How will AI continue to impact how IROs conduct their day-to-day business? The upcoming IR Magazine Forum – AI & Technology is focused on how IROs can following the footsteps of investors, governance and corporate communications teams who are adopting innovative technology, machine-learning and generative AI to support their daily decision-making.
Taking place on December 3 in New York, the event will provide IR teams at publicly listed companies with a blueprint for the responsible use of AI and other innovative technology to supercharge their IR program.
For many IROs, the main barrier will be in implementing AI in their standard workflows, with fears around privacy, accuracy and accountability all ranking high, according to recent polls. Ahead of the forum, IR Magazine caught up with Chandrika Nigam, former senior director of investor relations at Adtalem Global Education, who will be speaking on this exact topic and providing attendees a roadmap to use AI and related technologies.
You'll be talking on a panel titled ‘Overcoming the risks and obstacles of AI implementation’ at the AI and Technology Forum. Which aspects of this important topic are you keen to explore?
AI technology has taken the world by storm, creating opportunities for digital transformation across industries. However, its use in investor relations is still at a nascent stage, marked by hesitancy to incorporate AI in day-to-day activities, primarily due to the risks associated with its implementation. So, while this fast-developing technological environment brings with it a plethora of benefits to IROs, it also opens the door to a myriad of crucial topics including awareness on how to use AI and more importantly, when to do so.
Using generative AI to draft investor communications heightens the risk of inaccuracy and material omissions, leading to inadvertently misrepresenting material information. It is no surprise that data security and reliability are the most common concerns among IROs. Despite fears regarding data privacy and accountability, only a handful of companies have AI use policies in place. Such guide rails can serve as a jumping-off point for their employees. It is the foremost thing IR teams can address in collaboration with their IT and Legal counterparts. Further, compliance training for the IR team, particularly in relation to AI tools, is vital to the success of your department.
Can you tell us about your background in how you are implementing AI in your role as an IRO at your company and some of the things you're looking forward to hearing about at the event?
It has been a part of my IR toolkit for the past two years, starting with insights from platforms such as Capital IQ and Nasdaq, which we use on a day-to-day basis. A few examples would be the strategic use of algorithmic tools for investor targeting. My team used them to help build out a preliminary list of investors based on their investment style, assets under management, and their industry focus. Intelligence tools could be used to further segment information according to funds, ownership of competitors or historical data.
AI tools are also being used for peer monitoring. Earnings season is demanding for IROs as they support management teams while tracking the market sentiment, peer-earnings, and investor concerns. Today, IR teams are leveraging insights that go beyond what they would gather from merely tuning into earnings calls. For instance, sentiment analysis tools are a terrific way to gauge the pulse of industry leaders in response to the current macroeconomic conditions, discover hidden trends within the calls, and generate an understanding of how investors are articulating the rapidly evolving landscape. The outcome is distilled intelligence of an earnings call into digestible, actionable insights for IR teams. We also use this tool for theme-spotting, a checklist to ensure that we are not overlooking any important trends, topics, and predict questions analysts might ask.
Finally, time-consuming tasks such as summarizing highlights from investor days, SEC filings and other strategic events can be done in a more streamlined and sharp manner with the use of AI. Integrating AI into the IR program has been truly transformational for my team, though it does not replace the nuanced role we play in fostering investor trust and transparency.
At the AI & Technology forum this year, I am interested in learning how AI can potentially deliver better insights and data on the investment community and the capital markets. Its ability to generate real-time analysis of market events could be highly beneficial to IR teams, such as providing timely updates to executive management and investors.
What are some of the biggest challenges you have faced in your profession so far and what do you feel is the next big challenge on the horizon?
We all know the strong correlation between equity research and capital raising. Accordingly, the absence of an active financing environment over the past couple of years has challenged additional sell-side coverage. Further, many banks dropped certain sectors or minimized their coverage universe due to limited talent resources. And while the typical number of analysts for a company has declined by nearly 20 percent since before the pandemic, keeping analysts engaged remains a key focus area for IROs.
Now, with the help of AI, IROs can significantly optimize their time to prioritize relationships with stakeholders. But as AI becomes more central to corporate strategies, its governance is facing increasing scrutiny from the SEC and investors.
The next big challenge on the horizon is that the speed of AI evolution and adoption may outpace more methodical governance decisions. Businesses are not fully prepared to address AI governance and risk concerns yet. The SEC has increased emphasis on AI governance to go beyond management and involve active oversight from the board of directors. However, looking at data from the S&P 500, there is a wide gap: while 40 percent of companies disclosed AI-related risk factors in their SEC filings, only 9 percent established board oversight to manage these risks. Since most companies are bound to consider the role of AI in their operations and strategy, it may be worth assuring stakeholders that their board is equipped to understand its potential impact on the company.
If you were to give your audience at the AI and Technology Forum one piece of advice, what would it be?
Technology is an ever-evolving space and IR-related AI tools will continue to be introduced to the market, which makes continuous learning and adaptation necessary to stay ahead, requiring IR professionals to be agile and proactive in updating their AI strategies.
I believe it is vital to recognize technology before putting it to use, or it will be difficult to make decisions on how it can best serve your needs. Due to the sensitive nature of much of the material IR teams are privy to, education is a key consideration to AI adoption and application. For instance, knowing the difference between public AI – such as ChatGPT – versus private AI which is exclusive. Whatever information you feed into a public AI tool will become accessible and shareable in the future. On the other hand, an AI tool aligned with your company’s ethics and compliance policy – as well as database – will better serve your IR needs.
It is important to keep in mind that AI does not replace the human aspect of our profession. We are still in the phase where we are exploring the ability of AI, which makes human oversight vital. IROs will have to understand these impacts to earn the trust of the investment community and to stay relevant.
