As a part of the five-part podcast series sponsored by Hanzo featured this week on the Compliance Podcast Network, I was joined by Keith Laska, Hanzo Chief Executive Officer (CEO), to consider how the use of AI in investigations improves the workflow and processes around solving complex problems that compliance professionals experience when work around data.
Laska related that it is one of the things “that I have a lot of time to think about in planes, trains, and automobiles.” He noted, “it comes down to this one prevailing challenge that has a ripple effect throughout an organization, as humans, we create and produce new data faster than we can process and understand it.”
He further explained, “right now, literally in any office across America, millions of new pieces of unstructured web data are being created with every keystroke by every employee. This is from their website traffic, to their social media activity to their chats and exchanges in team collaboration tools and via email. There is an essentially an endless river of data which is flowing with information.” The difficulty within corporate compliance and legal functions is managing and understanding data across its lifecycle, understanding the risks and in using the insights from the data. There are opportunities that exist within that data which have not been fully embraced and operationalized. He concluded, “progress is being made on solving these problems and addressing these challenges head on”.
We then turned to some of the specific challenges and opportunities that technology creates for compliance teams. When you talk about embracing and operationalizing data within the corporate compliance function Laska said, “I think it comes down to building technology that solves problems as they organically appear and evolve within an organization.” Moreover, using AI and machine learning as a part of the solution to processing and controlling that data with the scale and speed what is needed. He cautioned that it is not “a magic bullet that automatically fixes everything nor is all, but it’s not AI and tech created equally”.
Yet even the DOJ is elevating their expectations around how compliance teams use and leverage data. The recently released Evaluation of Corporate Compliance Programs (2019 Guidance) suggested that compliance teams should leverage the wealth of data they collect to identify any patterns of misconduct and compliance weakness, and also that they should be receiving funding and budget to improve mechanisms around the processes of conducting and reporting on investigations.
We next turned to how this approach is helping not only litigation and legal professionals, but the compliance professional to use the information that is publicly available to help not only measure your risk, but actually manage that risk going forward. Laska related that the mission of Hanzo is to help companies be proactive about reducing active risks, whether those be in the litigation, reputational, compliance arena or elsewhere. He stated, “according to Dr. Michael Palmer who wrote a fantastic paper on litigation risk management, where he found organizations spend up to 33% of their operating profits on litigation. It’s about $23 billion per annum among large US corporations. So obviously companies spend a lot of money in litigation. The second data point that’s interesting is general harassment and of course sexual harassment charges filed with the EEOC are rising by 12% in just one year largely because of the #MeToomovement. These are areas that corporations are trying to grasp and grapple with the time it takes to investigate these and other claims are falling way outside of the recommended compliance guidelines.”
While these costs certainly are financial considerations which need to be managed, Laska’s third factor may, in the end, be the most significant for the longer term. He said, “86% of US citizens use social media every day. There’s a wide adoption of social media and it’s blurred the lines between private company communication like Slack and SharePoint, Zoom, etc., and then public social media sites like Facebook, Twitter, Instagram and Snapchat. You have this interesting dynamic where employees are commonly connecting with each other outside of company networks. They are connecting with each other on Facebook, Instagram and Snapchat. This is increasing compliance risk and areas that many compliance professionals find hard to understand if not impossible to analyze.”
These connections outside the business world are an increased risk. Conversely, these connections employees have are opportunities for companies to see if they need to engage in a more robust risk management strategy. It allows companies to see if employees are thinking about or even doing things, that if not illegal are perhaps unethical, which a company wants to stop before it moves to a true legal violation or something that could be the subject of a civil litigation and monetary damages.
Through such monitoring there is an opportunity for companies to find continuing abusive behavior on public channels. Laska noted, “people who do not have regard for ethical behavior and appropriate behavior towards other individuals, the chances are that individual is going to replicate that behavior in other places as well. So, while it might not serve to be a smoking gun, it will serve to kind of be influential in the process of what you consider to be the right type of individuals to bring into your culture.” This provide significant value to corporations to get ahead of these issues.
We discussed the increased need for monitoring of social media channels as they amplify the messaging across their platforms. Moreover, if an employee engages in abusive behavior on social media platform and then does so at the workplace, it could provide the actual notice to an employer which could result in higher liability. We concluded with a few words on archiving or in Compliance Evangelist parlance, Document, Document, and Document. This is not only a key for the litigation process but discussions with regulators/prosecutors in an enforcement action. Chain of custody is critical for litigation and the preservation is critical for regulatory enforcement. The Hanzo Investigator allows you to archive and preserve documents, data and information.
The information which is communicated through non-company channels is significant. As a compliance professional, you need to be aware of what your employees are not only doing but also their communications to prevent, detect and remediate any issues before they become legal violations going forward.
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© Thomas R. Fox, 2019