AI AND THIRD PARTY RISK MANAGEMENT
R&C: Could you provide an overview of the role AI technologies can play as part of a third party risk management (TPRM) programme?
Proudley: Compliance is a time consuming and resource intensive set of processes. Onboarding third parties and managing risks requires gathering data from a range of sources. That data has to be understood, digested and reported. For the third parties with the highest level of risk, enhanced due diligence is necessary. All of this takes time and costs money. But artificial intelligence (AI) provides solutions to automate the most time consuming and expensive tasks.
Green: Firms seeking to do international business are facing a perfect storm on account of three reasons in particular. Firstly, the rise of the conscious consumer and a wider push toward transparency. Secondly, increasing global instability which is leading to increasingly unstable regulation. Rapidly expanding sanctions lists now affect far corners of the supply chain. Thirdly, the continuing explosion in publicly available information. Internet data contains insight on any third party, leaving companies massively exposed. This creates an increasing need for organisations to really ‘know’ their third parties, including their customers, suppliers, donors, applicants and investors. Firms no longer simply ask ‘can’ we be in business with someone, but rather, ‘should’ we be. The search for transparency on counterparts has created a ballooning industry of laborious and time consuming background research.
Oct-Dec 2024 Issue
Dow Jones
Xapien