AI and Regulatory Risk Trends with Caroline Shleifer

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Integrating ESG in Risk Management

This chapter explores the significance of Environmental, Social, and Governance (ESG) factors in risk management, detailing the necessity for organizations to evolve with changing regulations. It also highlights the impact of collaboration, technology, and remote work in effectively managing diverse teams and enhancing decision-making processes.

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Welcome to RIMScast. Your host is Justin Smulison, Business Content Manager at RIMS, the Risk and Insurance Management Society.

In this episode, Justin interviews Caroline Shleifer, Founder and CEO of RegASK about the RegASK report, "The 2025 State of Regulatory Affairs and Compliance Report." Justin and Caroline discuss how regulatory affairs professionals see AI adding the most value in three key areas of their day-to-day activity: augmentation, automation, and acceleration. Caroline shares some examples of these areas of AI. The report highlights AI and ESG as areas of increasing regulation. Caroline shares how risk management professionals can best prepare for the unique challenges these emerging regulatory areas present.

The report suggests that AI solutions could transform regulatory affairs work, particularly in summarizing and adapting requirements to specific organizational contexts. Caroline offers her thoughts on risk management roles evolving alongside this AI adoption in regulatory affairs.

Listen for ideas on leveraging AI tech to stay current with the evolving regulatory landscape.

Key Takeaways:

[:01] About RIMS.

[:14] Member registration for RISKWORLD 2025 is now open! General registration opens on December 4th. Visit RIMS.org/RISKWORLD.

[:25] About this episode, coming to you from RIMS headquarters in New York. Our topic is AE adoption and regulatory risks with the Founder of RegASK, Caroline Shleifer.

[:49] The next RIMS-CRMP Exam Prep Virtual Workshop will be held on December 17th and 18th.

[1:00] On February 19th and 20th, there is a two-day virtual workshop for the RIMS-CRMP led by former RIMS President Chris Mandel and presented by the RIMS Greater Bluegrass Chapter, the 2024 RIMS Chapter of the Year.

[1:18] The next RIMS-CRMP-FED Exam Course will be held from February 4th through the 6th, 2025. Links to these courses can be found on the Certification page of RIMS.org and through this episode's show notes.

[1:34] RIMS Virtual Workshops! Elise Farnham of Illumine Consulting recently joined us here on RIMScast. On December 17th and 18th, she will host "Captives as an Alternate Risk Financing Technique".

[1:49] Gail Kiyomura of The ART of Risk Consulting, will host the "Fundamentals of Insurance" virtual workshop on February 19th and 20th, 2025.

[2:00] This is the last week to sign up for "Managing Data for ERM", hosted by Pat Saporito on December 12th. Registration closes on December 11th.

[2:12] A link to the full schedule of virtual workshops can be found through RIMS.org/education/online-learning pages. A link is also in this episode's show notes.

[2:26] Interview! The adoption of Artificial Intelligence in an enterprise's operations, workflows, and processes is on our members' minds. AI presents its own unique set of regulatory risks. My guest today is here to discuss insights about AI adoption.

[2:46] She is Caroline Shleifer, the CEO and Founder of RegASK, which recently released "The 2025 State of Regulatory Affairs and Compliance Report." She is here to discuss some of the trends that she noticed from the surveys of senior executives and business leaders.

[3:04] She shares her perspective on the upside potential of AI adoption and ways that risk professionals can work alongside regulatory professionals to ensure everything runs smoothly and above board. We've got data, trends, and perspectives to explore.

[3:21] Caroline Shleifer, Welcome to RIMScast!

[3:49] RegASK's new report is "The 2025 State of Regulatory Affairs and Compliance Report."

[4:15] Caroline worked for years in the life science and consumer product industry, helping them scout innovation in ingredients and technology and helping them put it on the market.

[4:47] Doing that, Caroline realized that many times there was a challenge in understanding which regulations applied or in being caught off guard by a regulation they were not aware of. Sometimes these regulations prevent businesses from launching a product as they plan.

[5:28] It's important to understand and catch up with the fast-moving regulatory environment. The challenge is understanding what applies to an organization well in advance so there are no delays or non-compliance. This is a recurring challenge for small and large companies.

[6:00] Caroline looked at the technology used in the banking and finance systems to help with compliance. She wondered why not apply that technology to the consumer product and life science industry to develop a product to help the regulatory affairs team stay current.

