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Context & Scope
Risk identification is a critical business function that involves reviewing documents, contracts, and processes to spot potential legal or compliance issues. Traditionally, human legal and compliance professionals perform this role by manually examining documents, researching relevant laws and regulations, and applying their expertise to identify risks.
- Financial Services: Analysing loan applications to identify potential regulatory compliance issues or fraud risks.
- Pharmaceutical Industry: Reviewing clinical trial documentation to ensure compliance with ethical guidelines and regulatory requirements.
- Manufacturing: Examining supply chain contracts to identify potential liability or intellectual property risks.
- Energy Sector: Analysing environmental impact reports to identify potential regulatory compliance issues or environmental risks.
- Technology Companies: Reviewing software licensing agreements to identify potential intellectual property infringement or data privacy risks.
AI Solution Overview
- AI system is integrated with document management and process workflow systems
- Documents or process descriptions are inputted into the AI system
- AI uses natural language processing to understand the content and context
- AI cross-references content with databases of laws, regulations, and industry standards
- AI identifies potential risk areas based on pattern recognition and historical data
- AI generates a risk report highlighting potential issues and their likelihood
- Human experts review the AI-generated report
- Experts provide feedback to the AI system to improve future assessments
- AI continually updates its knowledge base with new regulations and case law
If needed at any point:
- AI flags high-risk items for immediate human review
- Human experts can override AI decisions with justification
- AI can request additional information if certain elements are unclear
Human vs AI
| Human Intelligence (HI) | Artificial Intelligence (AI) |
|---|---|
| HI can process a limited number of documents per day | AI can analyse thousands of documents in minutes |
| HI may miss risks due to fatigue or oversight | AI consistently applies the same level of scrutiny to all documents |
| HI relies on individual knowledge and experience | AI can access and apply vast databases of legal and regulatory information |
| HI may have inconsistent risk assessments between different reviewers | AI provides consistent risk assessments based on predefined criteria |
| HI requires continuous training to stay updated on new regulations | AI can be updated instantly with new regulatory information |
| HI can understand nuanced context but may be subject to bias | AI applies objective criteria but may miss subtle contextual cues |
| HI can adapt to new types of risks quickly | AI requires training data to recognise new risk patterns |
| HI can explain reasoning in-depth | AI provides data-driven insights but may lack detailed explanations |
| HI can engage in creative problem-solving for unique situations | AI excels at identifying known risk patterns but may struggle with unprecedented scenarios |
| HI can negotiate and interpret ambiguous language | AI can flag ambiguities but may struggle with interpretation |
Addressing Common Concerns
Accuracy and Reliability: While AI has shown high accuracy in identifying risks, it's not infallible. That's why we recommend a hybrid approach where AI acts as the first line of review, with human experts providing oversight and final decision-making.
Handling Complex or Nuanced Situations: AI excels at pattern recognition but may struggle with highly nuanced or unprecedented situations. Human experts remain crucial for interpreting complex contexts and making judgement calls.
Keeping Up with Changing Regulations: AI systems can be updated rapidly with new regulatory information, often faster than human training programmes. However, human oversight ensures that the AI's interpretation of new regulations aligns with industry standards and best practices.
Data Privacy and Security: AI systems handling sensitive documents must adhere to strict data protection protocols. We implement robust security measures and ensure compliance with data protection regulations like GDPR.
Explainability of AI Decisions: While AI can identify risks quickly, it may not always provide detailed explanations for its decisions. We're continuously improving our AI's ability to provide clear rationales, and human experts are always available to interpret and explain AI-generated insights.
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