We continue our exploration of the use of AI in Compliance by considering using AI to manage evolving risks. Geopolitical instability, shifting regulations, and the proliferation of disruptive technologies can quickly reshape the risk environment. For compliance professionals, anticipating and managing these emerging risks is essential to maintaining the integrity and sustainability of their organizations.
Risk assessments have traditionally been periodic and reactive, leaving compliance teams playing catch-up. But with the advent of Artificial Intelligence (AI), organizations now have the tools to take a proactive, data-driven approach to emerging risk analytics. By leveraging AI models trained on global datasets, compliance teams can identify trends, predict vulnerabilities, and adapt their programs in real-time.
This post will explore AI’s role in managing emerging risks, how compliance teams can effectively implement these tools, and how AI can help meet the DOJ’s 2024 Evaluation of Corporate Compliance Programs (ECCP) expectations.
The Challenge of Emerging Risks
Emerging risks are, by definition, hard to anticipate. They often arise from complex, interconnected factors and can come from many directions. Geopolitical shifts can mean new or additional sanctions, trade wars, and regional conflicts can disrupt supply chains, create regulatory uncertainty, or introduce reputational risks. Regulatory changes will continue to be robust as rapid laws and regulations update. Even under a Trump Administration, there will still be updated regulations in the EU, especially in areas like data privacy, environmental standards, or anti-corruption—which can catch organizations off guard.
Technological advancements will only increase in scope, size, and speed. Innovations like blockchain, cryptocurrencies, and AI bring new opportunities and uncharted compliance challenges. Failing to anticipate these risks can result in significant financial, legal, and reputational damage. This is where AI can make a meaningful difference.
How AI Enhances Emerging Risk Analytics
AI excels at processing large volumes of data from diverse sources, identifying patterns, and delivering actionable insights. For emerging risks, AI presents opportunities in such varied areas as trend analysis, where AI models can monitor global news, regulatory updates, and industry developments in real-time, identifying trends that may signal new risks. Through predictive insights, machine learning algorithms can assess historical data to predict how current events might evolve into compliance challenges. Through dynamic risk mapping, AI can create heat maps that visualize potential risk hotspots based on geopolitical, regulatory, or technological factors. Finally, AI simulations can model “what-if” scenarios in scenario planning, helping organizations prepare for various potential outcomes. These capabilities allow compliance teams to move from a reactive stance to a proactive one, addressing risks before they materialize.
AI Applications in Emerging Risk Management
- Geopolitical Risk Monitoring. In this area, AI tools can analyze global data—news outlets, trade data, social media, and government reports—to identify geopolitical developments that might affect compliance. For example, an AI system might detect escalating tensions in a region where your suppliers operate, signaling a potential disruption or sanctions risk. Compliance teams can use this insight to review supplier relationships, adjust procurement strategies, or engage alternative vendors.
- Regulatory Change Detection. Staying ahead of regulatory updates is critical, whether in regulated or non-regulated industries, but most especially in industries with complex compliance requirements. AI can be a powerful tool in this area by tracking legislative developments worldwide and flagging pending bills or new regulations that could impact operations. This tracking and flagging allow compliance teams to prepare in advance, updating policies, training, and systems to align with new requirements.
- Supply Chain Risk Analysis
The supply chain has become increasingly critical in every business, not simply for product and raw material inputs but also from a regulatory and trade sanction perspective. AI-powered supply chain monitoring tools can identify vulnerabilities related to sanctions, trade restrictions, or human rights concerns. An AI tool could analyze shipping patterns and detect potential violations of new trade restrictions. With this information, your company can use this insight to ensure that its supply chain partners remain compliant and adapt logistics strategies.
- Technological Risk Assessment
AI can also assess risks associated with adopting new technologies like blockchain or artificial intelligence. An AI tool might flag compliance challenges tied to data storage requirements for blockchain transactions. This could allow your corporate compliance function to address these issues proactively by engaging with IT and legal departments to develop compliant workflows.
Best Practices for Implementing AI
Compliance teams must approach its implementation strategically to realize AI’s benefits in emerging risk management. It all begins with building a robust data infrastructure, as AI’s effectiveness depends on the quality of the data it processes. Invest in data governance frameworks to ensure data accuracy, consistency, and accessibility. This ties directly into the requirement from the DOJ in the 2020 ECCP, which, for the first time, mandated that compliance professionals have access across all corporate data lakes. Access across all data lakes is only the starting point for compliance, as it must collaborate across various corporate functions, as emerging risks often span multiple areas of the business. Compliance must work closely with legal, IT, supply chain, and other departments to ensure a comprehensive approach to risk management.
Choosing the right AI tool is critical. Start from the presumption that not all AI tools are created equal. You should evaluate solutions based on their ability to analyze the specific risks your organization faces, their scalability, and their ease of integration with existing systems. You must also continuously monitor and improve emerging risks, which are, by nature, dynamic. Regularly review and refine AI models to ensure they remain relevant and effective as new data becomes available. Documentation and accountability are critical, and AI models should be transparent and interpretable, especially in compliance, where accountability is paramount. Choose tools that allow you to understand how decisions are made and provide clear, actionable outputs.
Aligning AI with DOJ Expectations
One of the extra benefits of this approach is that it aligns with DOJ requirements, which were laid out in the 2024 ECCP and some of its predecessors. These include continuous improvement of compliance programs. They must evolve to address new risks. AI’s ability to adapt and learn from new data supports this requirement. In the 2023 ECCP, we knew the importance of data and data-driven compliance programs. The same is true in the area of data-driven risk assessments. The DOJ expects companies to leverage data analytics to identify and mitigate risks. AI provides the tools to meet this expectation effectively. The DOJ is moving towards a proactive risk management approach for compliance programs. AI allows compliance teams to address risks before they result in violations, aligning with the DOJ’s focus on prevention. To demonstrate alignment with DOJ guidelines, compliance teams should document how AI tools are used, the insights generated, and the actions taken based on those insights.
AI as a Strategic Partner in Compliance
Emerging risks will always challenge compliance programs, but AI provides the tools to navigate these uncertainties confidently. By leveraging AI for trend analysis, predictive insights, and dynamic risk mapping, compliance teams can stay ahead of the curve, ensuring their programs remain resilient and effective.
As compliance professionals, our role is to guide our organizations through the complexities of the modern risk environment. AI does not and will not replace our expertise. It can, however, amplify it, providing the data and insights we need to make informed decisions. Just as risk never sleeps, neither should your compliance program. With AI, we can ensure our programs are reactive, proactive, resilient, and ready for whatever comes next.
