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Digital Foundation , Endless Possibilities
Adil Buhariwalla, Partner Internal Audit & Risk Consulting
April 17, 2019
“The AI IA” – Artificially Intelligent Internal Auditor
IIA Gulf Regional Audit ConferenceAbu Dhabi, 16th to 18th April 2019
Crowe Mak, UAE(Member Firm of Crowe Global)
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Agenda
• Naturally Intelligent Internal Auditor
• Artificial Intelligence
• Artificially Intelligent Internal Auditor
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The traits of a “Naturally Intelligent” Internal Auditor
• Risk-based orientation• Governance expertise• Global perspective• Business acumen • Superb communicator (Written & Oral communication, Presentation skills)• Impactful presence• Collaborative• Technologically adept (CAATS, Flowcharting, Risk Mapping Tools, etc.)• Creative and analytical thinking, and problem solving• Strong ethical compass• Outstanding recruiter, manager and developer of talent• Relationship expert (Interpersonal skills)• Unquestioned leadership ability
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The birth of Artificial Intelligence??
1950 TURING TEST: Computer scientist Alan Turing proposed a test for machine intelligence
If a machine can trick humans into thinking it is human, then it has intelligence
1955: The term 'artificial intelligence’ was coined by computer scientist, John McCarthy to describe
“the science and engineering of making intelligent machines”
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Definition of Artificial Intelligence
Artificial intelligence is a branch of computer science which is based on the understanding that the process of human
intellect can be mechanized
• ability to learn• use language to communicate• experience and think• develop feelings• form concepts
• understand• apply logic and
reasoning• develop capacities to
recognize patterns• comprehend ideas
• plan• solve problems• make decisions• retain information
HUMAN INTELLECT
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Artificial Intelligence – different names
• Informatics•Machine learning•Knowledge-based systems•Cognitive systems•Intelligent systems•Intelligent agents•Computational intelligence
The new names help to procure funding by avoiding the stigma of false promises attached to the name "artificial intelligence"
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Today’s world of Artificial Intelligence
A. “AI, Sky High” - those who cannot stop praising its virtues
B. “AI, Oh My!” - those who paint doomsday scenarios about the –ve outcomes of AI
C.“AI, A Big Lie!” - those who are sceptical about the usefulness of AI
D. “AI, Please Clarify” -those who don’t know enough about AI to decide one way or another about it
AI
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Group ‘A’ – AI, Reach for the Sky….
Product Try-OnInstantly try on eye, lip and cheek make-up
Visual Artists
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Capabilities of AI
Does not need to sleep, rest or take breaks
Can organize and manage
Can interact with humans
Can think logically without emotions, with less or no mistakes
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Group ‘B’ – “AI, Oh My!”
What if, AI is programmed to do something devastating!
What if, AI is programmed to do something beneficial, but it develops a destructive method for achieving its goal
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Group ‘B’ – “AI, Oh My!”....
We humans control our planet, not because we’re the strongest, fastest or biggest, but because we’re the smartest
If we’re no longer the smartest, are we assured to remain in control
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Group ‘B’ – AI, Oh My! …..
Customer privacy and Security of AI systems
Large-scale job losses
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• Managing Directors and Chief Executives
• General and Operations Managers*• Software and Applications Developers
and Analysts*• Data Analysts and Scientists*• Sales and Marketing Professionals*• Human Resources Specialists• Risk Management Specialists• Financial and Investment Advisers• Database and Network Professionals• Supply Chain and Logistics Specialists
• Information Security Analysts*• Organizational Development
Specialists*• Chemical Processing Plant
Operators• University and Higher Education
Teachers• Compliance Officers• Energy and Petroleum Engineers• Robotics Specialists and Engineers• Petroleum and Natural Gas Refining
Plant Operators
Examples of Stable Roles
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• Data Analysts and Scientists*• AI and Machine Learning Specialists• General and Operations Managers*• Big Data Specialists• Digital Transformation Specialists• Sales and Marketing Professionals*• New Technology Specialists• Organizational Development
Specialists*• Software and Applications Developers
and Analysts*• Information Technology Services• Process Automation Specialists• Innovation Professionals
• Information Security Analysts*• Ecommerce and Social Media
Specialists• User Experience and Human-
Machine Interaction Designers• Training and Development
Specialists• Robotics Specialists and Engineers• People and Culture Specialists• Client Information and Customer
Service Workers*• Service and Solutions Designers• Digital Marketing and Strategy
Specialists
Examples of New Roles
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• Data Entry Clerks• Accounting, Bookkeeping and Payroll
Clerks• Admin. & Executive Secretaries• Assembly and Factory Workers• Customer Service Workers*• Business Svcs. & Admin. Managers• Accountants and Auditors• Material-Recording and Stock-
Keeping Clerks• General and Operations Managers*• Postal Service Clerks• Financial Analysts• Cashiers and Ticket Clerks
• Mechanics and Machinery Repairers• Telemarketers• Electronics and Telecommunications
Installers and Repairers• Bank Tellers and Related Clerks• Car, Van and Motorcycle Drivers• Sales and Purchasing Agents and
Brokers• Door-To-Door Sales Workers, News
and Street Vendors, and Related Workers
• Statistical, Finance and Insurance Clerks
• Lawyers ??
