Fairwords Weekly: AI and Creativity in Compliance, 5 Whys, and Targeting Off-Channel Communications
April 20, 2023
“Since 2021, preservation of Off-Channel Communications has become an enforcement priority of the SEC. On a number of occasions in 2021 and 2022, the SEC charged certain broker-dealers for failure to preserve such communications, imposing record-high penalties for such violations.”
– Tannenbaum Helpern Syracuse & Hirschtritt LLP
This week, we learn how artificial intelligence (AI) can empower and challenge compliance. We consider whether or not the ‘5 Whys’ method works for root cause analysis when it comes to compliance. We learn how the SEC’s recent enforcement has targeted off-channel communications of fund advisers. Finally, we examine the role of creativity in compliance and how one company aims to make compliance topics more accessible and engaging through entertainment devices.
The increasing impact of AI technology has brought significant benefits to big data insights, daily life, and business strategy. However, as AI’s capabilities evolve, it poses several compliance and operational challenges, such as the ethical use of analytic models, security, and privacy controls. As a result, organizations must prioritize sophisticated efforts to support prevention and response by establishing strong data governance, policies, and procedures. AI presents promising solutions that allow the compliance function to leverage data proactively to avoid risk and spot problems. This technology can help navigate patchwork regulations, monitor compliance, and adopt different strategies in different regulatory environments. However, compliance leaders must prioritize alignment between compliance needs, business objectives, and company culture while embracing the role of AI.
The Creativity and Compliance podcast, hosted by Tom Fox and Ronnie Feldman, explores the role of creativity in compliance. Ronnie’s company, Learnings and Entertainment, aims to make compliance topics accessible and engaging through entertainment devices. The podcast discusses how corporate culture impacts compliance and argues that the primary goal of compliance is to stop people from doing bad things and to live up to company values. Listeners will learn how to create psychologically safe environments, train leaders to build trust, and use interesting and informative content to make communication and training more engaging. The podcast invites listeners to reach out for more information about their solutions.