AI Risk Management

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6 papers in the last four weeks, up 100% on the four weeks before. 0.1% of all new papers.

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Latest papers 72

Oct 8, 2026cs.AI

TokenBank: Financial Infrastructure for AI Services

AI services incur inference costs during execution, while revenue may arrive later. Changing API prices, limited upfront capital, and service failures can limit operators' ability to sustain or expand their services. Beyond reducing per-request costs, operators need to plan future spending, fund execution before revenue arrives, and obtain compensation for specified losses. This requires clear agreements across services with different pricing and execution conditions. These agreements must distinguish rights to consume services from rights to receive payments, define obligations under uncertain costs and income, and specify which failures qualify for compensation and how much can be paid. We present TokenBank, a financial infrastructure that represents these commitments through structured contracts. It supports service-consumption rights, agreements that settle API-price differences in cash (forwards), financing through limited rights to future service revenue, and protection claims for specified service failures. Contracts specify participants, covered services, validity, ownership, fulfillment conditions, and settlement rules. Evaluation combines replay of 899,441 API requests, real model-driven agent execution, and contract API tests. In a zero-discount rising-price resampling scenario, forwards reduce mean expenditure by USD 304.88 but increase its standard deviation from USD 1,152.45 to USD 1,190.82. A controlled replication with five portfolios per capital condition finds mean contribution differences between financing and self-funding of +1.0635, -0.1406, and -0.2962 experimental USD under low, baseline, and ample capital, respectively. The evaluation distinguishes contract correctness from economic effectiveness under declared economic and failure assumptions; supplier invoices and commercial revenue are unavailable.

Cary Chang, Jialin Zhou

Nexilume Research

Financial Services AI Risk Management

Oct 6, 2026cs.HC

Systemization of Knowledge (SoK): Human-Centered AI Safety for Youth

While HCI increasingly examines AI-safety for youth, the literature lacks a comprehensive view of what risks have been identified, how they are addressed, and whether proposed protections work in-practice. We systematically reviewed 100 empirical HCI studies involving children and youth interacting with or exposed to AI across schools, homes, care settings, and public services. Using the YAIR taxonomy for risks and the MIT Mitigation Taxonomy for countermeasures, we map which risks have been identified, whether each risk is addressed by countermeasure(s), and whether each countermeasure for that risk is implemented and even evaluated. The risk-countermeasure mapping shows that most risks are matched only with proposed/ideated countermeasures; few countermeasures have been implemented, and fewer still evaluated; and existing evaluations often measure technical performance rather than protection from harm. We identify where coverage is absent, where safeguards remain untested, and propose concrete directions for HCI research to strengthen youth AI-safety.

Pratyasha Saha, Yaman Yu, Yang Wang

University of Illinois Urbana-Champaign Champaign, IL, United States

AI Risk Management AI Safety Evaluation Human-Centered AI AI Safety

Oct 6, 2026cs.AI

How Could AI Eliminate Humanity? A Failure-Mode Analysis of Civilizational Risk

This article develops a failure-mode framework for analyzing how advanced artificial intelligence could contribute to human extinction, irreversible civilizational collapse, or permanent human disempowerment. The central thesis is that catastrophic AI risk does not require consciousness, hostility, or an explicit intention to harm humanity. Instead, risk may arise through several distinct but interacting pathways, including autonomous misalignment, harmful human use, organizational failure, and competitive deployment. The severity of these pathways depends on factors such as capability, autonomy, external access, persistence, institutional safeguards, and the preservation of recovery capacity. The analysis is deliberately non-operational: it identifies causal conditions, empirically tractable intermediate quantities, and defensive research questions rather than procedures for causing harm.

