What AI-Powered Regulatory Intelligence Products and Solutions Really Need to Do

Introducing Our Author

In this blog, Shwetha Shantharam, AVP and Product Head at 4CRisk.ai, joins us to outline the real difference that Trustworthy Gen AI and Specialized Language Models can make to Regulatory Intelligence products. With more than 20 years’ experience, Shwetha has focused the last 5 years on powering up products for regulatory, compliance and risk teams with AI.  

1. What is AI-powered Regulatory Intelligence?

Over the past year, we’ve heard a lot of discussion around AI and RegTech and Regulatory Intelligence. We’ve heard that Gen AI is not safe for enterprises when working in regulatory compliance, risk management and cybersecurity, since the data used in prompts is open to public Large Language Models, such as those used by ChatGPT, Gemini and others.

So, what is the solution? How can organizations benefit from AI yet maintain the privacy of their data? The answer is simple: ensure your Regulatory Intelligence products utilize BOTH Trustworthy Gen AI and private, Specialized Language Models (SLMs).  A good indication is if the product has been recognized by the industry as a leader in both AI and RegTech. (FYI, 4CRisk in on both the RegTech 100 and AI Fintech100 lists!)

AI-powered Regulatory Intelligence can bring your organization amazing efficiencies and competitive advantage; so, don’t miss out. This blog covers the Trustworthy Gen AI concepts you need to know about when refreshing your RegTech stack to ensure it is AI-future proof.

2. What is Trustworthy Gen AI in Regulatory Intelligence?

Three things really separate trusted AI products from those that are not trusted.  

First, look for Trustworthiness in security, explainability and transparency. Trustworthy product managers can describe their AI Architecture, explain its reasoning, share it with you, and support it with explainable confidence scores, evidence linking, and methods that are used (e.g., LIME, SHAP, attention mechanisms) that are needed for audits/regulators.  These products utilize zero-trust security principles, support audit trails and adhere to AI regulations and standards.  

Second, understand the product’s AI Model Governance lifecycle.  In particular, look at the steps that are taken during data sourcing, model development and testing to identify and mitigate potential biases.  Product managers should be able to provide fairness metrics, diverse data sourcing, bias detection tools, and testing across demographic groups if asked. You want to see if their methods include continuous validation to maintain data accuracy, quality and relevance over time. The governance process and policy should outline steps for data clearance and acquisition, pre-processing and tokenization.

Third,  Trustworthy Gen AI product managers can attest to their Model’s Performance – how they are maintained, updated (retrained), and validated over time as regulations and language evolve.  You want to make sure the product has a frequent retraining program and monitors for model drift.

3. How are private, Specialized Language Models used in Regulatory Intelligence?

Small/specialized language models are curated and tuned on a risk, compliance and regulatory corpus, with the proven AI model governance and processing steps that we reviewed above. They are private and validated specifically for the Risk and Compliance domain. They avoid the use of public LLMs for training and can ensure IP is not violated as the information comes from certified authoritative sources.  SLMS are much smaller (like, 10% or less!) than LLMs and, as a result, are far more efficient and accurate.  An organization’s data stays within its virtual walls and is never used to train a public LLM.

4. How Are AI-specific tools and methods used in Trustworthy AI-powered Regulatory intelligence?

Here, it’s important to understand how AI tools such as ML/NLP, RAG and classification are actually being used, to allow your enterprise to reap massive benefits.  Does the product use AI to solve challenges in regulatory horizon scanning, rulebook curation, obligation management, assessments and gap analyses? Understand the specific techniques used and their direct application to regulatory change subtasks, including synopsis generation, enterprise compliance taxonomy mapping, obligation extraction or applicability assessment.  

Understand how AI is used to convert unstructured data into structured formats from multiple format types.  AI can parse and correlate massive volumes of information to provide compliance insights that are buried in unstructured data.  Also, ensure the product provides intelligent, curated information from content scans across multiple sources and formats, including regulatory bodies, jurisdictions, news, standards and guidance.  

5. How is Human Oversight incorporated into the regulatory and compliance management business process?

A product that incorporates process steps where professionals can verify, collaborate on results, and revise is going to be more trusted by its users. Human oversight and feedback is vital and can help ensure AI-generated results are reliable, accurate and build trust.  

Summary

Leveraging Trustworthy GEN AI, Specialized Language Models and proven AI methods like ML, NLP, and RAG will help you keep your RegTech stack AI-future proof.  AI helps your team keep pace with the velocity of change across all applicable rules, regulations and laws (RRLs) while mitigating compliance risks by aligning policies, procedures and controls with required changes. Insights from AI analysis reveal trends, inform strategy, improve time to market, competitive advantage and differentiation.  

Check out these related blogs and resources  

• https://www.4crisk.ai/post/five-ways-regulatory-change-management-istransforming-with-ai

• 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/post/what-leaders-should-consider-when-buying-ai-powered-regulatory-change-management-solutions
  

‍