[6:35] About six years ago, Caroline founded RegASK, starting small with her clients in the consumer products and consumer health industry. She expanded it progressively to larger geographies and industry verticals.

[7:06] Caroline respects risk professionals as they deal with challenges that are often overlooked by other business units. When the work is well done, no one sees it, as it seems seamless. No one sees the day-to-day work behind the scenes to prevent non-compliance.

[8:02] Risk professional teams are usually understaffed. The risk of non-compliance can range from stopping a product from being imported to stopping a clinical trial or having a big financial impact.

[8:45] Sometimes the compliance manager is the default risk manager and wears many hats.

[9:33] When Caroline formed RegASK, she saw something like AI was coming. She didn't see how quickly it would come. Things that took RegASK years to develop a few years ago, take less than a year to develop now. RegASK has accelerated its roadmap due to recent developments.

[10:49] According to the RegASK report, 38% of regulatory affairs professionals feel at risk of non-compliance due to unawareness of specific regulations. That agrees with the feedback RegASK gets from its clients.

[11:21] It's very challenging to understand every regulation. RegASK provides the curation of regulatory information and helps pass the information to the right teams at the right moment with the right language, including what the impact and risk may be for different business units.

[12:27] The report says 27% of senior executives expect regulatory risks to have the biggest impact on businesses in 2025. Everyone should be aware of these risks and be attentive to understanding the landscape and what is happening around them.

[13:17] Monitor regulatory agencies. Learn where and how to collect information and who should get the information you collect. Get training for the regulatory affairs team and the broader company on how to collect, summarize, and convey this information.

[14:04] The third point is to understand that now you have some technology that can help in this process. Understand what your needs are and adopt AI technology to some aspects of your workflow to solve some critical challenges you have.

[14:34] Understand what your workflow is. If you digitalize a process that is not optimal, you end up with a suboptimal digitalization and outcome. Study your current process and challenge it to see how it could be improved. Understand where technology can be leveraged in your process.

[15:10] RegASK helps companies to understand their workflow and how it can be improved. Caroline recommends picking the right partner to help you. Caroline notes that RegASK has been featured in a Gardner industry report on regulatory agencies and technology solutions.

[16:18] Plug Time! RIMS Webinars! On Thursday, December 12th, our final RIMS Webinar of 2024 will be presented by OneTrust: "Staying Vigilant: 7 Practical Tips for Ongoing Third-Party Risk Monitoring".

[16:35] More webinars will be announced soon and added to the RIMS.org/webinars page. Go there to register. Registration is complimentary for RIMS members.

[16:47] RIMS is now accepting nominations for all awards other than Risk Manager of the Year 2025. The submission deadline is Monday, January 6th, 2025. To receive a RIMS award, all winners must be active members and in good standing.

[17:07] These awards are the Diversity, Equity, and Inclusion Chapter Leadership Award, the Harry and Dorothy Goodell Award, the Volunteer of the Year "Heart of RIMS" Award, the Richard W. Bland Memorial Award, the Chapter of the Year Award, the Rising Risk Professional Award, the Risk Management Hall of Fame, and the Cristy Award.

[17:44] You can find more information about the awards through the About Us page of RIMS.org or the link in this interview's show notes.

[17:52] Nominations are also open for the Donald M. Stuart Award which recognizes excellence in risk management in Canada. Links are in this episode's show notes.

[18:04] Back to the Interview with Caroline Shleifer!

[18:20] Justin likes the part in the report that zeroed in on AI in regulatory risk management: augmentation, automation, and acceleration, three areas where AI will add value to daily activity.

[19:10] Caroline says these are the key areas where the technology can support regulatory risk professionals. She gives an example of augmentation. AI can take the capture of regulatory change and augment it with external information that can come into play.

[19:40] You can augment your initial data with additional feedback from your internal team's experience and external experts. With technology, you can easily collaborate and have information in one place and integrated into your workflow.

[20:29] Acceleration is about speeding up your workflow. Instead of searching multiple databases and websites, AI technology can leverage the search much faster. You type a question to get sources of information and then converse intelligently with the system.

[21:12] Automation handles mundane repetitive tasks. You can automate searching for regulatory agency information.

[22:01] The report also highlights ESG as an area of increasing regulation internationally. ESG regulations demand increased transparency and focus on sustainability practices, labor rights, corporate governance, environmental regulations, and more.

