Compliance management is undergoing a subtle transformation. This transformation began a decade ago and is steadily accelerating. Compliance management was performed entirely manually. To maximize the level of compliance, the organization relied entirely on the vigilance and performance of compliance personnel. Organizations are automating as much of the process as possible through compliance solutions because this enables them to achieve a higher level of compliance than previously possible through manual management.
From Disorder to Order
Rapid technological advancements over the last few years have made it difficult to forecast the industry’s future direction. The technological prowess of a new technology is not always synonymous with its practical applications. The internet is the ideal illustration – ecommerce started in the early 1990s. Amazon.com launched in 1994 and was far from the first ecommerce site. While ecommerce began to take shape in the early 1990s, its true potential and adoption into society did not become apparent until the early 2000s. The future shape of ecommerce became clear at that point.
Whenever a new technology is on the horizon, the market is flooded with rapidly divergent offerings. True success methods take time to emerge, and they are then incorporated by the rest of the market. Compliance solutions have progressed to this stage of the technology development lifecycle. A few years ago, it was difficult to predict how GRC would affect risk and compliance due to the proliferation of competing technologies and methodologies vying for dominance. These best practices have been established through a decade of testing, trial and error, and experience with GRC systems in real-world applications.
Machine Learning’s Growing Importance in Risk and Compliance Solutions
One of the most significant advancements in compliance and risk management has been the introduction of machine reading via natural language processing. Natural language is a critical component of the computing future. Historically, we have had to train ourselves to communicate with computers in computer-friendly terms. From programming to sending an email, we must click, type, and make the problem machine-readable. Rather than that, natural language processing aims to teach computers to understand how we speak. Our phones already support basic natural language processing. The feature is referred to as Siri on Apple devices, Google Assistant on Google devices, and Cortana on Microsoft devices. These digital assistants comprehend the questions we pose and respond appropriately.
Natural language processing has much loftier computational goals than simplistic phrase identification or digital assistants. If computers are taught to read and write human languages, our ability to process, store, and generate information will exponentially improve. The benefits alone in terms of risk and compliance solutions will be staggering.
The issue with manually managing compliance is that it requires reading, comprehending, memorizing, and implementing rules, laws, and regulations that are extremely complicated to comprehend. The sheer volume of clauses, subclauses, conditions, amendments, and updates makes manual tracking difficult. The workload is sufficient to overwhelm any person responsible for risk and compliance, but computers are more than capable of handling it.
The Mammoth Productivity and Efficiency Increase
It is straightforward to estimate the increase in productivity and efficiency that will occur once natural language processing is fully integrated into risk and compliance solutions. Similar changes have occurred in the financial industry as a result of the widespread use of spreadsheet software. VisiCalc was the first spreadsheet program, released in 1979. While the capacity to retain and edit figures in spreadsheets may seem laughably limited now, it was revolutionary at the time. VisiCalc was eventually dubbed the first “killer app” for computers. Numerous organizations purchased their first computer system specifically to use VisiCalc. Following VisiCalc, we had Lotus 1-2-3, which flooded the industry during the DOS era. Then came Microsoft Excel, which quickly established itself as the de facto spreadsheet application.
Contrast Microsoft Excel’s ability to work with numbers with people’s ability to work with numbers using paper and pens. In a matter of seconds, an Excel spreadsheet can apply formulas to large numbers of data cells, process data, produce results, and much more. If we attempted to perform the same task manually, it would take days rather than seconds and the accuracy would be significantly lower.
We did not see the same increase in natural language information because, while numbers were easy for computers to understand, natural language was incomprehensible to computers. For rudimentary natural language processing, new systems employ neural computing (computing models inspired by the human brain), which is already proving beneficial. Our own solution, the Predict360 Change Management Software module, is capable of parsing documents and extracting critical information based on keywords.
The technology is new, and as natural language processing technology advances, we may see machines performing all risk and compliance-related tasks. In every industry on the planet, we have delegated all data processing to computers, and we can expect that to occur with information processing once data becomes machine-readable.
The Way Forward
The future of risk and compliance solutions is dependent on technological advancements and will look very different from current methods of risk and compliance management. Additionally, some innovators are considering meeting machines halfway. Rather than waiting for machines to become intelligent enough to read and comprehend laws and regulations, some governments propose that we should design them to be machine readable in order to accelerate the pace of automation.
