EU AI Act

The core of the EU AI Act is a tiered risk framework that places obligations on AI systems based on their potential to cause harm.

• Prohibited Risk: These are AI systems deemed to pose an unacceptable threat to fundamental rights and are banned entirely. This includes systems that manipulate human behavior (e.g., subliminal techniques to cause harm) or use social scoring to evaluate citizens.
• High-Risk: This is the category that will impact most businesses. These are AI systems used in critical sectors where a failure could pose a significant risk to the health, safety, or fundamental rights of individuals. The Act includes an extensive list of high-risk use cases.
• Limited Risk: AI systems with specific transparency obligations to inform users that they are interacting with an AI. This applies to chatbots and AI-generated content (e.g., deepfakes that must be labeled as such).
• Minimal/Low Risk: The vast majority of AI systems (e.g., spam filters, video games) fall into this category and are subject to minimal, if any, regulation.

High-Risk Systems

If your AI system falls into a high-risk category, you are subject to stringent legal obligations before you can even bring it to market. 

The Act defines high-risk systems in two main ways: as safety components in products governed by existing EU law, or as systems used in critical sectors.

Sector	Example High-Risk AI System
Critical Infrastructure	AI systems used in the management of water, gas, or electricity supply, or for road traffic management.
Employment & HR	AI used for screening résumés, recruiting candidates, or evaluating employee performance.
Manufacturing & Operations	AI used as a safety component for products like robotics, surgical systems, or complex machinery.
Law Enforcement & Justice	AI used to evaluate evidence, predict criminal behavior, or manage judicial records.

Key Obligations for High-Risk Systems

For every high-risk AI system, providers and deployers must adhere to a series of strict requirements. These are continuous processes that must be maintained throughout the AI's lifecycle.

• Risk Management System: You must establish a continuous, documented process to identify, analyze, and mitigate risks.
• Data Governance: You must ensure that the training, validation, and testing data used to build the AI is of high quality and free from bias to prevent discriminatory outcomes.
• Technical Documentation & Logging: You must maintain detailed records about the AI system’s design, capabilities, and performance, with logs that track its activity.
• Human Oversight: High-risk systems must be designed to allow for human intervention and oversight to prevent or correct harmful outcomes.
• Cybersecurity: The system must be built with a high level of robustness, accuracy, and cybersecurity to protect against external attacks and manipulation.

Enforcement and Penalties

The EU AI Act is backed by some of the most severe penalties in the digital world. Non-compliance can result in administrative fines that are designed to be "effective, proportionate, and dissuasive." The penalties are tiered based on the severity of the violation:

• Up to €35 million or 7% of a company's total worldwide annual turnover for deploying a prohibited AI system.
• Up to €15 million or 3% of a company's total worldwide annual turnover for non-compliance with the obligations for high-risk systems.

A New Standard for Enterprise

Rather than viewing the EU AI Act  as a barrier, savvy leaders will see it as a strategic framework to build a more trustworthy and resilient AI-first organization. 

Proactively adopting practices from frameworks like the NIST AI RMF and OWASP lists is the most effective way to not only comply with the Act but to ensure your AI is a true driver of trusted growth.