AI Waves: Is your business ready for the new EU AI Regulations?

AI Waves: Applying AI in Business | New EU AI Regulations
AI Waves: Applying AI in Business | New EU AI Regulations
AI Regulations by Geofrey Banzi

AI Waves has returned once more! The most recent instalment of this series of webinars focuses on the proposal for a regulation of the European Parliament and of the Council imposing harmonised rules on AI.

Questions Covered:

  • Is it possible to create a precise definition of AI?
  • Is the description provided by the EU proper and relevant to its practical use?
  • How much does the quality of data affect AI algorithms?
  • Can the data quality be regulated and how could it be done?
  • How can you locate a high-risk algorithm? Does the European Union correctly describe current AI threats? Are the new regulations necessary?
  • How can the new laws affect business?


Jerzy Biernacki (Miquido), Lukasz Wieczorek (Konieczny, Wierzbicki Law Firm), Michal Barwicki (Konieczny, Wierzbicki Law Firm), Beril Sirmacek (Saxion University of Applied Sciences) and Martin Ciupa (Serial AI Entrepreneur)

Key Takeaways:

  • Financial markets are currently leading the way regarding the regulation of Artificial Intelligence.
  • A fundamental issue for AI regulation is the determination of appropriate definitions of AI and high-quality data.
  • The risk-based method used in the Act to differentiate between different AI applications and products needs further specification.
  • The implementation of the Act will likely have large scale impacts on the competitiveness of EU economy and business due to the widespread involvement of AI across all sectors.

Overview of updates to the EU regulations

The Artificial Intelligence Act is an act that has been proposed by the European Commission and is therefore not yet binding.

Regarding the implementation of the regulation, it is stated that each Member State will appoint an AI authority alongside the appointment of a European Artificial Intelligence Board as a coordination/assisting authority.

Points of significance:

  • Defining Artificial Intelligence
    • The term ‘Artificial intelligence system’ is defined in the proposed Act as:

Software that is developed with one or more of the techniques and approaches listed in Annex I and can, for a given set of human-defined objectives, generate outputs such as predictions, recommendations, or decisions influencing the environments they interact with. 

  • Potential Issues from a Business Perspective
    • Too narrow or too extensive
    • What methods will be applied to ensure the periodic updates are effective
    • Interpretation divergence risk between EU Member States
  • Risk Based Classification
    • Simply put, the method used to deduce the amount of regulation that will be applied is determined based on the amount of risk that the use of Artificial Intelligence poses to the user.
    • Four categories of risk are identified:
      • Unacceptable risk
        • Includes prohibited practices, e.g., manipulating people and social scoring.
      • High risk (area of specific intrigue for lawyers and those in business)
        • Includes uses that carry very significant risk to security, rights, and health of users, e.g., safety components of products, critical infrastructure, hiring and workforce management and the prosecution of crime
        • The providers of these AI applications and products must meet strict requirements because of the impact that it may have on the course of life
          • Risk assessment and mitigation
            • Concern – Not clearly defined.
          • Use of high-quality data sets
            • Concern – What is meant by this? 100% free, 98% etc. This requirement seems impossible to guarantee.
          • High level of accuracy, security, and robustness
            • Concern – This will require constant modifications.
            • Concern – Accuracy is a terrible metric for AI
          • The general sentiment is that an intermediate risk category is needed between the high risk and limited risk classifications.
      • Limited risk
        • E.g., chat bots
      • Minimal risk
        • E.g., AI computer games
  • Penalties
    • Up to 30 000 000 EUR
    • The numbers are big and therefore the Artificial Intelligence Act is something that business must pay close attention to avoid huge sanctions when the act becomes legally binding (resembles the impact that GDPR had on business)
  • Additional comments and concerns
    • Liability repatriation vis-à-vis the user
      • Interesting to business entities – may need to develop a way to share liability between the component AI subsystems involved in the final applications and products.
      • Currently, regulation says the provider will be liable.
    • AI system user impact on system’s performance
      • Should we share some liability, requirements, obligations with the user?
    • Testing of algorithms
      • Should we be focusing on testing over asking for complete knowledge of the exact function of the AI? The level complexity seems to be pointing this way (an appropriate comparison would be practices in medicine, namely the passing of new drugs and vaccines)
    • Adding another AI system category
      • Intermediate

Panel Discussion

  • The definition of artificial intelligence
    • This is an exceptionally complicated task, and it is impossible to know how such a definition will materialise in its application.
    • It will be very interesting to see what the different stakeholders think of the current approach and the extent of the potential disagreements which may arise.
  • The role of quality data in working on AI algorithms
    • This is an area of central importance for the Act. A more precise definition of what this means needs to be put forward and ‘high quality data’ is interpreted by experts in AI and business.
  • The potential risks of AI and keeping control over the technology
    • The general sentiment across the board is that regulation is necessary, however, that the act is far from being ready.
    • Inevitably, this regulation will impact the competitiveness of EU economy and business – this needs to be taken into consideration (from business perspective)
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