Mikołaj Sienicki, Krzysztof Sienicki

Polish-Japanese Academy of Information Technology, Warsaw, Poland, European Union · NIS, 05-807 Podkowa Leśna, Poland, European Union

AI Safety AI Risk Management AI Alignment

Oct 1, 2026cs.AI

A Deterministic and Auditable AI Security Risk Assessment Framework with ATLAS Aligned Executable Rules and Formal Verification

Artificial intelligence systems are increasingly deployed in high impact and safety critical settings, yet security assessment remains difficult to reproduce and defend under audit. Existing approaches often rely on narrative checklists or assessor driven scoring, and they lack an explicit, machine evaluable mapping from observable engineering artefacts to stable technique level outcomes. We present an evidence driven AI security assessment framework that operationalises assessment as a deterministic decision function. The framework normalises heterogeneous artefacts into a project independent Control ID taxonomy scored on a bounded four level ordinal scale, compiles technique level predicates from a pinned MITRE ATLAS snapshot via an explicit mitigation to control mapping, and outputs technique indexed feasibility and impact levels with traceable links back to the triggering evidence. We package all normative choices as a versioned assessment policy object to support repeatable reassessment across snapshots. To ensure semantic correctness, we formally verify boundedness, totality, ordered semantic consistency, and monotonicity of the compiled evaluator over the full declared score domain. We evaluate the framework on five public open source AI projects pinned to explicit repository snapshots, quantify before and after changes under a unified hardening intervention, and validate responsiveness to real engineering changes through fork based implementations of Software Bill of Materials (SBOM) generation and Continuous integration (CI) security scanning gates. Results show consistent downward shifts in feasibility profiles under strengthened observable controls, while worst case residual feasibility persists when technique specific core controls remain absent from the evidence scope.

Yixuan Huang, Basel Halak, Boojoong Kang

University of Southampton, Southampton, UK

AI Assurance AI Risk Management

Sep 17, 2026cs.CL

SAFARI: An Industrial Benchmark for LLM-Assisted Hazard Analysis and Risk Assessment

Large language models (LLMs) are increasingly considered for safety-critical engineering, yet their reliability in regulated functional-safety workflows remains underexplored. We introduce SAFARI (Safety-Aware Functional Automotive Risk Inference), the first industrial benchmark for LLM-assisted automotive Hazard Analysis and Risk Assessment (HARA) under ISO 26262. It contains 3,000 de-identified industrial HARA cases and evaluates two coupled tasks: open-ended hazard analysis and standards-grounded risk assessment. To evaluate open-ended HARA artifacts, we propose the first reference-anchored LLM-as-a-judge protocol with high expert correlation. Experiments with nine frontier LLMs show that models often produce plausible hazard narratives but remain weak at ISO 26262 risk classification, with the best ASIL macro-F1 reaching only 0.261. Chain-of-Thought prompting provides limited benefit and often degrades categorical risk assessment. Error analysis further localizes major failures to scenario-critical context omissions during hazard generation and to controllability misjudgments during risk assessment, indicating where expert oversight should be concentrated. The dataset can be obtained from https://github.com/xixi47520-hash/HARA.

Chenxi Wu, Zimu Wang, Haiyang Zhang +2

School of Advanced Technology, Xi’an Jiaotong-Liverpool University

LLM Safety Benchmarks AI Risk Management

Sep 15, 2026cs.HC

Disrupted Companionship: A Risk Assessment Framework and Cross-Platform Quantitative Analysis of Psychosocial Responses to AI Companion Disruptions

AI companions can provide meaningful relationships, yet these relationships remain vulnerable to platform-initiated changes. We study AI companion disruptions: platform changes that alter or terminate users' ongoing companionship with an AI. We compile 30 disruption events across major platforms, develop a taxonomy of six disruption types, identify three broad reasons for disruption, and propose a risk-assessment framework comprising four dimensions: relational discontinuity, population vulnerability, communication deficit, and transition-support deficit. Using longitudinal Reddit data, we estimate community-level psychosocial responses with a hierarchical Bayesian interrupted time-series model incorporating predictive controls. Across events, disruption onset was associated with immediate increases in anxiety, stress, suicidal expression, and grief activation, with relational discontinuity and transition-support deficit being associated with more adverse immediate responses across several outcomes. Our findings provide a cross-platform characterization of AI companion disruptions, quantitative evidence of their psychosocial impacts, and a prospective framework for assessing their potential risks before implementation.

