In today’s fast-evolving regulatory landscape, staying ahead of emerging risks and compliance requirements is essential for any organisation. When it comes to regulatory monitoring, horizon scanning has emerged as a proactive tool in helping businesses navigate regulatory changes, anticipate challenges, and staying compliant.
As opposed to reacting to regulations after they’re enforced, companies which implement effective horizon scanning stay prepared, often turning compliance into a strategic advantage.
For compliance teams, it’s about tracking evolving regulations, identifying upcoming policies, and preparing the business to meet these demands head-on.
The regulatory environment is more fluid than ever. Rapid advancements in technology, geopolitical shifts, and growing concerns around data privacy and cybersecurity are driving unprecedented regulatory changes. These complexities make horizon scanning critical for organizations to maintain compliance in an ever-changing world.
Horizon scanning provides a competitive edge by helping organisations stay ahead of regulatory changes. When businesses can anticipate regulatory shifts or emerging risks, they’re in a better position to adjust policies, implement controls, and avoid costly penalties.
Additionally, early identification of trends gives compliance teams the time they need to optimise business strategies, ensuring that the organisation stays competitive while remaining compliant with new laws.
For example, when the FCA releases consultation papers, there is a small window for organisations to respond and act on it. Staying on top of horizon scanning proactively will help you visualise how the regulation takes shape and predict how it will affect your organisation.
Despite the advancements in technology, modern horizon scanning still comes with challenges:
The sheer volume of data available can be overwhelming, especially for businesses operating in multiple sectors and jurisdictions. Filtering through the noise to identify relevant regulations is critical but challenging without the right tools. Below is a representation of the number of regulations that a financial organization in the EU faces annually.
There’s always a level of uncertainty in regulatory changes, especially when political or economic events drive them. Compliance teams must remain agile to adapt quickly to unexpected developments or pay the price for delays.
Smaller organisations may struggle with the cost of implementing advanced horizon scanning tools, especially those involving AI or global coverage. Most small teams use consultants or lawyers when needed to compliment the understanding of the existing team's skills. However, investing in an AI-first solution can pay off in the long term by reducing not only the compliance risks but also the time needed from your team to stay on top of it.
The traditional method of Horizon Scanning is a manual process comprising of 100% human effort, usually contributed by analysts, journalists, lawyers etc) reading, interpreting and summarising from various sources on the internet.
The process involves parsing the internet for updates from various regulatory bodies and manually checking against internal process, procedures and controls to check for any gaps. Largely regarded as the most time-consuming method of all, the traditional way is still followed amongst companies.
The next stage of evolution in compliance tech and horizon scanning involves compliance teams which built scrapers and automation to pull the information from across the internet and using rule-based approaches to match an update based on their profile and products. Rule-based filtering is also prevalent amongst many organisations today, where teams are optimising their bandwidth to save time on horizon scanning. There are two challenges with rule based matching.
While it does streamline and automate horizon scanning for financial institutions, there is still a large portion of the exercise which is dependent on manual work. This is counterproductive to the automation that is expected from the process and has potential to evolve further to add value and increase efficiency.
The final and most modern approach of all is the AI-powered Horizon Scanning approach. This approach consumes significantly less time than the first two. Here’s how the Zango AI approach works - We start by training our AI models with the information that is provided on the website, your internal governance documents, your onboarding form and any other additional information you have provided us with. We train our AI models on this data to learn and intelligently streamline regulations that match your business and eventually, bring down the noise.
At Zango, we ensure to seamlessly fit into your existing team’s processes by utilizing information that is already available, thereby gathering a deep insight into the company’s requirements, yet keeping the training light on the team.
Some of the reasons why the AI approach is regarded superior when compared to its predecessors is:
AI approach is regarded time-saving and cost-optimal because of its nature to implement and translate accurately, a job where consultants are hired to translate when the company is present across different countries and languages.
Horizon scanning practices have significantly evolved over time, transitioning from traditional methods of trend analysis and expert consultations to more advanced, data-driven approaches. The implementation of Large Language Models (LLMs) in horizon scanning has been transformative.
LLMs can process vast amounts of information from diverse sources—ranging from academic publications and news articles to social media and niche reports—enhancing and supercharging the capacity of human analysts.
Thus, the evolution of horizon scanning practices not only enhances foresight capabilities but also reduces the cognitive load on human analysts, allowing them to focus on strategic decision-making. Everything that the AI produces goes through a layer of human verification and validation, thereby providing optimal results, without compromising on trust.
This is how we envision the future of horizon scanning and compliance - where the AI engine and human expertise intersect to make life easier for teams.
Keeping up with compliance has never been simpler; automate compliance processes
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