The AI governance gap facing private equity fund managers

• AI is already being used in compliance and regulatory reporting, but formal policies remain rare.

• Legacy systems, governance expectations and cyber risk are now shaping the next compliance technology challenge.

For private equity fund managers, AI is no longer a distant operational question. It is already part of how many firms manage compliance and regulatory reporting around deals. The harder question is whether the governance has kept pace.

New Ocorian research* among 300 senior executives at private equity fund managers found that 69% use AI for compliance and regulatory reporting in relation to deals and decision-making. Yet only one in 20 said they have formal policies for the use of AI in compliance and regulation. By comparison, 89% have formal policies covering AI use in investment decision-making.
 

The policy gap matters

This gap matters because compliance work depends on control, evidence and accountability. If AI is being used to support reporting, monitoring or analysis, managers need to be clear about where it is used, who oversees it, how outputs are checked and what data it can access.

The research shows how quickly AI use is spreading across core fund management activities. Alongside compliance and regulatory reporting, 57% said they use AI for portfolio monitoring and performance analytics, 44% for due diligence and data analysis, and 41% for investor communications and LP reporting. Around 37% are still piloting AI tools, while 1% said they are not using AI at all.
 

Technology change is only part of the challenge

For many managers, the challenge is not simply whether to adopt new tools. It is how to connect them safely and effectively to existing operating models. In Ocorian’s study, 70% identified integration of new technology with legacy systems as their biggest technology-related compliance issue for the next two years.

Governance and resilience also sit high on the agenda. Nearly six in 10 respondents said adapting AI to governance requirements will be the biggest challenge. A similar proportion highlighted cybersecurity requirements and data protection, while half pointed to pressure to keep up with regulatory requirements for digital infrastructure. Cost ranked lower, with 28% identifying the cost of compliance technology, such as RegTech platforms, as a barrier.
 

What this means for private equity fund managers

As AI becomes more embedded in compliance activity, formal policy can’t lag behind practical use. Managers need policies that explain how AI is approved, monitored and challenged. They also need clear role and responsibility delineators, documented controls and a consistent view of how AI fits into wider governance, cyber and data protection obligations.

That does not mean slowing innovation. It means creating enough structure for teams to use AI with confidence, and enough discipline for boards, investors and regulators to understand how it is being managed.

Abi Reilly, Partner, Regulatory & Compliance at Ocorian, said: “Given the widespread use of AI by private equity fund managers, it is surprising that so few have adopted formal policies for the use of AI in managing compliance obligations. 

Most firms have recognised the need for formal policies covering its use in investment decision-making and that should also apply to how it is being deployed in compliance programmes as firms expand their use of AI across both business and control functions.

Cost does not appear to be a major issue with firms willing to spend, but legacy systems may be a stumbling block. In light of the technology challenges being faced, there is a strong argument for private equity fund managers to seek outside support and expertise to assist with documenting their AI governance frameworks.”

Background information

Please note that this article is intended to provide a general overview of the matters to which it relates and is provided for information only. It is not intended as legal or investment advice and should not be relied on as such.

*The research was conducted with 300 senior executives at private equity fund managers with total assets under management of $3.511trillion in May 2026 for Ocorian by independent research company PureProfile. The study included 210 executives across all major U.S. markets and 90 in the UK, Switzerland, Germany, Italy, Spain, Poland, Sweden and Bulgaria. They included 150 working at emerging firms managing up to $500 million, 90 at mid-sized firms managing between $500 million and $10 billion and 60 at large firms managing more than $10 billion.