Chau Do, Yunhao Yuan, Koustuv Saha +2

Aalto University Espoo, Finland · University of Illinois Urbana-Champaign Urbana, IL, USA · Nanyang Technological University Singapore, Singapore

AI Risk Management AI Companions

Sep 14, 2026cs.LG

A Decision-Support Audit Protocol for Supervision Drift in Proxy-Labeled Credit-Risk Prediction

Credit-risk models are trained on proxy labels and deployed under temporal and segment change, yet no single transfer metric separates base-rate shift, probability-scale shift, and feature-label relationship change. We contribute a design-science artifact: a locked, multi-signal audit protocol for supervision drift in proxy-labeled credit-risk prediction. Five layers (transfer performance, an oracle-gap probe, a calibration diagnostic, feature-label stability, and a synthetic positive control), thresholds, and decision rules were locked before interpretation; a bounded reading is a designed outcome. On a public LendingClub dataset (temporal 2013 to 2016 and cross-segment transfer), ranking is stable and oracle gaps are small; the clearest temporal signal is a prevalence and probability-scale mismatch that intercept-only diagnostic recalibration largely reduces, though its cause is not identifiable from the available release. The positive control responds only to larger injected shifts; subtler drift cannot be excluded. Mapping diagnostic patterns to governance actions is conceptual guidance, not validated here.

Mehrdad Shoeibi, Muhammad Shabanpour, Waldemar Karwowski +1

Department of Industrial Engineering and Management Systems University of Central Florida, Orlando, FL, USA · Department of Economics, Northeastern University, Boston, MA, USA

AI Risk Management Algorithmic Auditing Distribution Shift Detection Credit Scoring

Sep 14, 2026cs.AI

Design of a Deep Learning Credit Risk Early Warning System Integrating Multi-source Heterogeneous Data

Advancements in data fusion and real-time analytics technologies have opened new avenues for addressing complex domain challenges. Financial risk early warning systems often suffer from inefficiency due to information silos and monitoring delays. This paper proposes a credit risk early warning system based on heterogeneous information fusion. The system employs a model architecture integrating deep neural networks and attention mechanisms to extract multidimensional features from diverse data sources such as transaction behaviors and social networks, thereby establishing an early identification mechanism for corporate and individual credit risks. System testing demonstrates that this approach significantly enhances the accuracy and timeliness of risk warnings, outperforming traditional rule-based engine solutions. The findings offer innovative insights for early intervention in financial risks, holding practical significance for safeguarding financial stability.

LiYang Wang, Zhen Zhong, Zhen Tian +2

Washington University in St. Louis · Washington University in St. Louis, St. Louis, MO, USA · Georgetown University +5

AI Risk Management Credit Scoring

Sep 7, 2026cs.AI

Why Better Models Can Create Riskier Systems: Evidence from LLM Agents in Financial Markets

Large language models (LLMs) are being deployed at scale in consequential real-world systems, from financial markets to content moderation to hiring. We show that improving individual model capability can degrade rather than improve system-level outcomes. We hypothesize that shared training and architectures can lead more capable LLMs to behave more similarly, creating correlated actions that do not diversify away. We develop a general framework showing how this correlation creates a non-diversifiable risk floor and test its predictions in financial markets using an agent-based simulation with LLM traders of varying general-purpose capability. We find that: (1) frontier LLMs exhibit significantly correlated behavior that increases with capability; (2) when their shared reasoning is accurate, increasing agent participation reduces market-level risk; and (3) when agents share a common misinformation environment, the same correlated behavior becomes a liability. Together, these results identify a capability paradox: improving individual models does not necessarily produce better system-level outcomes. Whether the same dynamics arise in other domains is an open empirical question.

Jillian Ross, Eric So, Zoe De Simone +2

Department of Electrical Engineering and Computer Science Massachusetts Institute of Technology · Sloan School of Management Massachusetts Institute of Technology · Belfer Center for Science and International Affairs Harvard Kennedy School

Multi-Agent LLM Systems AI Risk Management Emergent Behavior in Multi-Agent Systems

Sep 2, 2026cs.CY

Reducing Catastrophic Risk from AI with Systematic Monitoring and Evaluation of Rogue AI Progression

This article presents a structured framework of behavioral indicators that may signal progression toward potentially catastrophic threats from artificial intelligence systems. We adopt a pragmatic approach, inspired by established methodologies in cybersecurity and national security. By establishing clear metrics, indicators, and thresholds across multiple dimensions of AI capability and behavior, this framework enables researchers and policymakers to implement evidence-based monitoring protocols.

