Artificial Intelligence and Cybersecurity
The financial industry spends over $181 billion maintaining compliance every year. According to a recent survey by the Risk Management Association, 50% of the firms surveyed spend 6-10% of their revenue on compliance costs. Large firms state that the average cost of maintaining compliance is approximately $10,000 per employee. The cost of industry regulation amounts to an 8% tax on financial firms. The fast-changing regulatory compliances landscape results in financial firms often failing to comply with the required standards simply because they are still reliant on repetitive manual tasks.
Without automation, reputational and brand damage will occur, and the entire exercise can be expensive and labor-intensive. Financial firms are fast turning to AI and big data as part of their regulatory technology strategy to remain compliant in today's data-centric world. The technologies enable financial firms to capitalize on the potential and value of next-gen regulatory compliance. Through AI, they can interpret regulatory compliance documents faster. Furthermore, AI-assisted applications offer actionable insights after consolidating lengthy and complex compliance documentation into shorter and easily readable text, therefore driving maximum value from the data.
Cyber Security Regulatory Compliance
Cyber attackers always seem to be one step ahead of security experts so we can expect the current cybersecurity landscape to become more rigorous building on regulations like the recent GDPR and California's Consumer Privacy Act. Many European companies are juggling between the constraints set by the implementation of GDPR, and at the same time, complying with the minimum industry standards to avoid being fined. The biggest obstacle to fulfilling regulatory requirements is that they become outdated quickly in the face of rapidly evolving technologies in cyberspace, constantly putting a strain on entire compliance ecosystem.
Governing bodies are continually changing the regulatory goalposts which adds significant demand to already overstretched cybersecurity teams. CISOs are struggling to comply with fast-changing external requirements at the same time as safeguarding their customers' data today. This increasing burden points towards the quick adoption of newly available technology tools that not only aid CISOs in making the entire regulatory compliance process seamless but also prove to be forward-looking when it comes to encapsulating and alerting the compliance teams on the changing regulations to avoid hefty fines and keeping the financial firms compliant at all times.
Importance in the Financial Services World
Recent studies by the Boston Consulting Group highlight the growth of cybersecurity regulatory requirements. According to the report, more than 30 cybers regulations have been announced in the United States alone in the last seven years. While these regulations strive to establish a set of robust cybersecurity practices to protect consumers and support the global economy's stability, they use different vocabularies and lexicons to communicate the same concepts and techniques, exerting a significant burden on the financial services industry. Smaller financial services companies work with 2 to 3 regulators, while larger firms employ 10, 20, or even more regulators to ensure compliance. Such a complex regulatory environment only results in inefficiencies, lost time, and substantial financial impacts for financial institutions.
According to the Banking Policy Institute, one chief information security officer indicated that he and his team spent nearly 40% of their work time reconciling various cybersecurity and regulatory frameworks. At another multinational bank, the CIO, head of the audit, and dozens of operating personnel had to conduct a two-month analysis of the bank's cybersecurity compliance, consuming 15% of the operating budget for the bank's technology risk and compliance function for the entire year.
By using AI and big data, financial firms can make their regulatory compliance process smart. These tools enable businesses to understand and predict intricate patterns in risk data. Additionally, banks can improve their compliance process by adopting cloud architectures, which help them securely store data. With benefits far outweighing the associated risks, AI is fast being adopted in the cybersecurity compliance landscape.
Putting AI to Work: Cyber Security Regulatory Compliance Framework
There are many established cyber security compliance frameworks that can help an organization tie its processes to established industry requirements, specifications, and government legislation. CISOs and other cyber security professionals must determine their organizations' specific needs to match them to the appropriate framework. Governance, risk management, and compliance frameworks established by NIST, PCI DSS, ISO, ISACA, GLBA, and the FFIEC strive to assess risk and identify security gaps. While they offer valuable recommendations for cyber risk management, applying and perfecting a cybersecurity strategy can overwhelm capable but short-handed IT security staff; this is where deploying AI makes perfect business sense.