The Digital Future of Risk and Compliance Management: The Game-Changing Technologies
The world of risk and compliance management is rapidly evolving, with new technologies and practices emerging to help companies navigate an increasingly complex landscape of regulations and requirements. In this blog post, we’ll explore the digital future of risk and compliance management, and the technologies that are driving innovation in this field.
“Act only according to that maximum whereby you can, at the same time, will that it should become a universal law.”Immanuel Kant
The business world is evolving rapidly, and so are the demands for effective governance, risk management, and compliance (GRC) practices. Today, companies face increasing pressure to comply with various national and international standards in areas such as data protection, IT security, sustainability, human rights, and more. Non-compliance or errors in compliance implementation can result in hefty penalties, which is why gaining the trust of investors, regulators, and customers is more critical than ever.
A Process-Oriented Perspective
The traditional approach of periodic manual audits is no longer sufficient to ensure effective compliance. The manual approach is incomplete and error prone as it only evaluates a small proportion of the total process volume. It also means only looking into the past, making it difficult to proactively prevent rule violations.
In recent years, several best practices have emerged with regard to methodology. For example, companies are finding that their process map and core processes are the perfect navigation structures to get an overview of risks and compliance requirements. Additionally, it is counterproductive to build a separate management system for each compliance topic. The requirements are highly overlapping, so an integrated management system that covers all topics is much more efficient.
New technologies are available to significantly increase the efficiency of this process. These include automation of processes, automated compliance monitoring through process mining technologies, and the use of machine learning and artificial intelligence.
Automation of Processes
Automation is increasing significantly with effective technologies deployed under the heading of “Intelligent Automation.” Workflow systems control the end-to-end processing of processes, RPA systems take over many of the activities that were previously performed manually, and Intelligent Document Processing drives the further digitization and automated processing of documents. Low-code/no-code platforms ensure that automations are created even without deep programming knowledge and are driven by specialist departments.
Automated Compliance Monitoring through Process Mining Technologies
Process mining technologies have become increasingly important in recent years, allowing companies to identify deviations and compliance violations as well as optimize processes. Process mining analyzes the processing of each individual operation, providing insight into the as-is end-to-end processes. In this way, compliance violations can be identified, and regulatory compliance can be ensured. By analyzing operations and data streams, process mining eliminates the main disadvantages of manual audits: instead of only random samples, the total amount of processes is analyzed, and a timely analysis allows not only to look into the past, but also to intervene in the processes in a controlling way. Companies can identify weaknesses and risks and take proactive measures to avoid risks and comply with rules, thereby avoiding compliance violations and potential sanctions and penalties.
Machine Learning and Artificial Intelligence
Machine learning technologies are also experiencing tremendous growth and innovation. AI systems can identify patterns and deviations by analyzing large amounts of data and proactively point out potential compliance violations. They can automatically adapt to new compliance requirements, extract rules from legal texts, and significantly reduce the time spent by employees, improving the efficiency of compliance activities. In the near future, audits will be fully automated, from the analysis of all business transactions to the review of all relevant rules to the automated generation of reports, hardly any manual intervention will be required.
While these technologies offer significant benefits, they also bring regulatory challenges. Due to the design and complexity of AI systems, it can be challenging to verify that all rules were followed. Nonetheless, the benefits of using these technologies far outweigh the regulatory challenges.
In summary, the future of risk and compliance management lies in the adoption of new technologies. These technologies can significantly increase the efficiency of enterprise risk and compliance management, reducing the burden on employees while improving compliance outcomes. Companies that embrace these new technologies will gain a competitive advantage, increase their trustworthiness, and avoid penalties for non-compliance.
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