T. Bauer, W. P. Kegelmeyer, E. Begoli +15

Sandia National Laboratories (SNL), Albuquerque, NM, 87185, USA. · Sandia National Laboratories, Livermore, CA 94451, USA. · Oakridge National Laboratories (ORNL), Oak Ridge, TN, 37830, USA. +9

AI Risk Management AI Safety Evaluation

Aug 31, 2026cs.AI

The Irreversibility Budget: Fleet-Level Risk Accounting and Admission Control for Agent Operating Systems

Fleets of LLM agents now externalize effects that cannot be fully undone: they move money, deploy code, delete data, and disclose information. Current controls check one effect at a time, so a fleet of individually authorized agents can overdraw its principal's risk under a shared trigger while every local gate stays correct. We propose the irreversibility budget, a cumulative account of residual value-at-risk that a trusted runtime maintains for each principal across agents, workflows, and tenants. Treating irreversibility as a first-class resource, the runtime charges each effect its residual loss below the agent and denies the marginal effect once the aggregate would overdraw the budget. Getting the price right is hard, because effects are heterogeneous, adversarially declared, and correlated. We perform a controlled study in which per-effect gates admit fleet-level overdraws of up to 48 times the tenant's risk limit while the budget holds every correctly charged run within that limit. Conservative, dependency-aware pricing remains the central open problem for a deployable design.

Bardia Mohammadi, Laurent Bindschaedler

Max Planck Institute for Software Systems Saarbrücken, Germany

AI Risk Management Runtime Enforcement for AI Agents LLM Agent Safety

Aug 31, 2026cs.AI

AI Morbidity and Mortality: A Framework for Clinical AI Failure Review

Clinical artificial intelligence is increasingly embedded in real-world care, yet existing safety mechanisms are poorly suited to reconstructing and learning from individual AI-related errors and near-misses. Aggregate model monitoring can identify performance changes, and traditional patient safety reporting can capture adverse events, but neither is designed to explain how risk emerges across the interaction among AI systems, clinicians, workflows, and institutional controls. We propose AI Morbidity and Mortality (AI M&M), a structured, blameless framework for case-based review of clinical AI failures. The framework combines standardized case intake, evidence preservation and investigator-level reconstruction, tool-in-loop attribution, and corrective-action tracking. Each event is classified across four linked dimensions: Trigger - Mechanism - Clinical Pathway - Corrective Action, separating the condition that exposed a vulnerability from the process that produced risk, its consequence for care, and the remediation assigned. We demonstrate the framework using five illustrative outpatient medication and clinical decision-support cases; two clinician reviewers independently applied all four classification axes and reached agreement across all 20 axis-level classifications. AI M&M is intended to complement, rather than replace, model monitoring, patient safety reporting, and regulatory oversight by converting individual AI-in-workflow failures into actionable institutional learning. Prospective evaluation across institutions, AI systems, and clinical settings is needed.

Paulius Mui, Dean F. Sittig, Steve Labkoff +1

X = Primary Care, Boston, MA, USA · UT Health McWilliams School of Biomedical Informatics, Houston, TX, USA · Informatics Review LLC, Lake Oswego, OR, USA +3

