Understanding the Scope of the EU AI Act
The EU AI Act is a cornerstone of Europe’s broader digital regulatory strategy to ensure that artificial intelligence is used ethically, transparently, and safely. It introduces a risk-based classification system for AI applications and sets specific compliance obligations depending on the risk level.
The regulation affects not only technology providers but also organizations that use or deploy AI systems, particularly in sensitive domains like credit scoring, insurance pricing, recruitment, and biometric identification. For financial institutions, these use cases are often central to their operations—and now fall under high-risk AI under the EU AI Act.
To navigate this regulatory shift, organizations must understand the four AI risk categories defined by the Act—unacceptable, high, limited, and minimal—and assess their exposure accordingly.
Identifying AI Systems Within Your Organization
A first step toward compliance is mapping out all AI-driven systems across your organization. This includes systems developed in-house or by third parties. Focus especially on use cases in areas such as lending decisions, fraud detection, underwriting, and customer risk profiling, which are likely to be categorized as high-risk.
Once identified, each system should be evaluated in terms of its purpose, potential societal impact, and degree of autonomy. Organizations must also understand their role in the AI ecosystem—provider, deployer, distributor, or importer—as responsibilities vary by role.
Assessing Risk Levels of AI Systems
Risk classification under the EU AI Act determines the level of regulatory scrutiny your systems must meet.
- High-risk systems, such as those used in credit scoring or employment screening, require rigorous documentation, risk management, and human oversight.
- Limited-risk systems must meet transparency requirements (e.g., disclosure that the user is interacting with AI).
- Minimal-risk systems face no specific obligations under the Act but are still encouraged to follow voluntary codes of conduct.
For financial institutions, this risk analysis is a strategic exercise. It supports both legal compliance and broader objectives around fairness, transparency, and operational resilience.
Implementing Compliance Measures
Compliance with the EU AI Act requires integrating AI governance into your organization’s broader GRC framework. This includes:
- Conducting fundamental rights impact assessments for high-risk systems.
- Implementing a risk management system that covers the entire AI lifecycle.
- Ensuring traceability, robustness, and cybersecurity of AI outputs.
- Maintaining technical documentation and audit trails for regulatory review.
Tools like CERRIX are evolving to support these new demands by integrating AI Act frameworks directly into GRC platforms, enabling more efficient compliance tracking, reporting, and risk assessment.
Training and Awareness for Staff
AI compliance is not just a technical or legal issue—it’s a cross-functional responsibility. Staff across risk, compliance, audit, and data science teams must be trained on:
- The structure and scope of the EU AI Act.
- Risk classification of AI systems.
- New responsibilities for governance, documentation, and human oversight.
Embedding this knowledge into the organization builds a culture of responsible AI use and enhances internal readiness for future regulatory scrutiny.
Monitoring and Updating AI Practices
The EU AI Act is not a one-off checklist—it’s a continuous compliance obligation. Organizations must set up procedures for:
- Periodic AI system audits.
- Real-time monitoring of outputs and performance.
- Capturing user feedback and potential risks.
- Adapting to evolving legal interpretations and technical standards.
By integrating compliance into their operational workflows and leveraging GRC platforms with AI-specific capabilities, businesses can future-proof their AI strategies.
Final Thoughts
The EU AI Act raises the bar for responsible AI use—especially for financial institutions and other regulated sectors. While the regulation introduces complexity, it also offers a chance to build more transparent, fair, and accountable AI systems.
At CERRIX, we are actively embedding the EU AI Act framework into our platform to support risk and compliance leaders in meeting these new requirements efficiently.
Want to learn more about embedding AI compliance into your GRC strategy?
Contact CERRIX →
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