Examples of Redundant Roles
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Shifting Skill Needs within MENA Region
89% Looking to automate the work
84% Hire new permanent staff with skills relevant to technologies
76% Retain Existing Employees
73% Expect existing employees to pick-up skills on the job
72% Hire new temporary staff with skills relevant to new technologies
69% Outsource some business functions to external contractors
56% Hire freelancers with skills relevant to new technologies
53% Strategic redundancies of staff who lack skills to use new technologies
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Ratio of Human to Machine Hours: 2018 vs. 2022 (projected)
Reasoning and decision-making
Coordinating, developing, managing, advising
Communicating & Interacting
Administering
Performing physical/manual work activities
Identifying & Evaluating job-related information
Performing technical and complex activities
Looking for & receiving job related information
Information and data processing
Human Machine Human Machine2018 2022
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Group ‘C’ – “AI, A Big Lie!”
• Potential lack of transparency
• High implementation costs
• Lengthy implementation times
• Ethical aspects of replicating human intelligence
• Integration challenges and lack of understanding of the state-of-the-art systems
• Usability and interoperability with other systems and platforms
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Group ‘C’ – “AI, A Big Lie!”….
• AI is only as good as the data that is fed into it
• Data could be biased because of human prejudices
• AI is only as smart as the algorithms developed by the programmer. Singularity or Superintelligence is still a fictional concept
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Group ‘C’ – “AI, A Big Lie!”….
AI does not, and cannot have any concept of “fairness". It only knows data. And the idea of what is fair differs from society to society
Human thinking is guided by emotions, which are totally lacking in AI
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Group ‘D’ – “AI, Please Clarify”
• What is AI – Clarified
• General Pros, Cons and Cautions – Clarified
• Next Step – Putting Artificial Intelligence into Perspective• The AI IA
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Technological Evolution
• AI is just yet another extension of technological evolution
• The objective of technological evolution has only been to help humans work smartly, safely, accurately, more productively, etc. – not harm them
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Technological Evolution
AI is not the culprit for Job Redundancies;
Inertia to technical evolution is
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The Key to Survival for IAs in the age of AI
BeAn Artificially Intelligent
Internal Auditor
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What is it to be an AI IA?
A Naturally Intelligent IA who learns to co-exist with AI
An IA who EVOLVES by inheriting technological variations through Awareness and Adapting
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Awareness & Adapting
Awareness: Self and the Organization, about AI
Adapting: Leveraging awareness of AI, to add value and improve an organization’s operations
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IA’s Bread & Butter?
Add value and improve an organization’s operations through systematic, disciplined
methods to evaluate and improve the effectiveness of risk management, control, and governance processes
AI automated
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How Can IAs Add Value Through AI
Help to keep the organization in pace with:• understanding and managing AI associated risks, • achieving expected results from AI automation, and • continuing to innovate
How?• Assisting in Integrating governance, risk and controls throughout the AI
automation program life cycle• Identifying opportunities to embed AI automation-enabled control activities• Capitalizing on intelligent automation innovations to increase the efficiency and
effectiveness of our (Internal Audit’s) own activities
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Assess and advise management on the impact of AI initiatives in terms of Risks & Opportunities
Identify AI automated controls for monitoring, compliance with laws, rules, regulations, policies & procedures, and risk management measures
Identify AI applications to deliver cost-effective, improved quality, smart services to clients
IA Adding Value thru’ AI
Own and manage risks
Oversee risksProvide Independent Assurance
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The risk that:• unidentified human biases imbedded in the AI technology• human logic errors will be imbedded in the AI technology• AI products and services may cause harm, resulting in financial and/or
reputational damage• customers or other stakeholders will not accept or adopt the organization’s AI
initiatives• the organization will lag behind the competition if it does not invest in AI • investment in AI (infrastructure, research and development, and talent acquisition)
will not yield an acceptable ROI
Awareness & Assessment of AI related risks
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AI automation for IA
• Robotics Process Automation (RPA): technology used to mimic repetitive human tasks with more precision and accuracy (e.g. Data gathering for analytics, Trend analysis and risk assessment)
• Enhanced Process Automation (EPA): technology with the ability to process unstructured data, build and use repositories of knowledge, and learn from experience (e.g. Knowledge based-systems (case-based) for fraud indicators, medical diagnosis, market trends, etc.)
• Cognitive Automation (CA): systems that combine artificial intelligence technology with data analytics for human decision-making, when there is voluminous data involved (e.g. Natural Language Processing, Digital virtual agents – automated customer services)
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The AI IA – Closing message
Gain Train Retain MaintainExplain
AI Knowledge
Management trust - Exhibit capability to apply knowledge and skills
Train yourself and team to apply knowledge
Knowledge and skills
Conduct AI knowledge awareness sessions for client and own team