AI Risk Management AI Safety

Aug 7, 2026cs.SE

Taxonomy-Driven Analysis of Open-Source AI Risk Mitigation Tools

Rapid adoption of large language models (LLMs) in enterprise settings has introduced operational, security, and governance risks. As generative AI applications move from pilot to production, manual harm identification and mitigation are becoming difficult to scale. Although many tools support model evaluation, adversarial testing, runtime guardrails, and observability, the tooling landscape remains fragmented. Tools are typically designed for specific engineering tasks and described in technical terms that do not align with governance frameworks or risk taxonomies, making it difficult to determine which tools address which risks and where critical gaps remain. This paper proposes a structured protocol to automate AI risk mitigation through a taxonomy-driven analysis of open-source LLM evaluation and security tools. We map the capabilities of 21 prominent open-source tools to the 32 subcategories of the extended MIT AI Risk Mitigation and Response Taxonomy. An LLM-assisted retrieval-augmented generation pipeline analyzes source code and documentation to extract capabilities for each taxonomy category. Reliability assessment yielded moderate agreement (Fleiss' Kappa = 0.509) among three independent reviewers. The analysis reveals a highly skewed landscape in which tools cluster around technical and operational controls, while governance, legal and regulatory, and financial and market controls remain largely unaddressed. This motivates a layered risk-mitigation architecture combining tool-based controls with organizational and regulatory processes. The mapping protocol achieved an F1 score of 75.5% after majority voting. Overall, the study provides a practical mapping between enterprise AI risk categories and open-source mitigation capabilities, identifies where human oversight remains necessary, and presents a taxonomy-driven framework applicable to open-source and proprietary solutions.

Afreen Alam, Evgenija Popchanovska, Ana Gjorgjevikj +4

Department of Administrative Sciences, Metropolitan College, Boston University, Boston, MA 02215, USA · Faculty of Computer Science and Engineering, Ss. Cyril and Methodius University, Skopje 1000, North Macedonia · Department of Computer Science, Metropolitan College, Boston University, Boston, MA 02215, USA

AI Risk Management LLM Security LLM Safety Evaluation

Aug 3, 2026cs.LG

Empowering Credit Risk Detection in Weixin Pay with Billion-Scale Deep Graph Learning

Credit risk detection, particularly mitigating individual fraud, is crucial for maintaining the stability of digital financial ecosystems. Accurately identifying credit fraud among billions of users is critical for minimizing financial losses and safeguarding the sustainability of inclusive financial services. Given that credit fraud risks are often concealed within heterogeneous user-risk graphs, Graph Neural Networks (GNNs) have emerged as an effective tool for risk mining by capturing complex dependencies. To address the scalability bottleneck of industrial GNNs, distributed training based on subgraphs is indispensable. However, existing strategies often compromise topological integrity for load balancing. This can be catastrophic for risk detection, as it indiscriminately severs the long-tail evidence chains essential for risk propagation. Overlapping subgraphs can restore severed risk contexts but inevitably introduce redundancy and noise, while overlooking the representation alignment across different local subgraphs. In this paper, we propose a risk-aware overlapping subgraph learning framework for large-scale credit risk detection. We first construct base partitions to ensure load balance. Then, we perform budget-constrained sampling that selects informative long-tail nodes, thereby preserving critical risk diffusion patterns while filtering out noise. To mitigate representation inconsistency, we design a cross-subgraph consistency alignment mechanism. By enforcing alignment constraints on the overlapping nodes, we harmonize the local representations into a globally consistent latent space. Extensive experiments on Weixin Pay's production dataset demonstrate that our model significantly outperforms existing strategies for risk detection, offering a scalable and effective solution for industrial graph learning.

Xin Liu, Xiyuan Chen, Chenglong Wu +3

Tongji University Shanghai, China · Tencent Inc. Shenzhen, China

AI Risk Management Financial Fraud Detection Distributed Training Credit Scoring

Aug 1, 2026cs.CR

ZK-SR117: A Chunked Zero-Knowledge Attestation Design for Aggregated Fair-Lending Metrics, with a Control Mapping toward Full SR 11-7 Coverage

