COO Magazine Q3 2024

Managing Operational Risks with Advanced AI: Insights from Behavox

Fahreen Kurji
Chief Customer Intelligence Officer

In today’s financial landscape, operational risks are a persistent challenge, threatening the stability, reputation, and legal standing of organisations.

These risks, ranging from insider threats to market abuse, demand robust solutions. Financial firms face critical questions such as:

  • How can we effectively identify and mitigate operational risks?
  • How do we ensure compliance with ever-evolving regulatory expectations?
  • What role can advanced technology, like AI, play in enhancing our risk management frameworks?
  • How do we maintain a secure and resilient operational environment amid growing threats?

Addressing these risks requires robust solutions and advanced technology. In this interview, Behavox, a leader in AI-driven risk management, shares how their innovative tools tackle these issues head-on.

Interviewer: How can financial firms effectively identify and mitigate operational risks?

Behavox: Operational risks in financial services often stem from failures in internal processes, people, and systems, or external events. Two significant risks are insider threats and market abuse. Insider threats involve employees misusing their access to confidential information, potentially causing severe financial and reputational damage.

Market abuse includes actions like market manipulation and insider trading, which undermine market integrity and investor trust. For example, the SEC has imposed significant fines on firms failing to detect insider trading, such as the $16 million fine on Nomura Securities in 2020.

We address these challenges with a suite of AI-powered products. Our communication surveillance platform, Quantum, monitors and analyzes employee communications to detect unethical behaviors and market abuse using advanced machine learning algorithms. This proactive approach allows firms to address issues before they escalate, ensuring higher levels of compliance and risk management.

Interviewer: How do firms ensure compliance with ever-evolving regulatory expectations?

Behavox: Ensuring compliance with regulatory expectations is critical. Regulatory bodies like the SEC and FINRA mandate the archiving of communications as a regulatory necessity. Quantum is pivotal in monitoring and analyzing employee communications for unethical behavior.

Our Intelligent Archive goes beyond mere storage by enhancing compliance with advanced search capabilities, allowing swift responses to regulatory inquiries. Falcon, our human risk management platform, predicts and manages human behaviors that could escalate into risks.

Additionally, our Pathfinder chatbot provides AI-driven guidance for finance professionals, helping them navigate complex compliance queries and prevent inadvertent breaches.

Interviewer: What role can advanced technology, like AI, play in enhancing risk management frameworks?

Behavox: AI is at the core of our solutions, significantly enhancing our risk management frameworks. Falcon analyzes behavioral patterns to predict and manage risky actions, allowing early intervention.

Our specialized large language model for the financial sector, Behavox LLM 2.0, offers precise explanations, summarizations, and complex financial calculations, enhancing the overall risk management framework. AI’s ability to process vast amounts of data quickly and accurately makes it indispensable for identifying potential risks and ensuring compliance.

Interviewer: How do we maintain a secure and resilient operational environment amid growing threats?

Behavox: Transparency and security are essential for maintaining a resilient operational environment. Our AI models are designed to be explainable, providing clear insights into their decision-making processes. This transparency is crucial for internal teams and regulators to trust and verify the outcomes driven by our AI. We support over 46 languages, ensuring our solutions can serve organizations worldwide. This multilingual capability overcomes geographical and linguistic barriers, maintaining a unified standard of compliance and risk management across global operations.

Our commitment to security is demonstrated through rigorous standards, including SOC II certification. We ensure that all data is handled in a secure, compliant, single-tenant environment, providing peace of mind about the integrity and confidentiality of their data. Real-world examples, such as the stringent data protection requirements in the EU’s GDPR, underscore the necessity for such robust security measures.

Behavox’s advanced AI solutions empower financial firms to navigate complexities with confidence, ensuring a safer and more efficient operational environment. By proactively addressing operational risks, maintaining compliance with regulatory expectations, leveraging advanced technology, and ensuring security and transparency, Behavox helps businesses protect their integrity and enhance productivity.

This article is taken from our iCOOC Industry Paper on Operational Resilience. If you would like a copy of this Industry Paper please contact Will Parry, Head of Research and Interim Lead at Armstrong Wolfe.

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