The intersection of technology and assurance functions is emerging as a critical area of focus for organizations aiming to streamline operations and enhance efficiencies. According to industry analysts at Gartner, Inc., legal, risk, and compliance (LRC) leaders are poised to significantly escalate their investments in technology. With projected spending expected to double by 2027, this surge is largely driven by the immense potential seen in Artificial Intelligence (AI) and Generative AI (GenAI) to automate an array of high-volume, low-value tasks. Despite the rosy outlook on productivity gains, Gartner experts advise a measured approach, warning of the premature nature of these expectations.
The Role of AI and GenAI in Legal, Risk, and Compliance
AI at the Peak of Inflated Expectations
The impact of AI within LRC functions is coming into sharper focus, as highlighted in Gartner’s Hype Cycle for Legal, Risk, Compliance, and Audit Technologies 2024. This seminal assessment illustrates the current status of numerous innovations, placing AI at the Peak of Inflated Expectations. This position underscores the prevalent wave of enthusiasm surrounding AI-enabled capabilities and their transformative potential. Weston Wicks, senior director analyst at Gartner Legal & Compliance Practice, emphasizes the importance of pinpointing optimal use cases for piloting AI technologies while adopting a cautious stance towards the prevalent hype.
The drive to implement cutting-edge AI solutions is partially fueled by the escalating complexity of regulatory landscapes, which necessitates the deployment of advanced tools like GenAI to navigate these challenges. Compliance monitoring solutions, for example, are advancing through the Hype Cycle as organizations recognize their value in managing intricate regulatory requirements. Moreover, adjacent innovations in the analytics sector, such as data and analytics governance, audit analytics, and legal analytics, are also progressing towards maturity. These developments indicate that AI, particularly GenAI, will significantly influence related technologies, fostering a more data-driven approach in LRC functions.
Trends Influencing the Hype Cycle
Within the context of the 2024 Hype Cycle, assurance leaders are keen on incorporating novel technologies to address pressing regulatory complexities. This enthusiasm has spearheaded substantial advancements in compliance monitoring solutions, which are becoming critical tools in the legal and risk management playbook. Similarly, GenAI’s role is growing, impacting various facets of analytics, including advanced contract analytics, which are inching closer to practical application stages. This progression is indicative of a maturing technology landscape where innovation is continually reshaping operational strategies.
Gartner’s projections suggest that the vigor around GenAI will reverberate through other technology segments, leading to faster advancement of pivotal solutions in the analytics domain. Specifically, data management, audit processes, and legal operations are poised to benefit from these evolving technologies. These tools promise to enhance the efficiency and accuracy of compliance measures, providing a robust framework for navigating the multifaceted regulatory environment. Nevertheless, Gartner experts remain cautious, urging a balanced view of the potential benefits against the inherent risks associated with early adoption of AI and GenAI.
Strategic Focus and Risk Management
Prioritizing Mature Technologies
Despite the growing excitement surrounding GenAI, Gartner advises assurance leaders to maintain a strategic focus on more mature innovations that are approaching the Plateau of Productivity. Technologies such as corporate legal operations tools, contract lifecycle management systems, and privacy management solutions are earmarked for their potential to deliver immediate productivity gains. This pragmatic approach ensures that organizations can leverage well-established tools to optimize their processes while gradually integrating more advanced AI solutions.
The emphasis on mature technologies aligns with the need for robust information management and data governance practices, which are critical for the successful deployment of AI in assurance functions. These established solutions offer a lower risk profile compared to nascent AI innovations, making them suitable for immediate implementation. According to Gartner, focusing on these technologies provides a balanced pathway for organizations to enhance their operational capabilities while gradually adapting to the transformational prospects of AI.
Navigating Risks with Human Oversight
The intersection of technology and assurance functions is quickly becoming a key focus for organizations looking to streamline operations and improve efficiencies. Industry analysts at Gartner, Inc. report that leaders in legal, risk, and compliance (LRC) sectors are set to significantly boost their spending on technology. By 2027, the investment is expected to double, driven mainly by the promising potential of Artificial Intelligence (AI) and Generative AI (GenAI) to automate numerous high-volume, low-value tasks. These technologies hold immense promise for increasing productivity. However, despite this optimistic outlook, Gartner experts caution that expectations should be tempered. They warn that the transformative benefits of AI and GenAI are still in their early stages and may take time to fully materialize. Thus, a balanced and measured approach is advised to ensure that the integration of these technologies leads to sustainable and effective enhancements in operational efficiency.
