Five Ways Regulatory Change Management is Transforming with AI

Introducing Our Author

Venky Verrapotu, CEO and Co-Founder at 4CRisk for the last 5 years, has over 20 years of experience in building high performance GRC technology platforms and more importantly onboarding hundreds of customers onto the platforms.  In this blog, he reviews with us five top ways AI transforms the Regulatory ChangeManagement process for businesses.

Why Regulatory Change Management is transformed by AI.

Regulations, rules, laws and standards are in constant flux. Thomas Reuters’s Regulatory Intelligence unit reported that in 2022, they captured over 61,000 alerts from more than 1,300 regulatory bodies, averaging 234 compliance updates each day. With business uncertainty mounting in global trade, supply chains and cyber threats, we can expect organizations to apply continued focus on keeping pace with regulatory changes. For many organizations, AI promises a level of transformation that can flip the script, turning what has been traditionally a manual effort into a competitive advantage. Here are five ways to transform Regulatory Change Management with AI that your teams need to consider.  

1. Scan the horizon for upcoming regulatory changes  

The first step in the regulatory change management process is to conduct a horizon scan. This involves proactively tracking potential changes in regulations, laws, standards and policy initiatives, including understanding new guidance and fines by reviewing alerts and notifications from agencies and regulatory sources. These sources can range from government websites and publications providing information on proposed legislation, new regulations, and policy changes, through to regulatory news outlets that provide updates on changes in specific industries, to professional and industry associations that provide information and analysis on regulatory developments. Horizon scans performed manually can be a lengthy process, subject to errors and prone to stale information.

• AI can help by regularly scanning these sources in minutes, correlating and comparing old versions to proposed changes to clearly outline upcoming changes. Some AI products can go so far as to extract and parse large and complex unstructured and structured data, identifying specific impacts on your organization’s current obligations.  AI can also generate clear summaries and detailed synopses of regulatory updates, helping teams quickly grasp the implications. AI scan analysis can be done up to 10 times faster than manual methods, freeing your teams to respond only when it is necessary to review upcoming changes.

2. Conduct an Applicability Analysis to see if a change could affect your business  

The next step in the process is to perform an ‘applicability analysis’ to see how a change applies to your organization, if at all. This involves constructing a ‘Difference Analysis’ between the current and upcoming versions, to the requirements of your organization and its jurisdictions.  In this step, it’s critical to flag risks, business units, products, services and partners that may be affected by the change. This is needed to filter out the noise and help with prioritization before taking a deeper dive into just what elements of your business need to be tweaked.  

• AI can help by parsing and generating a Difference Analysis in minutes, ingesting relevant documents, parsing them at a granular level, and flagging them as actionable or non-actionable.  AI can add tags that provide more information on type and matter. This initial analysis can be done up to 20 times faster than manual methods, freeing staff to review as the human-in-the-loop, to confirm what the organization really needs to look more deeply into as the change does, in fact, apply to the business.  

3. Conduct an Impact Assessment to see what specific processes, policies, procedures and controls need to change

The next step in the process is the deep dive. This involves a more formal assessment to discern the real impact of changes in regulations, rules, laws and standards on each of your business processes, potentially extending to internal policies, contracts, procedures and controls. In many organizations a Law Memo needs to be prepared, presented and discussed with affected parties.

• AI can help by generating an Impact assessment mapping relationships such as business unit, function, product and service to each element of the change, in minutes.   AI can help prioritize actions to align each change to your internal artifacts. AI can summarize prioritized changes and support legal and compliance reports, for example, by generating Law Memos and Action Plans. All this can be completed up to 30 times faster than manual methods, freeing your lawyers and subject matter experts to review and confirm the AI analysis and results.  

4. Manage the change to completion, with the right evidence along the way  

The next step in the process is making the changes needed, and in some cases, sitting with regulators to show evidence of the change in a regulatory exam. It’s critical that issues and action plans are well-documented and supported by appropriate evidence by the professionals who were subject matter experts on the change.  This is good old-fashioned program management with all the follow-ups and reporting required in a complex web of actions that can feel like a never-ending story.  

• AI can help by generating workflows for actions prioritized to close gaps and being a central repository to analyse status on actions flowing from your Issue Management systems of record. AI can auto-track remedial actions, compare documents such as policies and controls based on gaps from the impact analysis, to provide summarized and detailed evidence. This AI work can reduce the oversight burden, making the process up to 5 times more efficient.

5. Gain Competitive Advantage and agility by knowing your options  

The final step in the regulatory change management process is reaping the rewards of being proactive.  

• By leveraging AI to accelerate well-defined, agile steps, your teams at both the program and project levels will be able to move faster to align your business operations with regulatory obligations.  In a world where businesses must quickly adapt to new suppliers across multiple geographies, streamline and automate processes, being able to respond to more demanding regulatory requirements is table-stakes for agility.  The ability to know your options and show evidence can mean the difference between going to market more rapidly or taking advantage of new opportunity before a competitor, who may be less certain of their regulatory options and obligations, can.  

Summary

AI has the power to be a game changer for automating regulatory, risk and compliance programs. By harnessing its analytical power, your teams can work 10, 20, or even 30 times faster—quickly identifying upcoming regulatory changes, new guidance, and other critical information needed to operate more effectively  

Check out these related blogs and resources  

• https://www.4crisk.ai/post/regulatory-intelligence-how-the-regtech-sector-is-being-transformed-by-ai-in-regulatory-risk-and-compliance-programs

• https://www.4crisk.ai/whitepapers/revolutionizing-regulatory-change-management-the-power-of-ai

• https://www.4crisk.ai/post/how-ai-powered-horizon-scans-slash-the-time-you-spend-keeping-up-with-regulatory-changes