Compliance in the Age of AI: Exploring the Impact of AI Automation and ChatGPT
Artificial Intelligence (AI) has become an integral part of our daily lives, powering everything from virtual assistants to autonomous cars. In recent years, AI automation has gained widespread attention for its potential to revolutionize industries, increase efficiency, and reduce costs. As one of the most popular AI language models, ChatGPT is at the forefront of this technological advancement.
To gain insights into the latest trends in AI automation and ChatGPT, we spoke with Laetitia Hoffmann, the Global Head of Due Diligence at Dow Jones. With her vast experience in the industry, Laetitia is well-positioned to provide valuable insights into the current state of AI automation and its future direction. In this blog post, we’ll dive into our interview with Laetitia, exploring the latest trends in AI automation and ChatGPT. We’ll discuss the impact of AI automation on various fields such as risk management and, compliance, the benefits and challenges of implementing AI solutions, and the future of AI automation.
The Impact of AI Automation on Compliance and Due Diligence Processes
AI automation is already having a significant impact on the compliance and due diligence process. With the ability to digest vast amounts of unstructured data and narrow down results, screening tools and workflow tools powered by AI are transforming the way companies approach compliance. AI-powered screening tools can quickly sift through vast amounts of data, identify potential risks, and flag any issues for further investigation. This not only saves time and resources but also helps to ensure that compliance teams are able to identify potential issues before they become major problems.
Similarly, AI-powered workflow tools can help to streamline the due diligence process, automating many of the time-consuming tasks involved in conducting thorough investigations. This can help to speed up the process, reduce costs, and ensure that due diligence is conducted more consistently and accurately. Of course, as with any new technology, there are also challenges associated with implementing AI automation in compliance and due diligence processes. These challenges include issues related to data privacy and security, as well as the need to ensure that AI solutions are transparent and explainable. However, these challenges are not insurmountable, and many companies are already leveraging AI technology to improve their compliance processes.
What Is ChatGPT?
ChatGPT is a generative AI chatbot that has rapidly gained popularity in recent months. In short, ChatGPT is a highly sophisticated natural language processing (NLP) tool that can ingest text and pictures and generate easily digestible human-readable output.
One of the most significant advantages of ChatGPT is its ability to analyze and synthesize vast amounts of data, making it an incredibly powerful tool for a range of industries. Whether it’s conducting due diligence investigations or analyzing market trends, ChatGPT can quickly sift through large amounts of data, identify patterns and insights, and present them in a way that is easy to understand.
The latest version of ChatGPT, GPT-4, takes this technology even further, allowing the tool to ingest both text and pictures and generate even more sophisticated outputs. With the ability to analyze both visual and textual data, ChatGPT is poised to become an even more valuable tool for businesses across industries.
The Role of ChatGPT in Customer Due Diligence and Third-Party Risk Management
While ChatGPT is a powerful tool for analyzing and synthesizing data, there are significant limitations to its use in the context of compliance and compliance decisions.
First and foremost, the technology is not designed to be a compliance tool in and of itself. Rather, it is intended to be a summarization tool, helping users to quickly and easily digest large amounts of complex information. Additionally, the terms and conditions of OpenAI, the organization that developed ChatGPT, explicitly state that the tool should not be used for any serious purposes, including compliance-related tasks.
Despite these limitations, however, there is no doubt that generative AI tools like ChatGPT have the potential to transform the way that due diligence investigations are conducted. By quickly analyzing large amounts of data and synthesizing key insights, these tools can help to speed up the due diligence process, reduce costs, and improve accuracy.
Moreover, as Laetitia also points out, we are likely to see generative AI tools like ChatGPT increasingly used in the compliance space in the future. As the technology continues to evolve and become more sophisticated, it may be possible to leverage these tools to enable more effective decision-making in the context of due diligence and third-party risk management.
How ChatGPT Impacts the Industry and Enables Streamlined Processes
ChatGPT has set a hallmark for what is possible and allowed us all to dream of the summarization that would be possible for what is often a very long-winded and human-intense process. The tool has generated a conversation about automation and has taken the discourse about what we would want from an output to a different level. It has dared people to dream of how we could approach complex processes that are currently quite human-driven.
The industry is facing contrasting forces, with people needing to be faster and decisions made quicker, budgets are smaller, and there is labor cost inflation. There is a lot of pressure on the industry to perform high all in the wake of ever-increasing legislative demands. A tool like ChatGPT could really enable streamlined processes for a number of professionals within the industry, thereby being quite useful.
ChatGPT could also enable teams with a global remit and limited language capacity in-house to ingest sources more easily. With the ability to analyze and put together a tremendous amount of data and synthesize it for the consumer of that output, ChatGPT could provide a level of understanding that might be difficult to replicate for those who have a global remit.
Although there are other players in the generative AI space,such as the Google Cloud Platform, ChatGPT has been the most in the media, which has created a discourse about the limits of the possible when it comes to these sophisticated language programs.
Challenges of Using ChatGPT for Investigative Diligence
While there are numerous advantages to using AI tools like ChatGPT for investigative diligence, there are also significant challenges that must be considered. One of the primary challenges is the reliance on outdated data. ChatGPT is based on data from 2021, which may not be current enough to provide accurate insights for many investigations. Another challenge is the lack of transparency in the sources of information used by ChatGPT. This lack of information can make it difficult to verify the accuracy of the results and can lead to critical decisions being made based on incomplete or misleading information.
