Author: Manisha Gupta, Student of LLM 2 Semester at Jagannath University, Jaipur
Co-Author: Dr.Varsha Dhabhai, Associate Professor at Jagannath University, Jaipur
ABSTRACT
Artificial intelligence (AI) is transforming the landscape of corporate compliance and legal risk management. Technologies such as machine learning and natural language processing are equipping compliance officers with tools to monitor transactions and organizational activities in real time. These tools can identify potential regulatory violations and detect suspicious behavior, enabling a proactive approach to compliance. By analyzing vast datasets, AI enhances risk assessment and mitigation strategies, offering insights into potential threats such as credit defaults, fraud, and cybersecurity breaches.
Despite its growing application across various sectors, AI introduces complex legal challenges. Chief among these is algorithmic discrimination—an increasingly scrutinized issue that may expose organizations to liability for unfair or biased outcomes. To mitigate such risks, transparency and accountability in AI decision-making processes have become imperative. Moreover, AI’s reliance on large volumes of data raises significant privacy concerns. Compliance with data protection regulations such as the General Data Protection Regulation (GDPR) requires stringent data governance practices.
Beyond the legal implications, ethical considerations surrounding AI use cannot be overlooked. Businesses must navigate the delicate terrain of AI ethics to ensure that their systems operate in a fair, responsible, and transparent manner. Failure to adhere to ethical or regulatory standards can not only result in legal penalties but also damage corporate reputation.
In conclusion, while AI presents significant opportunities for enhancing compliance and risk management, it also introduces a host of legal and ethical concerns that organizations must address. Striking a balance between leveraging AI’s capabilities and adhering to established legal and ethical norms is essential to maximizing its benefits while minimizing associated risks.
Keywords: AI Compliance, Legal Risks, Algorithmic Bias, Data Privacy, Risk Mitigation.