Deploying ML models in regulated decision-making (credit underwriting, fraud detection, loan approval) requires demonstrating fairness and robustness to auditors without exposing model weights or customer data. We address this attestation problem for U.S. bank supervision under SR 11-7 and OCC 2011-12 guidance. We present a chunked zero-knowledge circuit design that attests an aggregated fairness statistic - the demographic-parity gap - on committed, nonce-sampled batches of real 2022 HMDA mortgage data, and demonstrate it end-to-end: 32,768 rows, 32 independently verified zkSNARK proofs, aggregated attested gap within 0.0029 of the true held-out value, per-chunk proving under 4 seconds. We also demonstrate extensibility by attesting a second control on the identical architecture - expected calibration error at 10 bins - with all 32 chunks verified, per-chunk proving at about 14.7 seconds, and attested ECE within 0.00037 of the plaintext value on the same committed rows. We compare this design against two alternatives - a flat summation circuit, which overflows past a few thousand rows, and a tree-reduction circuit, numerically exact but intractable to compile - and find the chunked design is the only one that reached this scale. We discovered and root-caused a genuine data-quality failure (a sentinel-code outlier distorting circuit proving and the fairness statistic itself) and resolved it with a published preprocessing specification. We also propose a fuller mapping from SR 11-7 and OCC 2011-12 control language to zero-knowledge statements (nine control elements spanning soundness, calibration, robustness, and drift), a nonce-based sampling protocol resisting bank-side cherry-picking, and a threat model for deployment, proposed as design work, not implemented results. Two controls, one model class, one task are demonstrated end-to-end; the rest is scoped and left as future work.

Mohammad Nasir Uddin, Rahnuma Tabassum Orpita, Eklachur Rahman Bhuiyan +1

1DBA-BIDA (Business Intelligence and Data Analytics) Program, Westcliff University, USA · Department of Computer Science and Engineering, Northern University Bangladesh, Bangladesh · 3Washington University of Science and Technology, Alexandria, Virginia, USA +1

AI Risk Management Algorithmic Auditing Algorithmic Fairness Zero-Knowledge Proofs

Jul 25, 2026cs.SE

On AI Safety and Security Technical Debt in Engineering AI-Enabled Systems

Artificial intelligence (AI) systems are increasingly deployed in high-stakes domains such as healthcare, autonomous driving, finance, and education. While these systems offer powerful data-driven and adaptive capabilities, their complexity, rapid evolution, and dependence on dynamic data pipelines introduce new forms of engineering liability collectively referred to as AI Technical Debts (AITDs). AITDs arise from root causes spanning data governance, model implementation, algorithm design, architectural decisions, operational processes, documentation practices, and testing adequacy. Unlike conventional technical debt, many AITDs are latent and propagate across tightly coupled AI pipelines, leading to maintenance challenges, reliability degradation, and heightened safety or security risks. Guided by the principles of AI Trust, Risk, and Security Management (AI TRiSM), this study reinterprets technical debt through the interconnected dimensions of trustworthiness, focusing on AI safety and security technical debts. We conduct a systematic review of 60 primary studies and identify 31 distinct types of AITD, which are organized into a root-cause-oriented taxonomy comprising seven classes. The analysis examines how these debts map to 18 trust-related concerns, including 6 safety hazards and 12 security vulnerabilities. To support mitigation, the review synthesizes 34 actionable guidelines (8 safety and 26 security) targeting the prevention, detection, and reduction of AITDs across the AI lifecycle. Building on these findings, we introduce AITD-MAP, an integrated framework that connects the AITD taxonomy, quality and risk impacts, and mitigation strategies into a unified structure for risk-aware AI engineering. The framework aims to assist AI software engineers in making AI safety and security technical debts visible, understanding their root causes, and mitigating their presence.

Muhammad Tukur, Hayatullahi B. Adeyemo, Tao Chen +5

Computer Science, University of Birmingham, Edgbaston, UK · CSE, HBKU, Qatar · Computing and Informatics, Bournemouth University, UK +3

Software Engineering AI Risk Management AI Safety

Jul 23, 2026cs.AI

Regulating autonomous and agentic AI

Regulating activities where regulatees use autonomous and agentic AI is challenging. Regulatory assumptions about regulatee knowledge and control no longer hold true; much of that lies elsewhere in the AI supply chain which thus needs to be brought within the scope of regulation. Governance systems for autonomous AI cannot replicate existing governance models, but need a fresh approach. Retrospective supervisory oversight becomes ineffective as a risk management tool, and AI autonomy generates new systemic risks which require new solutions. This paper investigate four regulatory systems: UK regulation of content platforms, data protection, UK financial services, and the EU AI Act'92s cross-sectoral regime. It analyses the challenges posed by autonomous and agentic AI and proposes potential solutions which regulators might adopt. These will transform regulation from a reactive process to an active one, and assist it in adapting to the challenges of AI autonomy.

