Leveraging Generative AI in Investor Relations: A Competitive Advantage

Artificial Intelligence has indisputably carved a new frontier in various industries, from healthcare to education and, most notably, finance. The advent of Large Language Models (LLMs), based on generative AI, presents important opportunities for Investor Relations Officers (IROs) to gain a competitive edge in today's dynamic market. But what does this new and rapidly evolving technology entail, and how can it be harnessed effectively to enabled the "Elevated IRO?"

What Is Generative AI?

Generative AI is a subfield of artificial intelligence that has shown remarkable capabilities in generating human-like text, images, and code. It utilizes algorithms to create new, original outputs based on the data it has been trained on. In the case of LLMs like GPT-4 by OpenAI, this training includes billions of words and a wide array of other data points.

The Transformer Model

The core engine powering generative AI is the "transformer model." Developed by Google in 2017, the transformer architecture uses self-attention mechanisms to understand the context between words, providing a robust framework for natural language understanding and generation. It is this technology that enables LLMs to produce coherent and contextually relevant text at high speed.

Near Term Applications in Investor Relations

1. Automated Reporting: Generative AI can generate quarterly and annual financial reports, allowing market focused leaders to focus on key areas for strategic decision-making.

2. Market Analysis: Generative AI models can digest vast amounts of textual data to offer insights into market trends, sentiment, and potential investment opportunities, thus helping IROs make more informed recommendations. This can be used as part as an overall Impact Intelligence approach.

3. Personalized Investor Communication: The ability of LLMs to understand and generate text can be utilized to create personalized communications to investors, vastly improving engagement and trust, particularly with retail investors for public companies that have larger percentages of holdings here.

4. Data Visualization: Though primarily focused on text, generative AI has shown promise in creating graphical content. This can be used to automatically generate data visualizations for investor materials including presentations, capital market days and earnings call materials

5. Risk Mitigation: With advanced natural language understanding, generative AI can monitor financial news, social media, and other platforms for early signs of market risks, thereby helping IROs to take proactive measures as sentiment suggests four areas of the foundational four that are required to be in focus for the next investor engagement.

The Pivoting Role of The Elevated IRO

Despite the advanced capabilities of LLMs, involvement of the investor relations teams remains indispensable, but different. The nature of the human-AI collaboration is going to be critical to and significantly beyond the review and quality control function. The synergy between the machine capabilities and the Elevated IRO will be on enabling the focus of the IRO on areas for innovation and creativity in strategic investor communication and engagement and increasing amounts of time focused on complex questions and decision making, e.g. capital structure and policy in 2024 in light of the potential for sustained higher interest rates.

Operational, Legal and Ethical Considerations

IROs must be cautious about the limitations of LLMs, particularly around the risk of generated information. It's imperative to have a human in the loop for verification and validation, especially when dealing with highly sensitive financial data and investor communications. While the models may be an productivity accelerant, it is still critical to have review.

The Road Ahead

As the technology matures, it is likely that LLMs will become even more integrated into the field of investor relations, offering increasingly sophisticated tools for data analysis, content generation, and stakeholder engagement. The companies that pioneer the adoption of this cutting-edge technology are the ones that will set the standard in the investor relations landscape, paving the way for a new era of transparency, efficiency, and strategic advantage.

Generative AI provides an array of tools that can revolutionize how Investor Relations Officers operate and provides the opportunity to "Elevate" with enhanced capacity to focus and advise the board and leadership team on complex issues and develop and execute an innovative and differentiated investor communications and engagement strategy to elevate your value.