[Ai in finance] AI in regulatory compliance, risk management, and auditing
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Transcript of [Ai in finance] AI in regulatory compliance, risk management, and auditing
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AI in Finance: Regulatory Compliance, Risk Management, and Auditing
Natalino Busa - Head of Data Science
https://en.wikipedia.org/wiki/File:DTI-sagittal-fibers.jpg
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What’s in the next hour?
Machine learning and cognitive computing for :
• Regulatory Compliance• Process and Financial Audit• Operational Risk Management• Data Management
Discussion
• Q&A• Ideas, use cases
Recommendations
• Data computing systems• Tools, and Skills
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5http://www.bibler.org/images/overlay/reni-moses_with_the_tables_of_the_law.jpg
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Moving towards digital
Design QueriesVerify?
Comply?
Run Queries
Check Reporting
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Meet the band at the bank
Business developer
Data Scientist
Database Admin
Devops
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Data-driven Compliance
❏ Distributed systems: time❏ Complete, Correct, Coherent Information❏ Human and Machine Errors❏ Incorrect Interpretation of Regulations❏ Attacks, Frauds, Exploits
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Auditing + Compliance + ORM
Counting ThingsKnown Knowns
Talking about the:Expressive Power of SQL
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AI and Machine Learning to the rescue
NLP - Process Mining Anomaly Detection - Knowledge Graph
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What is NLP? Transforming free text into structured data and back
Computer Science + Linguistic
Based on Algorithms,
Machine Learning and Statistics
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What problems does NLP solve?
Question Answering
Machine Translation
Text Summarization
Topic Extraction
Semantic Search
Spelling correction
Sentiment Analysis
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LDA: extract topics from documents
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Semantic Search
The ... sleeps on the mat
w(t-1) w(t+1) w(t+2) w(t+3) w(t+4)
embedding
w(t)
dog, cat
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Semantic Search Word2Vec, Par2Vec, Doc2Vechttps://arxiv.org/pdf/1405.4053v2.pdfhttps://arxiv.org/pdf/1301.3781v3.pdf
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NLP to SQLTransform Natural Language Question to Database SQL queries
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Google: open source NLP parserscoring 95% in grammar accuracy
https://github.com/tensorflow/models/tree/master/syntaxnet
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Operational Risk Management
- Benefits -
1. Reduction of operational loss.2. Lower compliance/auditing costs.3. Early detection of unlawful activities.4. Reduced exposure to future risks.
EstablishContext
Risk assessmentIdentification
Analysis - Evaluation
Risk Treatment
Monitor & Review
ORM
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Unknown unknowns in ORM
Looking for something we don’t know we should be looking for
• Unexpected Services Failing• Suspicious Access schemes• Fraudulent Transactions
Looking for Patterns,Looking for Anomalies
IT Risk
Model Risk
Legal Risk
CyberSecurity
Fraud Risk
Conduct Risk
Money Laundry
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Network Intrusion detection
http://billsdata.net/?p=105
It contains 130 million flow records involving 12,027 distinct computers over 36 days (not the full 58 days claimed for the entire data release).
Each record consists of: time (to nearest second), duration, source and destination computer ids, source and destination ports, protocol, number of packets and number of bytes
Techniques: TDA, Dimensionality Reductionhttps://en.wikipedia.org/wiki/Nonlinear_dimensionality_reduction
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AI Tools
http://www.shivonzilis.com/machineintelligencehttps://www.oreilly.com/ideas/the-current-state-of-machine-intelligence-3-0
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AI based solutions: Enterprises
http://www.shivonzilis.com/machineintelligencehttps://www.oreilly.com/ideas/the-current-state-of-machine-intelligence-3-0
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AI based solutions: Industries
http://www.shivonzilis.com/machineintelligencehttps://www.oreilly.com/ideas/the-current-state-of-machine-intelligence-3-0
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AI based solutions
AI Tools: Exist but may be too narrow in scopeData + Libraries + Scientists: Still the way to go for customization
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Hype it right. Understand the limitations of current systems
Google’s Self-Driving Car Program Odometer Reaches 2 Million Miles
http://www.wsj.com/articles/googles-self-driving-car-program-odometer-reaches-2-million-miles-1475683321
Deep learning as a tool for increased accuracy and efficiency of histopathological diagnosis
http://www.nature.com/articles/srep26286
Why is AI so difficult?
http://waitbutwhy.com/2015/01/artificial-intelligence-revolution-1.htmlhttp://www.forbes.com/sites/gilpress/2016/10/31/12-observations-about-artificial-intelligence-from-the-oreilly-ai-conference/http://www.tor.com/2011/06/21/norvig-vs-chomsky-and-the-fight-for-the-future-of-ai/https://www.safaribooksonline.com/library/view/oreilly-ai-conference/9781491973912/video260721.html
Down the rabbit hole.
https://youtu.be/_1Cyyt-4-n8https://youtu.be/u6aEYuemt0Mhttps://youtu.be/bEUX_56Lojc