What Can Artificial Intelligence Do for Me if There Is a Regulatory Change?
There are many internal and external situations that drive a hard requirement to understand what is in contracts, including lawsuits, data breaches, a financial status downgrade, M&A activity, or a regulatory change, just to name a few.
Regulatory events are becoming more prevalent, including accounting changes such as IFRS 15 for revenue recognition and IFRS 16 for the treatment of leases, and also new ones designed to ensure large financial institutes have plans for possible economic downturns, including EBA “write down rules,” and, SR 14-1 and “Living Wills” reporting for US-based banking institutions. When a contract discovery and analytics system has found and extracted a set of more common terms from contracts, it can then function as a search engine for contracts. Users can create extraction policies to cover new areas for compliance, and they can do it in a way that is more cost effective and far faster than manual reviewing.Going back to IFRS 16 as an example, a user can search for lease agreements, then, after they are all found and processed, run search policies for leases with maintenance or services included. The system can find just those items within leases, and allow an organization to make the decision to separate the lease for the asset or assets from the potential services included with that asset. The new system can account for them in a way that meets compliance, and also benefits the financial reporting of the organization. Just imagine the costs of the traditional review in this case, finding all lease agreements, having someone read each one looking for a services element, extracting the details of the asset vs. services leasing, and then passing that to the Legal and Finance teams to restructure the lease for IFRS 16 compliance reporting.
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