[22:45] There is a broad spectrum of additional regulations and directives you have to look at and monitor. It's evolving quickly.

[23:00] The first thing is to integrate ESG into the risk framework. Establish an ESG-specific risk management process such as a governance compliance check, supply chain audit, and so forth.

[23:17] The second aspect is the reporting and disclosure using robust reporting tools. Look at the mandatory disclosure requirements. Make regular improvements in your reporting.

[23:41] Reporting requires collaboration across functions, such as sustainability, HR, corporate governance, and other teams to align on the ESG initiatives versus regulatory expectations. It's across the organization. Collect and then disseminate the information across the organization.

[24:09] Finally, monitoring the evolving global ESG standards, emerging social responsibility regulations, and environmental and sustainability regulations. There is a lot to take care of and companies are not always well-equipped to do so. It requires a lot of attention and structure.

[24:54] Regulatory affairs professionals are collecting the regulatory changes and requirements for compliance. They summarize them and highlight the potential impacts and risks for the company. For instance, regulation around packaging can put a supply chain at risk.

[25:24] This information needs to be passed on to the risk management and compliance decision-makers. These are early signals they get much faster than when they waited for the information to be processed manually. That can give them more time to prepare the response.

[26:14] This data-driven decision-making helps teams prepare better for compliance and active risk identification.

[26:33] RegASK has about 35 employees and a global community of about 2,000 spread across more than 120 countries.

[27:11] Caroline credits technology such as Teams and Zoom for helping RegASK continue to function during COVID-19. It's super easy to collaborate remotely now and be productive. When she needs to meet in person, Caroline enjoys meeting with different teams in different places.

[28:01] Caroline thinks remote work brings some additional energy and creativity with teams being in various countries and regions.

[28:14] Caroline uses AI in her work. She uses it day-to-day in testing RegASK's products and functionality, sales process, and drafting marketing materials. Now it's how you adapt AI rather than do you adapt AI. How can you leverage it efficiently in a very specific use case?

[29:07] After the creativity and value added by humans, AI is helping in different processes.

[29:20] Special thanks again to Caroline Shleifer of RegASK for joining us here on RIMScast. "The 2025 State of Regulatory Affairs and Compliance Report" is now publicly available. A link is in this episode's show notes.

[29:37] I've also listed links in this episode's show notes to RIMS and Risk Management Magazine reporting and coverage of AI and AI adoption. Check it out!

[29:50] More RIMS Plugs! You can sponsor a RIMScast episode for this, our weekly show, or a dedicated episode. Links to sponsored episodes are in our show notes. RIMScast has a global audience of risk and insurance professionals, legal professionals, students, business leaders, C-Suite executives, and more. Let's collaborate and help you reach them! Contact pd@rims.org for more information.

[30:36] Become a RIMS member and get access to the tools, thought leadership, and network you need to succeed. Visit RIMS.org/membership or email membershipdept@RIMS.org for more information.

[30:53] Risk Knowledge is the RIMS searchable content library that provides relevant information for today's risk professionals. Materials include RIMS executive reports, survey findings, contributed articles, industry research, benchmarking data, and more.

[31:09] For the best reporting on the profession of risk management, read Risk Management Magazine at RMMagazine.com. It is written and published by the best minds in risk management.

[31:24] Justin Smulison is the Business Content Manager at RIMS. You can email Justin at Content@RIMS.org.

[31:31] Thank you all for your continued support and engagement on social media channels! We appreciate all your kind words. Listen every week! Stay safe!

Mentioned in this Episode:

RIMS DEI Council

RIMS-Certified Risk Management Professional (RIMS-CRMP)

RIMS-CRMP Stories — Featuring Manny Padilla!

Nominations open for RIMS 2025 Awards! (Through Jan. 6, 2025)

Nominations for the Donald M. Stuart Award

"RegASK: The 2025 State of Regulatory Affairs and Compliance Report"

RIMS Risk Management Magazine, "Managing the Risks of Emerging AI Regulations"

RIMS Risk Knowledge: Artificial Intelligence

RIMS Webinars:

"Staying Vigilant: 7 Practical Tips for Ongoing Third-Party Risk Monitoring" | Sponsored by OneTrust | Dec. 12, 2024

RIMS.org/Webinars