IBM Watsonx.ai Management Tools Unleash GenAI Potential.
US regulators like the FRB, SEC, and OCC require financial services firms to show that their risk governance structure addresses laws, rules, and regulations (LRRs). This monitoring helps maintain a safe and dependable control environment that meets tighter rules and the organization’s risk tolerance.
However, determining the applicability of banking regulations to particular sections of a legislation can be a difficult and subjective process that calls for expert judgment. Based on the bank’s attributes, such as being a Global Systemically Important Bank (GSIB) or providing certain goods and services, banks frequently depend on outside suppliers to evaluate LRRs and generic controls.
Furthermore, LRRs are always changing, as are other industry frameworks like the Control Objectives for Information and Related Technologies (COBIT), Information Technology Infrastructure Library (ITIL), and National Institute of Standards and Technology (NIST).
This ongoing development necessitates constant work to help guarantee that the organization’s control environment is free of holes. Regretfully, it takes a lot of time and frequently causes delays to manually link LRRs to rules, standards, procedures, risk metrics, and controls. This procedure creates a discrepancy between the organization’s capacity to prove compliance with LRRs and regulatory expectations.
For instance, a bank may have a policy requiring the protection of its clients’ personal information, and the standard may call for the encryption of such information. In that scenario, the control would assist in guaranteeing that personal data is encrypted, and the procedure would specify the steps to encrypt it. However, the bank may not be able to prove compliance with the encryption standard, putting them at risk of noncompliance, if the links between LRRs and controls are not updated promptly.
The watsonx Regulatory Compliance Platform reduces manual effort for control owners, compliance, risk and legal teams
Legal and regulatory requirements can be mapped to a risk governance framework using IBM Watsonx, which also automates the identification of regulatory duties. This solution facilitates the verification of compliance with current responsibilities by examining governance documents and controls and connecting them to relevant LRRs. By using this technology, audit, compliance, risk, legal, IT, and business control owners can construct and maintain LRR libraries with a great deal less human labor.
For instance, Watson Discovery can undertake an effect analysis by actively searching the internet for regulatory revisions for a certain group of LRRs. Watson Assistant can be utilized as an interactive Q&A tool to answer questions from external parties, auditors, and regulators regarding the risk and control environment in a conversational fashion. A risk and compliance program is increasingly using large language model (LLM), which need little to no training.
To apply the banks’ different process, risk, and control taxonomies, LLMs stored in Watsonx augment LRR and governance data. A prompt evaluates an obligation using a programmed approach. For instance, every risk category of the company, including strategic, reputational, wholesale, interest rate, and liquidity risks, would be examined to see what applies. The matching categories to internal controls and other pertinent policy and governance datasets are supported by the improved metadata.
When the content is publicly accessible, whether from third parties or is curated by the organization in an obligation’s library, the procedure is uniform and repeatable across regulations. IT and cybersecurity frameworks like NIST, ITIL, COBIT, Cloud Security Alliance Control Matrix, Federal Financial Institutions Examination Council (FFIEC), and others are included in the mapping and coverage capabilities that are not exclusive to LRRs.
The solution may link the pertinent LRRs to the applicable NIST controls, for example, if a bank wishes to guarantee adherence to the NIST cybersecurity framework. This gives the bank a clear and thorough picture of its cybersecurity posture.
IBM Watsonx.ai
How the watsonx Regulatory Compliance Platform accelerates risk management
The platform’s advanced artificial intelligence (AI) modules, IBM Watsonx.ai, watsonx.gov, and watsonx.data, provide a variety of cutting-edge technical features tailored to the particular requirements of the sector. These components, which may be installed on-premises or in any cloud, are based on IBM’s cutting-edge AI technology.
Users can participate in the whole lifecycle management of generative AI (gen AI) solutions within the IBM Watsonx.ai platform, which includes training, validation, tuning, and deployment processes. Watsonx.ai supports a variety of natural and programming language use cases by facilitating the development of expanded language models through the usage of foundation models from IBM and other sources.
The platform includes the cutting-edge Prompt Lab tool, which was created especially to expedite prompt engineering procedures. By using pre-written sample prompts, customers may confidently start their regulatory and compliance projects quickly and save successful prompts as notebook entries or reusable resources.
Interestingly, the prompt engineering parameters, model references, and prompt wording are all carefully formatted as Python code inside notebooks, enabling smooth programmable interaction. Additionally, IBM Watsonx.ai provides the Tuning Studio function, which enables users to iteratively steer foundation models toward outputs that are more in line with their particular needs.
Watsonx.governance‘s comprehensive suite of tools allows customers to quickly construct responsible, transparent, and explainable AI workflows that are suited to both machine learning and generative AI models. When installed, watsonx.governance combines the features of AI factsheets and Watson OpenScale with the Model Risk Governance features of OpenPages into a single service.
Watsonx.governance also expands its governance features to include generative AI assets. This platform enables users to evaluate machine learning models and foundation model prompts, build AI use cases for the methodical tracking of solutions addressing relevant business concerns, and develop processes while precisely monitoring lifecycle activities.
By supporting data from various sources and removing the requirement for migration or cataloging through open formats, IBM Watsonx.data enables scalable analytics and AI initiatives. This method reduces data duplication and extract, transform, and load (ETL) operations while allowing centralized access and sharing. Data preparation for a variety of applications, including retrieval augmented generation (RAG) and other machine learning and generative AI use cases, is made easier by integrated vectorized embedding capabilities.
Without the need for SQL knowledge, a conversational interface driven by Gen AI makes data discovery, augmentation, and visualization easier. Interoperability is ensured by smooth interface with current data stacks, tools, and databases.
All things considered, using Watsonx for regulatory compliance provides a revolutionary method of transparently and responsibly managing risk and AI projects. Organizations may easily handle the intricacies of regulatory requirements by utilizing its full range of capabilities. This makes it easier to guarantee ethical AI practices throughout the whole lifecycle, from data management to model training. IBM Watsonx.ai enables users to confidently evaluate, track, and improve AI workflows, promoting creativity and confidence in AI-driven solutions while easing regulatory compliance.
