Monitor first to avoid problems later. 

Proactive monitoring is the ongoing, real-time or near-time review of targeted business data or communications in order to spot and respond to potential compliance issues. As opposed to auditing, the intent of proactive monitoring is to identify any suspicious activity that could ultimately be the subject of investigation or potential litigation.

With workplace and regulatory investigations on the rise, proactive monitoring is an important part of the compliance effort, mitigating potential damage—both financial and reputational—that could result from the behavior of a few bad actors. Rather than waiting to chase down unethical behaviors after the fact, companies are adopting a more programmatic posture in monitoring business transactions and employee conduct to help ensure compliance with company policies and procedures.

Increased regulatory burden since the financial crisis, in addition to heightened public and investor scrutiny regarding “#metoo” scandals and personal data breaches, are just a few of the factors that have driven companies to shift to a more proactive approach in their internal ethics and compliance monitoring. In a recent H5 Corporate Investigations survey, more than 67% of respondents said their companies monitor networks and data to identify potential wrongdoing. In the process, they are transforming their investigations and risk assessment processes and controls in part by introducing more automation.

At the ground level, companies are adopting a variety of data analytics in their move to proactive monitoring including:

• Rules-based monitoring to identify already known ethics and compliance risks
• Text analytics to mine communications and documents for potentially problematic content
• Network analysis to identify problematic communication patterns across people and entities
• Anomaly detection to recognize new types of ethics and compliance risks
• Visual analytics to populate dashboards for effective communication across stakeholders

Financial sector companies, in particular, have been early adopters in this space, developing automated detection capabilities at the core of their ethics and compliance programs in order to combat financial crime such as money laundering, insider trading, or collusion. Detection engines such as these leverage specific settings and parameters to flag for suspicious activity. This baseline set of rules is then coupled with statistical and machine learning technologies in order to automatically tune the accuracy of proactive detection on an ongoing basis.

Financial sector companies are not the only ones who are benefiting from adopting proactive monitoring tools.. In light of the recent opioid epidemic and other scandals related to off-label prescribing, leading pharmaceutical companies have integrated proactive monitoring in their ethics and compliance monitoring, leveraging technology to analyze medical education group chat activities leveraging natural language processing in order to identify any worrisome emerging patterns.

More generally, although the sources and type of ethics and compliance risks differ across industries, all companies today share the need to ramp-up their ability to identify, track, and investigate noncompliant and unethical activities in real-time. Incumbent manual processes are either being bolstered or replaced by a variety of tools that allow for systematic flagging, analysis, and documentation of potential issues.

Technology is just one component to think about in evolving internal ethics and compliance practice, but a critical one to integrate as the nature of ethics and compliance roles, responsibilities, and expectations evolves in response to increased public awareness and regulatory focus of ethical and compliance issues. In this dynamic context, monitoring supported by data analytics and automation can serve as a proactive first line of defense against non-compliant and unethical behavior.