Needing to meet EU AI Act compliance has further complicated regulatory requirements around AI for many companies – even those that are located outside of Europe. The stakes are substantial, with fines of up to €35 million or 7% of global annual revenue for serious violations. For context, that exceeds even GDPR penalties.
The Act imposes significant obligations on companies developing or deploying AI systems. If you’re a U.S.-based SaaS company offering AI-powered services in the EU, for example, the law may apply to you. If your product touches high-risk areas like healthcare, recruitment, or finance, you’ll have stricter protocols to follow.
Our team at Rhymetec helps organizations understand their compliance requirements, automate the parts of compliance that can be automated, and fast-track your compliance. This article will help you understand whether your AI systems fall within scope and their risk categories, the measures you need to implement, and how to turn compliance into a competitive advantage.
Which Types of Organizations Need EU AI Act Compliance?
The EU AI Act applies to organizations that develop or use AI systems within the European Union (EU), regardless of where they are based. Even companies outside of the EU must comply if their AI systems affect individuals in the EU.
The Act categories AI systems based on risk, with corresponding requirements for each category:
- Prohibited AI Systems: These are AI systems that pose unacceptable risks. An example of this under the EU AI Act would be an AI system being used to predict the risk of an individual committing a crime based solely on personality or profiling traits.
- High-Risk AI Systems: AI used in critical areas such as law enforcement, hiring, credit scoring, infrastructure, and medical devices must meet strict requirements. Both providers and deployers of high-risk AI have to comply with these obligations.
- Limited-Risk AI Systems: AI systems with transparency obligations, such as chatbots or AI-generated content, must disclose that users are interacting with AI.
- Minimal-Risk AI Systems: These are AI applications with low regulatory impact, such as spam filters or recommendation algorithms. These tend to be largely unaffected by the EU AI Act.
Organizations impacted by the AI Act include:
- AI Developers and Providers: Companies building AI models or integrating AI into their products must meet compliance requirements if their systems fall under high-risk or transparency rules.
- Deployers of High-Risk AI: Businesses using AI systems classified as high-risk in hiring, credit decisions, or critical services must comply with risk management and oversight obligations.
- Distributors and Importers: Organizations that place AI systems on the EU market must verify compliance before distribution.
- Non-EU Companies Serving EU Users: Organizations are subject is the Act if they offer AI-driven services or products affecting EU individuals. For example, a software company outside of the EU selling AI-based medical diagnostics to European healthcare providers would need to comply.
Companies must determine which of their AI systems fall under the AI Act’s scope and what compliance obligations apply, based on how the technology is being used.
What Are The Requirements, and How Can EU AI Act Compliance Be Achieved?
Compliance with the EU AI Act entails several core requirements (all of which Rhymetec can fulfill on your behalf!). Below are the main requirements and how to meet them. Keep in mind that your organization’s requirements will vary based on the risk level of your AI systems, as discussed above.
1. Risk Management
High-risk AI providers are required to extensively document their risk management process. Risk management under the EU AI Act means having a clear process on how you will assess and mitigate AI-related risks, through measures including continuous monitoring and periodic evaluations to address any emerging risks.
2. Incident Response and Business Continuity
Organizations must have mechanisms in place to not only identify AI risks but also to actually respond to incidents.
Your team should know exactly how they would respond and recover from AI-related failures or security incidents. This can be documented in an incident response plan, which is a good idea for every organization to have regardless of their compliance obligations. For your business continuity plans, the goal should be to ensure that AI systems remain operational and safe during disruptions.
3. Data Protection and Recovery
AI systems must use training data that is as high-quality and unbiased as possible. They must also implement corresponding controls to protect data from unauthorized access, corruption, or loss. This set of requirements under the EU AI Act shares heavy overlap with privacy regulations in the EU, such as GDPR.
4. Ongoing Security Controls
AI systems need to include safeguards against cybersecurity threats and vulnerabilities. This can be accomplished by applying security measures, including access controls, logging, and anomaly detection.
5. Compliance Documentation and Reporting
Lastly, AI providers need to keep detailed records of system design, functionality, and decision-making processes. High-risk AI systems require additional technical documentation that can be reviewed by regulators.
How Does The EU AI Act Compare To Voluntary AI Frameworks?
