EU AI Act
Definition
The EU AI Act is the European regulation that classifies AI systems by risk and attaches obligations accordingly — from transparency duties for ordinary business applications to strict requirements for high-risk uses such as employment decisions or creditworthiness.
Most operational back-office automation — document processing, quoting support, reconciliation — falls outside the high-risk categories, but transparency and documentation duties still apply.
The practical requirement is evidence: a classification per use case, documented data sources and a named human owner.
In practice
- Obligations scale with the risk class of the use case
- Back-office automation is usually low risk, not unregulated
- Classification and documentation must exist per system
Related terms
- AI governanceAI governance is the set of rules defining which AI systems a company operates, on what data, with which permissions, under whose responsibility, and how outcomes are reviewed. It makes AI use auditable towards management, auditors and regulators.
- Data residencyData residency defines in which jurisdiction company data is stored and processed. For AI systems it covers the hosting region of the application, the database, the model endpoint and any logs, plus whether prompts may be used for provider training.
- Human in the loopHuman in the loop means a defined point at which a person reviews, approves or corrects the AI system's work. The handover is designed in advance for specific triggers — value thresholds, low confidence, unknown counterparties — rather than left to chance.