In this multi-part blog post series, I am exploring the increased use of technology to continue to drive the performance of corporate compliance programs. I am considering the use of Artificial Intelligence (AI) in a best practices compliance program and its collaboration with the compliance professional. Yesterday, we reviewed what the compliance practitioner can add to an AI system. Today, I consider what AI can bring to the compliance professional and that adds ROI value.

In a Harvard Business Review (HBR) article, entitled “Collaborative Intelligence: Human and AI Are Joining Forces”, H. James Wilson and Paul R. Daugherty explored how companies are seeing and using not simply the intersection of AI and business but the collaboration of AI and business to “reimagine their business processes, focusing on using AI to achieve more operational flexibility or speed, greater scale, better decision making, or increased personalization of products and services.” That last sentence sounds like a good goal for every compliance program to strive for going forward. This also leads to my observation that AI will not replace compliance for, as the authors make clear, “most activities at the human-machine interface require people to do new and different things and to do things differently.” They end their piece by stating, “the lesson is clear: Organizations that use machines merely to displace workers through automation will miss the full potential of AI. Such a strategy is misguided from the get-go. Tomorrow’s leaders will instead be those that embrace collaborative intelligence, transforming their operations, their markets, their industries, and—no less important—their workforces.”

There are three general ways AI can expand the reach of a corporate compliance function: (1) AI can amplify compliance strengths; (2) AI can interact with compliance customers, employees, third parties and other stakeholders, thereby lengthening out the reach of compliance; and (3) AI can extend out compliance capabilities.


The authors note, “Artificial intelligence can boost our analytic and decision-making abilities by providing the right information at the right time.” This amplification is further enhanced through the iterative nature of the process, as a smart machine can learn and evolve through additional information digested. In the compliance realm the obvious place would be in review of third parties contracted to a company through the Supply Chain. In most multi-national organizations subject to anti-corruption laws, such as the Foreign Corrupt Practices (FCPA), the number would be many, many thousands; perhaps even hundreds of thousands. Without some manner to winnow this number down, the task for compliance practitioners is almost overwhelming. However, this is not true through the use of AI, which can review literally hundreds of thousands of third parties with appropriate parameters. Further, the iterative process is where the ‘smart learning’ comes in and the AI will make the process more and more efficient.


I find this to be one of the more interesting areas. Consider AI communicating with an internal reporter in their native language and providing an English transcript back to the corporate compliance function in the United States. AI can handle native and natural language conversations, provide answers to Frequently Asked Questions (FAQs) through stores of data and even analyze a caller’s voice and flag for follow up if required. Even if AI cannot handle such a call, it can be turned over to a compliance representative for follow up and then AI can learn from its interactions with the compliance professional. Through use of AI in this manner, a compliance practitioner can focus on addressing more complex compliance issues.


Typically in this arena, AI is considered for its potential safety uses, most often cited in manufacturing scenarios. However I see this concept would also be well-suited to compliance, particularly through the concept of the digital twin. The digital twin is a concept from manufacturing which allows a designer to create a computer model of a process or piece of equipment and test it to failure. The stresses put on an airplane wing can be much more safely tested on the computer than even in a wind tunnel.

Vince Walden wrote about this concept in his article “Profit and Loss of One” in Fraud Magazine. Walden and his colleagues at Ernst & Young worked with General Electric (GE) to “use digital twins to analyze and simulate real-world conditions, respond to changes, improve operations and predict failures before they happen.” They did this by creating a more detailed risk model that GE business development team members faced and then used the digital twin concept to pressure test to see where failure might occur. Armed with this knowledge, the compliance team was able to deliver a risk management solution to individual GE employees based upon an assessment of their individual risk.

This concept moves into the area of what Secretary of Defense Donald Rumsfeld once called “unknown unknowns”. It allows a company to move far beyond even data mining to find associations. This type of use of AI is not simply about seeing patterns and correlations in data, it is much broader as it is about discovering causal links. From there, a compliance professional can step in and take a much deeper dive if required. This is identification of red flags at almost a meta-level, moving compliance into the truly prescriptive role which is the next gold standard in compliance.

Tomorrow we will combine all these concepts and see how AI might move the corporate compliance function forward.

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© Thomas R. Fox, 2018