive data. Companies deal with enormous amounts of third-party data, some of which is highly sensitive and requires certain handling protocols, and cybercrime and ransomware are endemic. AI-aided tools and solutions can smartly handle sensitive data much better than an individual would, determining potential cyber threats and issuing alert prompts prior to an eminent attack – something humans are less likely to forecast in most cases. Moreover, intelligent machines can navigate through restricted jurisdictions or systems to obtain publicly- and legally-accessible data.

Amid all this buzz, it should be clearly understood that AI will work effectively only when it is deployed with several other innovations that are already on the market or are being developed. The compliance space, like many others, is changing very fast. Therefore, whatever risk-management tools you consider for your business, you must make sure that they are technologically up to date and conform with your risk appetite. Implementing a suitable AI-enabled compliance programme is not a straightforward process; it involves cultural change, design and implementation of procedures, and internal reporting processes. But, if well natured and utilised, AI can greatly help in assessing and managing compliance risks.


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Conclusion

Ideally reporting would always be done locally and in person, but in reality the more opportunities and avenues that are provided to employees to report (many of which can be anonymous) the more likely it is that issues will be dealt with in a timely manner, and the company will be better off for it.

Helping to properly distribute the subsequent workload through compliance, human resources, legal or other relevant teams will also grow the effectiveness of the hotline.

 
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