Deploying AI in Your Business? Don't Forget This Department AI and other advanced technologies play a critical role in augmenting compliance processes and workflows.

As data sources proliferate and regulators expect companies to screen relevant risk areas, business leaders are leaning on artificial intelligence technology to help lighten the load. That's for good reason: AI can supercharge the compliance process.

Many companies believe more is better when it comes to due diligence. But trying to track every news article, social media post or regulatory update concerning every customer or partner leaves many compliance professionals drowning in data, or worse, missing critical findings that require further actions.

At the same time, regulators are expecting companies to screen against much broader categories of risk for potential partners. For example, there has been growing concern over ESG risks that arise from third-party relationships. In light of these challenges, AI and other advanced technologies play a critical role in augmenting compliance processes and workflows.

Related: This Often-Overlooked Department Deserves a Seat at the Decision-Making Table

How AI benefits the compliance department

Artificial intelligence is rapidly evolving to help businesses highlight the pieces of meaningful information that can inform a compliance decision. One of the key components is machine learning, which learns from data and identifies patterns. These learning-enabled systems can help compliance departments move beyond simple keyword searches to retrieve smarter and more relevant results.

They can also help departments weed out duplicate data, which often accompanies high-profile incidents involving a customer or partner. Other advanced technologies, such as natural language processing (NLP) and sentiment analysis, are capable of processing and deciphering human languages. With these technologies, companies do not need to worry about missing important findings in foreign languages or failing to catch a third party's name in non-Latin characters.

AI can also be utilized to build rule-based systems and automate workflows to streamline compliance processes. For example, once a new third party is added to the system, a compliance questionnaire will be automatically sent and flag any potential risks for review, followed by a database screening. If there is any risk identified from the screening, the results will be flagged for review and trigger other follow-up actions. AI compliance technology can funnel these reams of data into interactive business intelligence, producing periodic reports of issues that should be escalated.

But while AI is a powerful tool for these departments, companies have to be realistic in their expectations of what the technology can actually do. That's not just important in setting goals. Regulators will not look kindly on a compliance department that leans too heavily on the automated part of a due diligence operation, especially if the company doesn't follow up on the red flags the system produces.

Related: What Your Company Gets Wrong About Compliance

How to leverage AI in the compliance department

For starters, AI doesn't obviate the need for a human compliance staff. It's better to think of AI as a tool that can tackle repetitive, administrative challenges, freeing up staff to focus on more complex and creative projects.

Companies tend to think of AI as a panacea, but for all their computational might, AI systems are dependent on the competency of the humans who set them up. AI is powerful because of its ability to learn from past data. In order to leverage AI, organizations need a well-developed process in place. A lot of companies have third-party data or processes stored using multiple systems, resulting in poor data quality and inconsistent patterns. Successful AI implementation requires first consolidating this data and properly defining internal processes.

It is also important to make sure datasets are not biased. For example, if a dataset does not include any findings on whether a partner is a politically exposed person — potentially susceptible to bribery or corruption — the system will not be able to learn from and highlight such a risk going forward.

Lack of talent is another challenge to AI implementation. AI solutions require considerable resources to continuously train models and modify algorithms. With AI's popularity continuing to grow across many industries, workers possessing skills and knowledge in AI will be in high demand. Companies that want to be competitive will need to find ways to entice these AI experts to join their operations.

AI has immense potential to help companies build resilience and make their compliance programs more efficient. To accelerate its adoption, organizations must design strategies for how AI will solve specific problems. If implemented properly and used pragmatically, AI can buttress a scalable and effective compliance program.

Isabel Yeung is managing director of Blue Umbrella, a global compliance technology company.