AI is ready for Compliance, and Compliance is ready for AI - the ROI is clear.

Introducing our Author

Shwetha Shantharam, AVP and Product Head at 4CRisk.ai, with more than 20 years’ experience in software, and has specialized in AI-powered products for regulatory, compliance and risk teams. She joins us in this blog, to review the ROI of AI-powered products, agents and co-pilots for your Compliance program.  

First Off… Small Specialized Language Models vs Large, Public LLMs

How many of your Compliance specialists wonder, how do I use AI?  Like so many others facing this question, the question for organizations is not "should" we implement AI, but "when" and "how”.  AI-powered software solutions will become a necessary mandate for the future effectiveness of Compliance programs.  However, not all AI-powered compliance technology solutions are the same. Leveraging large language models (LLMs) is not appropriate nor recommended for most firms. LLMs reside on the public domain, which means organizations are sending their confidential data to the public domain, which creates unnecessary risks and exposures.  Additionally, LLMs are notorious for hallucinations and inherent bias causing inconsistent results that need to be checked. 4CRisk provides a private domain-specific, specialized language model with our products that give you the confidence that your data remains private within your firm.  

Key Challenges for Regulatory and Compliance Teams

Now, let’s tackle some of the key challenges, and how AI can help.  

• Regulatory Compliance – Your Always On Analyst - AI will scan the horizon, read regulations, rules, laws and standards, and guidance - merging similar obligations across authority sources, and create a library of obligations and even AI-generated rulebooks.  It will do this for both structured and unstructured information – 50 times Faster than a human can.
• ‍Analyze your Compliance Framework. AI will read, extract, parse and analyze policies, procedures and controls from complex documents, up to 50 x Faster than a human can. It will use this analysis to understand where gaps in your compliance framework exist.
• ‍Understand and Remediate Gaps in Your Coverage - AI will assess the efficacy of your controls against any additional requirements associated with a regulatory change. It will interpret the intent of change, and map changes onto your compliance framework, show gaps and even suggest language to close gaps. AI will go beyond simply organizing information…. artificial intelligence technology will interpret and suggest key areas of focus and priority, thereby accelerating your everyday work.  

Current legacy solutions are typically siloed in nature, whereas AI cross silos to help professionals rapidly analyze large volumes of data. AI enables better management of compliance functions and can augment and support the end-end process.  

The Overall ROI of AI-driven Regulatory Change and Compliance

4CRisk provides ROI Calculators and eBooks to walk you through the process calculating quantitative value for your business case (see the links below).

Getting the right Al initiatives funded quickly to take advantage of the astounding potential of 4CRisk technology requires a solid business case. Basic questions need to be answered: have we chosen the best use cases that will deliver benefits? Will our people, process, and technology - emerge smarter and better equipped to embrace more Al use cases with 4CRisk? Have we measured the benefits, both qualitative and quantitative, along with costs, to create a cumulative ROI over a reasonable timeline? Have we identified out the risks of this initiative, and a plan to contain them?

The return on investment for AI implementation can also be assessed across several qualitative dimensions:

• Enhanced Accuracy and Consistency: AI-driven compliance technology helps ensure consistency when applying compliance rules and regulations to your internal compliance framework. In contrast to manual reviews, which may vary in accuracy and interpretation, AI algorithms apply predefined rules consistently across all customer profiles, reducing the risk of errors and compliance breaches.‍
• Continuous Monitoring and Alerts: AI can continuously monitor external business data, both structured and unstructured, for regulatory changes, compliance gaps, and risks.
• ‍Increased Efficiency: AI can process and analyze data significantly 50 times faster than manual review, enabling compliance departments to handle a larger workload faster. This increased efficiency saves compliance staff time, allowing them to focus on more complex or high-priority tasks.
• ‍Reduced Personnel Needs: With AI handling routine functions, organizations may be able to streamline their compliance team or reassign staff to more strategic roles. This can lead to cost savings by optimizing human resource allocation and reducing the need to hire additional personnel to handle increasing compliance demands.
• ‍Lower Error Rates: AI solutions are less prone to errors or oversights than manual processes. By reducing the risk of mistakes, organizations can avoid the potential financial and reputational costs associated with compliance breaches or regulatory penalties.
• ‍Risk Assessment and Screening: AI algorithms can analyze the extracted data, cross-referencing it with various databases and watchlists to identify potential risks or red flags. This automated risk assessment significantly reduces the time and effort needed to review and screen each customer, allowing compliance teams to focus on high-risk cases.
• ‍Improved Scalability: AI-driven compliance systems can quickly scale to handle larger volumes of customer data without significant increases in costs or staffing requirements. As the institution grows or faces increased compliance scrutiny, AI can accommodate the dynamic expanding workload more efficiently than traditional siloed manual processes.

What May Be Different About Building a Business Case for Al initiatives?

• Magnitude of Change: What most people are still amazed by is the magnitude of change. Al brings a levels­ of-magnitude-faster analysis: 10, 20 or 50 times faster than a human being. Therefore, an Al business case must account for differences in speed, accuracy and the need to collapse and smooth processes in completely new ways.
• ‍Human in the Loop reviews: Al data and resulting information can be profoundly more accurate and highly comprehensive in its analysis, however, teams still need time to review results, to ensure people understand the Al analysis and how to respond to it.
• ‍More Stakeholders: More teams may need to buy-in to clearly understand at what points in the process Al can be leveraged. IT needs to determine how affected systems can handle the new inputs and outputs; Finance needs to take a realistic look at the costs and benefits across your organization.
• ‍Be Prepared for Significant Changes: You may find some astounding effects: Legal and Compliance are no longer the bottleneck. IT and Security reviews go faster than ever. Audit teams will find fewer issues with fewer people. Teams are released from mundane admin work to provide high-value analysis.
• ‍Costs to transform people and processes: These may be more than you are used to with legacy systems where change is incremental. Al requires dynamic champions, retraining front-line staff and constant tuning. Al-smart resources are in high demand and may be more costly.
• ‍You may need support for a longer period: Al products evolve rapidly and become available with new features overnight on Saas platforms. Plan carefully and build in buffers.
• ‍Selling the Business Case: The best way to prove the case is with a short evaluation showing numbers before and after. Make it compelling, realistic, powerful and measured against expected results.
  

At 4Crisk.ai, our private, specialized language models and AI-powered regulatory and compliance technology help address your regulatory and compliance challenges, streamline compliance processes while reducing compliance risk exposure.  

With the constant expansion of regulatory requirements and increasing severity of punishments, maintaining effective compliance has become an absolute necessity within the modern business world.  4Crisk is here to help you along the journey toward compliance maturity!

Check out these related blogs and resources  

• https://www.4crisk.ai/post/the-business-value-and-roi-of-rcm-how-ai-transforms-each-step-in-the-process ‍
• https://www.4crisk.ai/post/compliance-three-key-actions-to-leveraging-ai-successfully-in-2025 ‍
• https://www.4crisk.ai/whitepapers/roi-and-business-case-for-ai