Businesses that deal with high volumes of transactions and move large amounts of money every day often find themselves under intense scrutiny by their investors, regulatory bodies, and the public as a whole. It is the business leader’s duty to protect stakeholders from any wrongdoers who would hope to take advantage of the firm’s vulnerabilities.
Unfortunately, fraudsters these days have increasingly complex technology at their disposal for their wrongdoing. However, the technology that can be used for protection against these attacks is evolving alongside it. It is up to companies to adopt this technology proactively so that bad actors can be stopped in their tracks before they wreak havoc on the business and its resources.
Why Compliance is Important
Compliance standards are an important part of holding businesses accountable for their actions. The responsibility for security breaches lies just as much with the company that leaves the data or money vulnerable as it does with the perpetrator. Sadly, once that information is stolen — there are very few ways to get it back. As such, it is the responsibility of a company to maintain strict compliance standards and invest in the proper resources to enforce them.
Some companies think of compliance standards as hoops they have to jump through, but the increasingly difficult nature of security threats businesses face makes it clearer than ever that compliance standards are in place for the greater good. Compliance standards protect not just consumers and investors, but also the business itself. Failing to adhere to these standards can result in enormous penalties, including fines or even the loss of the company.
Still, many business leaders lack the upfront knowledge and equipment to maintain compliance, particularly if their company is in its infancy. Most entrepreneurs start their business with plenty of hyper-specific knowledge about the industry they are entering, but far less knowledge about the general principles of running a business. Concepts like compliance and regulations are often something that leaders learn as they go — and they often have to learn the hard way.
How to Best Maintain Compliance
Businesses must remember that the biggest vulnerability they face is not their systems, but their employees. Even if a company has strict compliance standards and has invested in the best possible tools to support them, these measures are only as good as they are enforced. If employees don’t know how to follow these standards or use these tools, they will have little to no benefit to the company’s security.
Business leaders also face the challenge of not having enough time to focus on compliance measures. It’s understandable why some business people, unfortunately, miss the mark with compliance — entrepreneurs have a lot on their plate while running a new business in its early growth stages — but this is a process that cannot be neglected. If a business leader does not have time to focus on compliance, delegate the task to someone who does.A great way to lift this burden off of the shoulders of employees is to outsource compliance management to a third-party administrator. Serving as a trusted intermediary between a company and its investors, a third-party administrator can manage any number of tasks, from managing paperwork and investor onboarding to managing a firm’s cybersecurity needs. Additionally, this can come at a lower cost as an outsourced and highly trained full team can often come at the same cost as having one or two full-time professionals on staff.
Artificial Intelligence and Compliance
Many companies have turned to artificial intelligence (AI) solutions to aid in their compliance management because of their potential to significantly reduce overhead costs. Staffing a team of several compliance professionals can be costly over time and risks the possibility of suffering due to human error. On the other hand, implementing an AI solution overseen by a smaller staff or (better yet) an outsourced third-party administrator can deliver consistent, quick, and reliable results.
One of the main applications of artificial intelligence in the compliance sector has been using AI-powered technology to help detect potential cybersecurity threats. Because of AI’s superior data processing capabilities, it is able to identify threats much more quickly and, as a result, respond much more quickly. If the human team is able to respond in a timely manner, the threat can be addressed before wreaking havoc on the company’s systems.
Although AI can process data much more quickly and efficiently than humans, some have questioned its accuracy. Currently, artificial intelligence is still dependent on an input of information, which is gathered from databases created and maintained by human sources. If some of that information received is inaccurate, the result could be a false positive or false negative reading. Furthermore, artificial intelligence’s knowledge is limited by human knowledge, meaning that an AI-powered detection system would not be able to identify any new threats beyond the technology humans are familiar with.
AI technology also poses the additional obstacle of requiring further compliance standards of its own. When adopting any new platform or technology, evaluating efficacy and security should be the first consideration of business leaders. Compliance measures must be put in place to ensure that employees are using the technology properly and that the use of the technology will not introduce any further points of vulnerability into the system.
How Using AI-powered Compliance Tools Benefits Companies
The benefits of staying compliant are obvious. For one, business leaders can rest assured knowing that their business will be safe from any potential legal consequences. Neglecting to follow regulations and compliance standards leaves the company and its leaders vulnerable to legal action from disgruntled investors and clients who lose their money.
However, strict compliance standards and enforcement policies also have the proactive benefit of improving investor confidence in the company. Seeing a business establish a partnership with a trusted third-party administrator for their compliance needs assures investors that their money is safe and protected by several rounds of checks and balances.
There is a wealth of tools on the market that allow leaders to protect their business and their sensitive information. Implementing these advanced tools — including artificial intelligence technology — with the help of a third-party administrator is the best way to ensure that all resources are adequately defended.