Understanding the differences and overlap between the EU AI Act and voluntary frameworks (like ISO 42001 and the NIST AI Risk Management Framework) can help streamline your compliance efforts. The good news is that these frameworks do overlap quite a bit, and you can leverage existing work you may have already completed and/or use EU AI Act compliance to fill in requirements for future regulations.
The EU AI Act vs. ISO/IEC 42001
ISO 42001 provides an excellent framework for AI governance but does not carry legal obligations. Companies that adopt ISO 42001 must still meet the EU AI Act’s legal obligations if their AI system(s) fall under the Act. Fortunately, there is some overlap between the EU AI Act and ISO 42001 controls:
If your organization already has an ISO 42001-compliant risk management framework, it can fairly easily be adapted to fulfill the EU AI Act’s risk assessment obligations. Both the EU AI Act and ISO 42001 also include controls for bias mitigation and improving data quality. If you have already documented data governance policies under ISO 42001, they can contribute to meeting these requirements.
Finally, ISO 42001 requires documenting your AI system risks and objectives. The AI Act mandates similar documentation for high-risk AI systems, so an organization that is already ISO 42001 compliant can leverage existing documentation to fulfill the AI Act’s record-keeping obligations.
The EU AI Act vs. The NIST AI Risk Management Framework
The NIST AI RMF is a voluntary guideline that provides a framework organizations can use to manage AI risks, but it does not entail enforcement measures or assign risk categories.
However, both heavily emphasize risk management and governance. Companies that have already adopted the NIST AI RMF already have elements in place that align with the AI Act requirements. For example, the NIST AI RMF defines oversight roles that can be mapped onto the AI Act’s requirements to designate responsible individuals for compliance and monitoring.
Another area in which the requirements overlap is transparency and documentation. Under the NIST AI RMF, organizations are encouraged to document AI risks and decision-making processes. Likewise, the AI Act requires technical documentation for high-risk AI systems, including explanations of system functionality.
In general, businesses with existing voluntary AI frameworks can accelerate EU AI Act compliance by mapping existing controls to the Act’s requirements. Organizations that use the NIST AI RMF or ISO 42001 have a head start in EU AI Act compliance, but must still determine whether their AI system(s) fall under the Act and what additional legal obligations apply.
5 Business Benefits of EU AI Act Compliance
For many organizations, complying with the EU AI Act is a regulatory requirement. However, it can also provide other advantages. Companies that integrate AI Act compliance into their operations reduce their legal risks while strengthening their market position and improving trust. The 5 main benefits are:
1. Broader Access To The EU Market
Compliance allows businesses to sell and deploy AI systems in the EU without facing legal barriers or enforcement actions. Companies that fail to comply, meanwhile, risk facing fines and restrictions on their AI products.
2. Substantial Reduction in Risk To Your Organization
By implementing AI governance, risk management, and transparency measures, you can reduce the likelihood of legal disputes, regulatory penalties, and reputational damage to your organization.
3. An Advantage Over Non-Compliant Competitors
By meeting the requirements under the EU AI Act, your organization can demonstrate a commitment to responsible AI use, which helps differentiate you in the market. Customers, investors, and business partners may prioritize vendors with compliant AI solutions.
4. Stronger AI Governance
A natural byproduct of meeting requirements under the EU AI Act is having clearer AI-related policies and oversight processes. This improves internal decision-making and AI systems’ reliability. Companies that comply with the EU AI Act will also find it easier to adapt to other current and/or future AI regulations.
5. Customer and Public Trust
The general public and businesses are increasingly concerned about AI-related risks. Seeing that you are compliant with the EU AI Act creates reassurance that you take the risks seriously, and builds confidence in your AI products and services.
In Conclusion: EU AI Act Compliance Key Takeaways
The EU AI Act introduces an array of requirements impacting AI providers, deployers, and businesses operating in the EU or serving EU users. Compliance includes risk management, incident response plans, documentation, and ongoing security controls. EU AI Act compliance is an entry point to many business advantages, such as expanding your market access in the EU.
Many organizations choose to outsource the work of EU AI Act compliance to a virtual CISO (Chief Information Security Officer). Our virtual CISOs at Rhymetec have helped over 1,000 organizations meet their security and compliance needs in the fastest timeframe possible. Contact us today or check out our information on vCISO pricing to learn more.
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