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Posted On:
December 21, 2023

LEARN Series 2: How AI-driven regulatory change management is revolutionizing compliance programs"

A Deeper Dive into your Regulatory Change Management Program – How AI transforms each step in the process

In the dynamic regulatory compliance landscape, where regulations constantly change and evolve, Artificial Intelligence (AI) emerges as a transformative force, offering innovative solutions to streamline regulatory change management processes

In the dynamic regulatory compliance landscape, where regulations constantly change and evolve, Artificial Intelligence (AI) emerges as a transformative force, offering innovative solutions to streamline regulatory change management processes. Among its many contributions, AI significantly enhances the mapping of regulations to policies and controls while empowering organizations with advanced horizon-scanning capabilities, supported by deep insights by answering questions and queries with lightning speed.

 Have a look at Blog 1 in this Series to understand the challenges, drivers and benefits of AI in Regulatory Change Management Programs in general

 First of all, let’s go over some definitions we will be using in our blog:

 Large Language Model (LLM) - A large language model is a type of artificial intelligence algorithm that uses deep learning techniques and massively large data sets to understand, summarize, generate and predict new content. The term generative AI also is closely connected with LLMs, which are, in fact, a type of generative AI that has been specifically architected to help generate text-based content.

 Natural Language Processing (NLP) - Natural Language Processing focuses on the interaction between computers and human language. It involves the development of algorithms and computational models capable of understanding, interpreting, and generating human language in a way that is both meaningful and contextually relevant. By leveraging linguistic and statistical techniques, NLP enables machines to process, analyze, and derive insights from vast amounts of natural language data, facilitating more effective communication between humans and computers.

 Let’s look at the main processes in a Regulatory Change Management Program, and how AI really makes a difference.

 Process 1: Anticipate Regulatory Changes with Horizon Scans

In the fast-paced and dynamic world of regulatory change and compliance, being reactive is no longer sufficient. AI introduces a proactive element through its horizon-scanning capabilities, enabling organizations to anticipate regulatory shifts before they occur. By continuously monitoring regulatory bodies and analyzing news sources, AI algorithms act as early warning systems, detecting signals of impending changes.

 Think of this: AI can review massive data set of regulatory changes related to a particular topic (for e.g. Legal age for consent in privacy) from multiple sources, identify obligations, map related articles and provide meaningful insights into organization context such as risk and compliance taxonomy, products, services and jurisdictions impacted)

 Why Do You Need this in Your RCM Program? This proactive approach has significant advantages: 

-   Organizations can stay ahead of the curve, gaining valuable lead time to prepare for and adapt to upcoming regulatory shifts

-   This reduces the risk of non-compliance and positions organizations as agile and well-prepared entities in their respective industries.

-   AI's ability to provide timely insights, based on conversational AI queries and questions, allows organizations to make informed decisions, navigate uncertainties confidently, and maintain a strategic advantage in regulatory compliance.

 Process 2: Analyze & Map Rules, Regulations and Laws to Policies and Controls

Being knowledgeable about a regulatory change is not enough. One of the critical challenges in regulatory change management is ensuring that organizational policies and controls are accurately aligned with the latest regulatory updates. AI addresses this challenge by automating the mapping of regulations to policies and controls.

 Think of this: AI systems can swiftly and accurately analyze extensive regulatory texts by using advanced technologies such as NLP and machine learning algorithms, parse thousands of data sources, and synthesize changes from multiple sources into a single natural language sentence, as well as provide a different analysis between existing and changing regulations. This process ensures that organizations quickly and precisely understand how regulatory changes impact their existing rulebook, as well as policies and controls.

 Why You Need this in Your RCM Program? Consider this:

The benefits of AI-driven mapping are manifold:

-   AI reduces the risk of misalignment, by pinpointing how changes affect the rulebook, policies, procedures, controls and risks – at a granular level - enhancing accuracy and efficiency across all compliance efforts.

-   Organizations gain a comprehensive view of how an obligation must change, allowing them to align their internal policies seamlessly.

-   AI mapping facilitates compliance and positions organizations to proactively address potential gaps and assess control efficacy to ensure a robust compliance framework that aligns with regulatory requirements.

Process 3: Identify, Assess and enable Close Loop Monitoring of regulatory changes  
Identifying, assessing, and managing rapidly changing rules, regulations, and laws poses a challenge in the landscape of regulatory change management. Organizations must ensure changes are made on time, despite the sheer volume and complexity of changes. Without a systematic governance process, important regulatory changes may be missed, leading to compliance risks and potential legal consequences.

-   Think of this: AI significantly augments and streamlines the process of identifying, assessing, and managing changes to rules, regulations, and laws with advanced workflow and action plans to align policies, procedures and controls to upcoming changes.

