S6:E12 | How Do We Develop Compliance Officers In An AI Era? | Compliance in Context

Welcome back to the Compliance In Context podcast! On today’s show, we dive into the conversation on how firms continue to develop legal practitioners and compliance officers in an AI era. In our Headlines section, the SEC Establishes a Financial Reporting and Accounting Unit Within Division of Enforcement and the SEC’s RegFlex Agenda SEC Agenda Targets Crypto, Climate Rescission, Treasury Clearing, and finally, we close up today with another installment of What’s On My Mind, where we review a recent quote from a track coach on how we can push our compliance colleagues to become the best versions of themselves.

Show

Headlines

• SEC Establishes Financial Reporting and Accounting Unit Within Division of Enforcement
• SEC Agenda Targets Crypto, Climate Rescission, Treasury Clearing

Interview with Kurt Wachholz

• Reviewing the University of Chicago Law School’s statement on education in the AI Era
• How should firms adapt its training and policies in response to AI?
• How can we as compliance professionals develop an AI-resilient pedagogy and assessment?
• What are the “essential human” skills that distinguish excellent compliance professionals?
• How should firms instruct the responsible, effective, and ethical use of AI?
• What are some techniques firms can employ to foster an active, in-person engagement of compliance experiences that are conducive to learning?
• What can firms do avoid a reliance on technology while still highlighting and enhancing the output of AI tools for compliance purposes?

What’s On My Mind

• A lesson from a track coach on the true definition of winning and becoming the best versions of ourselves

Quotes

19:56 – “We had them all present to the rest of the class, and the class judged everyone's presentation, the rationale, who they selected, why they selected, all that good stuff. We get done with the assignment, and I'm going up to tell everyone who won, because they all had to turn in who they thought did the best presentation. And what I said to them is, ‘You all failed the assignment.’ And they just couldn't believe it. It's like, ‘What do you mean we failed the assignment?’ I said, ‘Because what you all decided when you were given this was that you had to make a choice with what you were given.’ And so, the part we were trying to help them with was, nobody questioned the exercise. They tried to fit the exercise around what they were told to do. So what I was trying to help them with, especially when we think about ethics and things of that nature, sometimes you have to question the premise before you go to the answer. And so I thought that one of the things that was really helpful about that exercise is that your reasoning doesn't start with your choices; it starts with the premise for it. I think that really relates to AI. A lot of times, we're going to be thinking about what's the output and is it acceptable, versus what did we start with in the first place as to why we used the tool.” - Kurt

34:49 – “Experience is not just accumulating answers. Going through an exam and responding to the request didn't necessarily give me experience. What it gave me was an identity of, like, this means that this is the production of what something is being asked to produce. But it wasn't actually helping me learn how to think. It was helping me learn how to deliver.” - Kurt

42:45 – “Knowing the right answer is not the same as being able to produce the right outcome. Knowing we're doing something wrong isn't what you're winning. It's getting the right outcome from knowing that; that really matters to the business. How we give voice to a concern can determine whether that concern is even meaningful.” - Kurt

49:36 – “Finding the reg and understanding the reg is not going to be their challenge. I can't tell you how many hours I probably wasted reading rule releases so I could understand them. Not that I'm saying we shouldn't read them anymore. But what I'm saying is that summarizing things and being able to condense down what's the stuff that I really need to take away from this, that's a huge tool that will allow me to be more effective. But applying that is the part that's missing, and I think that's the key.” - Kurt

59:12 – “Technology changes. Throughout our time in the industry, technology continues to evolve. And the constant in all of that has been the principles that are the foundation of our industry. Those things have endured. But the key component that is crucial for us as professionals is that reasoning is what connects the two.” - Kurt