Chris Reed, Alex Austria, Anmol Bharuka +3

Professor of Electronic Commerce Law at the Centre for Commercial Law Studies, Queen Mary University of London · postgraduate student researchers for the Cloud Legal Project

AI Risk Management AI Agent Governance AI Governance

Jul 17, 2026cs.AI

Harmonizing AI Safety Thresholds

Frontier AI companies have published capability thresholds that differ substantially, making it difficult for third parties to verify whether a threshold has been crossed or to compare requirements across companies. Moreover, without common minimum thresholds, risk mitigation may be inconsistent, creating a potential race to the bottom in safety standards. We develop a methodology for deriving harmonized thresholds across three risk domains. For misuse risks (cyber and biological), we take expected harm as the key primitive and use an explicit risk-modeling approach that accounts for risk channels and model release conditions. For automated AI R&D, we base our proposed threshold on the observed rate of AI progress rather than expected harm. Our analysis expands upon prior work and highlights existing empirical gaps and limitations.

Wilber Sean Anterola, Matthew Ball, Luis F. Lafuerza +1

1Brown University · Centre pour la Sécurité de l’Intelligence Artificielle (CeSIA)

AI Risk Management AI Governance AI Safety

Jul 17, 2026cs.MA

When Not to Automate: A Formal Protocol for Human Preservation in AI-Optimized Organizations

Standard automation ROI misses four categories of systemic risk -- tacit knowledge erosion, resilience reduction, regulatory exposure, and socio-institutional capital degradation -- that affect long-term organizational performance. PHP-AIO (Protocol for Human Preservation in AI-Optimized Organizations) is a five-gate sequential decision protocol with a final composite check that quantifies these unpriced systemic risks at the role level and produces auditable automation decisions. A closed-form automation-debt measure (

ρ(P)

) formalises how role-level decisions accumulate across multi-step processes; its warning is neutralised only by a regulator-mandated human-in-the-loop anchor. Applied to stylised profiles of representative internal roles, PHP-AIO produces distinct outcomes -- automate, augment, hybrid, and preserve -- for candidates that standard cost-benefit analysis would uniformly automate. Threshold sensitivity analysis confirms the gate decisions are robust to upward perturbations of at least 14% in three of four representative cases. Keywords: AI governance, automation decision, human oversight, tacit knowledge, organizational resilience, financial services

Jose Manuel de la Chica Rodriguez, Jairo Rodriguez Arias, Spyridon Chouliaras

1Santander AI Lab

AI Risk Management Business Process Automation AI Governance Human Oversight of AI AI and Labor

Jul 15, 2026cs.AI

CausalGraphX: A Counterfactual Graph Neural Network Framework for Explainable Systemic Risk Assessment

The interconnected nature of global financial systems makes them vulnerable to systemic risks, where the failure of a few institutions can trigger catastrophic cascading defaults. Traditional risk models often fail to capture the complex, non-linear dynamics of these networks. While Graph Neural Networks (GNNs) have shown promise in modeling relational data, they primarily learn correlative patterns and function as black boxes, offering little insight into the causal mechanisms of shock propagation. This limitation is critical for regulators who require explainable models to perform stress tests and devise effective interventions. We introduce CausalGraphX, a novel framework that integrates GNNs with counterfactual reasoning to provide explainable assessments of systemic risk. CausalGraphX employs a Graph Attention mechanism to learn representations of institutional vulnerability and uses an adversarial regularization technique to ensure these representations capture causal drivers rather than spurious correlations. Furthermore, we propose an optimization-based approach to generate counterfactual explanations, answering questions such as, "What minimum capital injection would have prevented Bank A's default under a specific stress scenario?" We validate CausalGraphX on large-scale synthetic financial networks. Our results demonstrate that CausalGraphX significantly outperforms traditional and deep learning baselines in predicting cascading defaults while providing sparse, plausible, and actionable counterfactual explanations.

