Today, I want to consider the article Strategy For and With AI by David Kiron and Michael Schrage. The authors premise is, “A company’s strategy is defined by its key performance indicators. Artificial intelligence can help determine which outcomes to measure, how to measure them, and how to prioritize them.”

Their article had several insights for the Chief Compliance Officer (CCO) or compliance practitioner who is looking to employ Artificial intelligence (AI) to help move their compliance program up a level. One of the first key insights is that it is not enough to simply have a strategy for AI. The authors stated, “Creating strategy with AI matters as much — or even more — in terms of exploring and exploiting strategic opportunity. This distinction is not semantic gamesmanship; it’s at the core of how algorithmic innovation truly works in organizations. Real-world success requires making these strategies both complementary and interdependent. Strategies for novel capabilities demand different managerial skills and emphases than strategies with them.”

This makes clear that AI does not supplant the compliance function or the compliance professional, AI complements what the compliance professional can do with the information available to them. Yet the authors believe that when it comes to machine learning, an appropriate compliance strategy is defined by the key performance indicators (KPIs) leaders choose to optimize. This means that a CCO who cannot clearly identify and justify their strategic KPI portfolios has no strategy.

The bottom line? AI plays a critical role in determining what and how compliance KPIs are measured and how best to optimize them. Optimizing carefully selected compliance KPIs becomes AI’s strategic purpose in the compliance function. Understanding the value of optimization is key to aligning and integrating strategies forand with AI and machine learning. KPIs create accountability for optimizing strategic aspirations, including compliance.

Three key takeaways:

  1. Use KPIs to define and measure your innovation strategy.
  2. AI should only supplement, not supplant a compliance professional.
  3. What are your compliance KPIs?

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