The rapid advancements in AI present significant challenges for risk management professionals. Their main concern revolves around addressing the risks stemming from the widespread adoption of AI and implementing strong protective measures for financial institutions. This focus is crucial, as their primary mission is to safeguard the markets against the threat of systemic collapse.
While prioritizing prevention is vital, exclusively concentrating on it could lead to stagnation in risk management. There is a growing realization that in some instances, we must employ AI to mitigate the risks posed by AI itself. The unpredictable nature of AI disruption makes it challenging to anticipate where it will strike next or where AI will play a crucial role in risk management. However, despite this uncertainty, it is necessary to take proactive steps and begin integrating AI solutions into risk management strategies.
In the past year, the leadership at Evalueserve has fostered a culture of innovation throughout all departments. This included issuing a similar challenge to every group, including our risk team: to investigate the application of generative AI in client support processes. We found that the risk function shared similarities with other areas, leading us to uncover numerous use cases for generative AI in risk management.
Enhanced Due Diligence (EDD) is a prime example. We found that analysts employing generative AI could decrease report completion times by 28%. The boost in productivity for specific tasks within the report writing process varied from 20% to 50%.
What is EDD?
During the risk review process, EDD is initiated when a potential client is deemed high-risk. This involves a comprehensive collection of information, including the client's financial history, business relationships, and reputation, to assess their risk profile thoroughly.
Our objective was to evaluate whether the integration of generative AI tools could streamline the report writing process for enhanced due diligence, along with the diverse tasks involved in the procedure.
How Did We Quantify the Benefits of Generative AI in EDD?
To accurately measure the benefits of generative AI, we established a controlled testing environment with the following parameters:
- Level playing field: We selected four individuals with no prior experience in enhanced due diligence to participate in the experiment.
- Uniform training: Our EDD experts delivered 4-5 training sessions that included detailed walkthroughs of the EDD process, supplemented with various SOPs and sample data.
- Consistent toolset: All four participants were given access to Evalueserve’s generative AI accelerator, Infinity AI, eliminating variability in the tools employed.
- Clearly defined scope: We selected 20 high-profile companies. The EDD report requirements were explicitly defined, and the participants were told to use only publicly available data.
- Dual assignment: Each company was assigned twice. Once with Infinity AI and once without. The assignments were given out at random to minimize potential biases and allow for direct comparison.
What Did We Learn?
Analysts utilizing Infinity AI experienced a 28% reduction in report completion time, decreasing from 7-8 hours to 5-6 hours. When examining specific tasks, Infinity AI facilitated:
- 47% faster adverse media analysis – by highlighting negative sentiments from various sources like press releases, news articles, etc.
- 45% faster company backgrounds 45% – by summarizing lengthy annual reports.
- 31% faster biographies – by organizing data in chronological order.
Based on these findings, it is evident that generative AI presents significant opportunities to boost productivity and rapidly enhance the skills of EDD analysts. The trial enabled us to refine how analysts can effectively utilize generative AI tools. For example, ensuring the accuracy of EDD data is paramount. We discovered that analysts often needed to provide additional context to obtain the desired information. Through prompt adjustments, we tailored Infinity AI more precisely to their needs, resulting in a 20% improvement in response quality.
Additionally, robust quantitative processing functionality is essential. Analyzing financial data is a crucial aspect of assessing company health. Therefore, the AI's ability to accurately interpret tables containing dates and amounts is indispensable.
At Evalueserve, we acknowledge that EDD represents just the beginning of the vast array of potential applications for generative AI. As AI technology continues to rapidly evolve, the opportunities for its utilization are expanding in parallel. Industry experts concur that we are only scratching the surface of the possibilities that generative AI offers.
Ultimately, EDD serves as merely one example of the numerous potential applications for generative AI. Evalueserve is fully committed to this journey, starting with enhancing productivity in everyday operations. We have already initiated the integration of generative AI solutions into client processes, tailoring our approach to address each client's unique challenges and requirements.
If you have a specific use case in mind or need guidance on where to begin, feel free to contact us.
