It’s no secret that AI can give organizations a major competitive advantage, whether it be predicting supply and demand surges or providing personalized recommendations. One way we’re seeing an increase in AI being used is for its ability to anticipate and mitigate risks across organizations.
Companies around the globe are leveraging AI to ensure legal compliance and mitigate risk. In fact, Gartner predicted that privacy-driven spending on compliance tooling would rise to $8 billion worldwide throughout 2022. The interest in adopting AI for risk management efforts is fueled by increasing data regulations and traditional methods of data oversight becoming unreliable, given the large volumes of data that organizations are handling. Amid these regulations and large volumes of data, organizations are finding themselves desperate for resources to analyze, assess and monitor risk while staying up to date with compliance pressures.
What Artificial Intelligence Is
Before understanding how AI can be used to mitigate risk across an organization, it’s important first to understand what AI is as a basic function.
Gartner describes AI “as applying advanced analysis and logic-based techniques, including machine learning (ML), to interpret events, support and automate decisions and to take actions.” In layman’s terms, AI combines computer science and datasets to provide problem-solving recommendations and perform tasks that would otherwise require human intelligence.
AI shouldn’t be feared by humans—it isn’t scary and certainly won’t steal their jobs. It does quite the opposite. It offers the opportunity to find competitive advantages for your business through improved decision-making that is backed by factual data. It is actually the perfect “assistant” because it does the tasks that take way too long. For security professionals, it helps them do their jobs better, faster and with greater accuracy.
How AI Is Used To Mitigate Risk
The value of AI in ensuring risk management across organizations is getting more attention, as Gartner claims that more than 40% of privacy compliance technology will rely on AI by 2023. It’s safe to say that AI is no longer just a theme for sci-fi movies or talking robots. It is proven technology being used in different industries across the globe to ensure risk mitigation in areas such as:
1. Contract Management
Contracts are the lifeblood of an organization because they essentially manage both internal (employee contracts) and external relationships (real estate, IT or third-party agreements) and define how you conduct business. They even guide your relationship with customers. So, it is imperative that you accurately protect all contracts from risks or potential risks.
Unfortunately, humans aren’t perfect and are prone to innocently made errors, particularly after spending countless hours reading, interpreting and dissecting lengthy, often mundane, and repetitive verbiage found within contracts. Legal professionals can make more informed, strategic decisions about contract risk by evaluating data derived directly from AI analytics and computations.
Companies can move from reactive to proactive with their risk identification efforts by locating vague passages, redlining expirations, discovering areas of omission and identifying contract standard deviations. AI can also rapidly scan and compare clauses to the “preferred language” in your existing playbook to assign a score (low, medium or high) to the contract. This valuable insight can help contract managers, risk managers or legal professionals determine how, or even if, they want to move forward with a contract.
2. Fraud Detection
A TransUnion report found that online fraud attempt rates for financial services rose 149% between Q4 2020 and Q1 2021. Detecting that amount of fraud by humans alone—combing through gigabytes of data—would be impossible.
But it’s not just financial institutions that need to be wary of fraud. Banks, healthcare services, educational establishments, manufacturing firms and government agencies can leverage AI to monitor financial transactions. Using algorithms trained with historical data, AI can suggest suspicious logins, identity theft or fraudulent transactions in real time. Humans can then leverage the data to determine whether the fraud is legitimate and train the AI engine to flag or reject future transactions entirely. And because AI continues to “learn” indefinitely, it also helps avoid trends that have historically led to fraud.
3. Threat Intelligence
All companies, regardless of size or vertical, are susceptible to data breaches. An IBM report states that the United States sees the most expensive data breaches in the world, with an average of $4.24 million per attack. Detecting and acting on these threats quickly and early is crucial.
AI aids with threat intelligence by sorting through overwhelming data volume and ensuring the accuracy of that data to identify and eliminate the threat. It can also use the latest knowledge of global or industry-specific threats to better configure prioritization decisions based on what could be or what is most likely to be used to attack your systems. Organizations are seeing the benefits of AI for threat intelligence. Capgemini’s research found that 60% of respondents believe AI drives higher efficiency for in-house cyber analysts, and 74% say AI enables a faster response to breaches.
Artificial intelligence is not only here to stay for risk management, but it will continue to develop, and its necessity will keep growing across a wide variety of industries. With AI’s ability to identify potential risks, prioritize these risks and suggest solutions, the value is well understood. It will undoubtedly change the way business is done for years to come and ensure that the future of how we do business is protected and compliant.