 Why Do you need this in your RCM Program? Consider this:

-   Closes the Loop: Establishing a systematic workflow with action plans ensures that the identification, assessment, and management of changes to align policies, procedures and controls to rules, regulations, and laws are not isolated activities.

-   Accountability: The incorporation of workflow-driven action plans brings accountability into the regulatory change management process to your compliance team members. Assigning specific tasks and responsibilities within the workflow ensures that each step is carried out by the responsible SME, reducing the likelihood of oversights and enhancing the overall effectiveness of the program.

-   Shared Audit Trail: The integration of action plans provides a shared audit trail for all stakeholders involved in the regulatory change management process. This shared trail not only enhances transparency but also facilitates collaboration by allowing team members to access, track, and contribute to the progression of tasks and compliance efforts.

 Process 4: Report and Answer Questions

In the intricate landscape of regulatory change management, one of the challenges lies in efficiently reporting and answering questions, particularly in discerning the policies affected by changes in regulations. This demands meticulous scrutiny of evolving regulatory frameworks, quick identification of impacted policies, and precise communication of these implications to relevant stakeholders. Traditional and outdated methods often result in delays, increased chances of oversight, and a higher risk of miscommunication, leaving organizations susceptible to compliance gaps and reputational risks.

 Think of This: AI significantly transforms the landscape of reporting and answering questions in regulatory change management by providing a swift, accurate, and streamlined approach. For example, Conversational AI can answer questions like – what policies and business units are affected by this regulatory change? What is the legal age of consent across our obligations and do our policies provide coverage for that?  AI systems can rapidly scan and comprehend rulebooks and policies to identify the specific policies affected by regulatory changes and generate detailed, easy-to-understand responses. The speed and precision of AI not only enhance the accuracy of information but also facilitate agility in responding to inquiries.

 Why Do you need this in your RCM Program? The benefits are significant: 

-   Agile: Rapidly respond to inquiries and changes in regulations with speed and accuracy, ensuring the organization stays agile and adaptable in the face of evolving compliance requirements.

-   Evidence: Provide concrete evidence on the impact of regulatory changes on specific policies, offering a transparent and auditable trail for regulatory compliance, internal assessments, and external audits.

-   Regulators: Enhance communication with regulators by promptly addressing inquiries and providing detailed information on how the organization is aligning with and adapting to regulatory updates, fostering a cooperative and compliant relationship.

-   Insights: AI ensures that organizations can promptly and comprehensively address questions regarding the impact of regulatory changes on their products, policies, procedures, controls and business units thereby fostering a more efficient and effective regulatory change management process.

 The Future Outlook of Regulatory Change Management Programs

As regulatory environments continue to evolve, the role of AI in regulatory change management is poised for further growth. The future may witness advancements in AI technologies, including improved natural language understanding, expanded data analytics capabilities, and more sophisticated predictive modeling. Organizations embracing these technological advancements will not only enhance their compliance posture but also gain a competitive edge in navigating the complexities of the regulatory landscape by:

·  Enabling Effectiveness: AI streamlines the gathering, organization, assessment, prioritization, communication, monitoring, compliance, and demonstration of good regulatory compliance practices. This aligns with the business driver to keep current with the compounding effects of regulatory change.

·  Improving Efficiency: AI optimizes human resources and capital budgets, consistently managing regulatory changes in a rapidly evolving regulatory and business landscape. This addresses the business drivers to reduce information overload, broken processes, and insufficient resources.

·  Delivering Resilience: AI enables the organization to find gaps in regulatory compliance and address these exposures before they hurt the organization. This enables the organization to ensure policies, controls, and processes stay aligned with requirements.

·  Accelerating Agility: AI facilitates quick adaptation and response to regulatory developments, providing a competitive advantage over competitors hindered by broken processes. This aligns with the business driver to understand the compounding impact of change across regulatory, business, and external risk landscapes.

 By promoting accuracy, efficiency, and strategic foresight, AI confidently enables organizations to navigate the intricate web of regulatory changes. As regulatory compliance becomes increasingly intricate, those organizations leveraging the capabilities of AI are better positioned to adapt, thrive, and maintain a proactive stance in this ever-evolving regulatory landscape.

 Summary Insights and More Resources on this topic

AI tools give compliance teams an advantage in transforming regulatory change management programs to thrive in a dynamic business environment and teams to connect and map changes to regulatory information.  They can, in days rather than weeks, draw conclusions, and take confident action in addressing changes that impact their organizations’ processes, policies, controls and risks.  By leveraging the power of AI, organizations can streamline their regulatory change management efforts, ensuring a more secure, compliant, and stable future.

4Crisk products: Regulatory Research, Compliance Map, Regulatory Change are revolutionizing the way organizations connect regulations with their business requirements.

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