Additionally, ChatGPT’s ability to disambiguate between high-profile subjects and everyday individuals is a concern. This can lead to incorrect assumptions and decisions based on incomplete or inaccurate information. Furthermore, the requirement for a specific query format can make it difficult to ensure consistent results across teams. Another issue is that the use of sensitive information to train the system can create data privacy and legalistic challenges. The use of such information may be problematic from a privacy perspective and could potentially violate legal regulations.
Moreover, risk taxonomies vary, and what may be considered risky for one person may not be considered risky for another. This can lead to inconsistencies in the output and a lack of clarity in determining what constitutes a risk. Finally, there is the issue of accountability and oversight. Current regulations require that generative AI tools like ChatGPT be classified in tiers, with varying levels of oversight and quality checks to ensure accurate results. These regulations are still being developed and may vary by jurisdiction.
While these challenges pose significant obstacles to the use of ChatGPT for investigative diligence, they are not insurmountable. As technology continues to evolve, new solutions may emerge to address these issues and improve the effectiveness and reliability of AI tools for investigative diligence.
How Ambiguity Affects the Accuracy of Output from ChatGPT and Similar Tools
One of the biggest hindrances of using ChatGPT and similar tools for due diligence and research purposes is ambiguity. The tool struggles with disambiguating everyday individuals, which poses a challenge for making critical decisions based on accurate information. This means that a lot of time gets invested in ensuring that the right individual is being referred to and misinformation is not being used to make important decisions.
While ChatGPT is quite good at identifying higher profile subjects, it still struggles with everyday individuals. The lack of sources for the information generated by the tool also makes it difficult to determine the origination of the information, which is crucial for making informed decisions. This can lead to problems with accuracy and reliability, especially when it comes to making critical decisions.
Nevertheless, it is possible to prod the technology to look again and reiterate its query to be more inclusive. However, this may not always be comprehensive and can lead to missing certain things. The lack of sources also makes it difficult to verify the accuracy of the information generated by the tool. This poses a great challenge in practicality, making it difficult to use for making critical decisions based on accurate information.
The Legislative Hurdles of Using AI Tools in Compliance Processes
As AI text generation tools such as GPT-3 become more prevalent in the compliance industry, it is important to consider the legislative hurdles that companies and compliance teams may face when assessing the potential use of these tools in their processes. One of the biggest concerns is data privacy, as the use of unlicensed versions of these tools can lead to potential breaches in data privacy regulations.
Moreover, licensing of underlying sources also poses a challenge as publishers may not want a core summary of all their written works to be accessible through these tools. There are also varying levels of use cases to consider, with different implications from a legislative perspective for using these tools for social media posts versus job application decisions.
In the EU, legislation is in place to ensure the proportionality of how the technology is used versus the decision that the output is there. However, with the speed of development of these tools, legislative processes may not be able to keep up with the technology’s prowess. As such, copyright perspectives must also be considered. Overall, companies and compliance teams should remain vigilant in keeping an eye on potential legislative changes and consider the ethical implications of using these tools in their processes.
Ensuring Compliance, Comprehensiveness and Bias-Free Automated Processes
As exciting as the potential applications of AI and GPT-3 may be, organizations must take a careful and considered approach to implementing these technologies. The vetting process is crucial, and it involves ensuring that the technology protects sensitive information, complies with data privacy regulations, and is fit for purpose.
It is essential to understand the different pitfalls of AI and GPT-3 and not make critical business decisions based on the technology without fully understanding how it works or guarantees the quality of its output. While GPT-3 and similar technologies are incredibly exciting and great at what they do, they are not meant to perform compliance functions and must not be forced to fit into the organization’s particular box.
Organizations must remain cognizant of the different challenges they face in implementing AI and GPT-3 technologies. This may mean taking a more cautious approach to innovation and assessing what technologies are meant to do. It is essential to find solutions that can give us the transparency, accuracy, and speed that we need to make these exciting developments applicable for the industry at large.
Takeaway Points
The potential of AI and automated processes is truly exciting and has the power to transform the compliance industry. However, organizations must be cautious in their implementation and vetting process to ensure that these technologies are compliant, comprehensive, and unbiased. It is important to understand the limitations of AI and not rely solely on it for critical business decisions.
The compliance industry should strive to push the boundaries of what is possible with these technologies, while also being conscious of their goals and decision-making process. Ultimately, there may be certain tasks that are best left to humans, and organizations must strike a balance between utilizing technology and maintaining human oversight. By being mindful of these considerations, the compliance industry can effectively leverage the power of AI and automated processes to drive growth and innovation.
Closing Words
The implementation of AI and other emerging technologies in the compliance industry is an exciting development that can potentially transform the industry’s practices. However, it is essential to be cautious in adopting these technologies and to ensure that they are compliant, comprehensive, and unbiased. Organizations must vet these technologies to protect sensitive information, ensure data privacy, and guarantee the quality of output. It is crucial to strike a balance between embracing innovation and being aware of the potential pitfalls that come with it.
As the Global Risk Community team, we thank Laetitia Hoffmann for her expertise and insight. More information about this topic is available in our original interview, which is accessible here.
#compliance #duediligence #AI #ChatGPT #automation
