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AI Powered Contract Management to Navigate Regulatory Compliance

The term regulatory compliance can give many a legal teams nightmares. These regulations are complex, have high stakes, and non-compliance to them can have irreparable effects on organizations. And with multiple regulations, obligations, and compliance clauses, regulatory compliance forms the core of all contracts

Considering the ever-changing regulations and the ever-increasing stringency in implementing them, it has only become more complex and seemingly impossible to handle regulatory compliance manually. Especially when companies sign thousands of contracts every year that hold enormous financial value and cover numerous different federal, state and environmental regulations and obligations.

Automated contracting tools have helped ease contracting and make it more accurate. But they don’t suffice when it comes to complex compliance regulations, risk management or predicting outcomes. Automation is just a stepping stone in adopting a more sophisticated, intelligent and analytical solution. A solution that can think, analyze, observe and predict and suggest actionable insights.

Artificial Intelligence powered applications like Robotic Process Automation (RPA), Natural Language Processing (NLP), Semantic Analysis, and Smart Analytics can transform contracting and turn contracts into analytical, structured documents fully complying with ever-changing and complex regulatory compliance. They can identify and rectify nuances and errors that are often missed by the naked eye and can predict how parties will react to certain obligations and how best to tackle them. AI’s ability to process large volumes of data with speed and accuracy can transform regulatory compliance in contract management.

Let us explore in detail how Artificial Intelligence is playing a crucial role in simplifying the complexities of regulatory compliance:

1. Simplifying regulatory compliance for contract managers and legal teams

Contracts are usually exhaustive with large number of clauses, sections, obligations, regulations and terms of business. Sifting through all these pages to ensure there are no omissions or errors is a task that can take legal and compliance teams, days. Often, these stakeholders do not have enough time to go through the entire documents or keep a track of all changes.

To aid in such situations, Artificial Intelligent applications come to the rescue. Natural Language Processing can read through documents, parse them for important keywords and clauses, track any omissions or missed clauses and provide insights into the next steps for compliance leaders to follow. Robotic Process Automation can route any big discrepancies to the right authorities for review and notify them. This, apart from saving time and effort, also ensures there are no manual errors and maintains accuracy and consistency across contracts.

2. Updating all past and legacy contracts with the latest regulatory changes

With constant changes and updates to regulations and compliance, companies find it difficult to track all past contracts and update them to ensure full compliance. To do this task manually is an impossible feat considering contracts are stored across different systems and often across different locations as well.

The first step in digitizing contracts is to collate all contracts and store them in a single unified location on cloud, accessible by all. Once this step is complete, Artificial Intelligence can go through all legacy contracts, update any redundant clauses with updated ones and ensure not just the ongoing but even the legacy contracts are all fully compliant.

3. Notifying stakeholders of updated regulations

AI applications ease the work of compliance teams by constantly keeping them updated with any changes in regulations or updating laws and obligations. This can ensure that businesses always stay on top of regulatory requirements and keep their processes, audit trails and reporting structures updated to match with the new regulatory landscape.

4. Keeping a constant eye on contract compliance

Technologies like advanced analytics, machine learning, and deep learning can provide organizations with an additional layer of support in ensuring they are always compliant. These tools can identify any discrepancies in contract compliance and performance obligations and alert authorities immediately for quick action-taking. This enables organizations to rectify any errors from their ends in real time and act against non-compliant parties.

Looking at the high risk, high stake function of regulatory compliance in contracts, these are yet to get the technological backing they are long due. With cutting-edge technologies and automation taking a front seat in almost every spoke of the corporate wheel, using these to avert organizational risks and ensure regulatory compliance in contracts is the only foolproof way forward.


Mr. Panchal is the Vice President at Zycus. An ardent promoter and practitioner of Theory of Constraints and CCPM, Digesh brings with him deep domain expertise from his long and rich personal experience in manufacturing. In his prior stint at Verdantis, he has led highly complex implementations of Master Data Management solutions for multiple master domains, across various industries and varied deployment models. As a forward-thinking leader with extensive experience in the design, development, testing, and rollout of cutting-edge B2B SaaS solutions, Digesh excels at driving the day-to-day operations of complex enterprises to produce turnarounds. At Zycus, Digesh is responsible for building a best-in-class AI-driven Enterprise CLM software and drive market traction.
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