Rabimba Karanjai, Hemanth Madhavarao, Lei Xu +1

University of Houston · PayPal Inc. · Kent State University

Causal Representation Learning AI Risk Management GNN Explainability Counterfactual Learning Finance

Jul 15, 2026cs.CY

Unsafe at any AUC: Unlearned Lessons from Sociotechnical Disasters for Responsible AI

As automated decision-making and data-driven technologies pervade society and are used to manage consequential outcomes, understanding the technology's capabilities, limitations, and attendant risks in context requires analysis of full sociotechnical systems. Sociotechnical analysis of risks in highly complex systems provides clear lessons for the design and evaluation of AI systems, transcending a technical focus on reliable or "responsibly designed" components to understand risks at a systems level. Human-made catastrophes have been studied for decades because of the severity of these events: consider Chernobyl, Three Mile Island, Fukushima-Daiichi, Bhopal, the Challenger disaster. A common misconception is that these kinds of events are freak accidents, resulting from the inherently unforeseeable interactions in complex systems. Closer examination reveals that the risks and hazards were well-known beforehand but not acted upon due to social structural, political and economic factors. We outline several areas where the development and use of AI can benefit from learning these unlearned lessons: improved risk perception, communication, and analysis at the organizational level; traceability of requirements and responsibilities; and holistic approaches to responsibility and safety that include social and organizational dynamics as first-order engineering concerns. For each area, we offer concrete unlearned lessons and exemplify how they led to failure in prior accidents as well as examples of how these lessons remain unlearned for modern computing systems, particularly AI.

Joshua A. Kroll, Andrew Smart, R. Stuart Geiger +1

Naval Postgraduate School · Google Research · University of California, San Diego +1

AI Accountability AI Risk Management AI Safety Responsible AI

Jul 14, 2026cs.AI

AI-Native Insurance for Agentic AI: Pricing, Underwriting, and End-to-End Automation

Agentic AI introduces new insurance challenges because autonomous AI systems can make decisions, invoke tools, modify external environments, and interact with third-party services. This paper develops an AI-native mathematical framework for underwriting, pricing, and contract design for agentic AI deployments. A deployment is represented by a risk state that captures autonomy level, operational authority, permission exposure, governance maturity, and dependency concentration. The framework maps the risk state to event probabilities, loss severities, governance costs, premiums, deductibles, coverage allocation, and policy covenants, and formulates an optimization problem for insurance contract design under participation, profitability, and incentive compatibility constraints. The paper establishes structural properties of insurability, including characterization of an insurability region, monotone deterioration of feasibility with increasing exposure, and governance certification thresholds. Insurance is further interpreted as both an operational cost and a regulatory mechanism for AI deployment. A healthcare case study illustrates contract optimization, sensitivity analysis, and automated claims processing for agentic AI systems.

Quanyan Zhu

Department of Electrical and Computer Engineering and the NYU Center for Cybersecurity, NYU Tandon School of Engineering, New York University, Brooklyn, NY 11201, USA

AI Risk Management AI Agent Governance Agentic AI

Jul 10, 2026cs.AI

TrustX Agent Risk Classification Framework (ARC): Risk-Tiering Internally Created Agentic AI Systems

The proliferation of agentic AI systems across enterprise and public-sector contexts has outpaced the capacity of general-purpose AI risk frameworks to classify and govern them. In this paper, we introduce the TrustX Agent Risk Classification Framework, a structured, repeatable instrument that can be applied to seven types of agentic AI systems and is grounded in foundational pre-existing AI governance frameworks. At the core of the framework is a twelve-dimension scoring rubric that robustly quantifies the risk. This rubric is combined with other components, such as the GPA + IAT classification model and the five-level autonomy framework derived from existing literature. These inputs produce a three-tier governance output with mapped control recommendations. A specialised Coding Assistant extension is also included to account for nuances specific to this type of agentic AI system. We then use an illustrative example to show our framework in practice. ARC is intended for AI governance practitioners, risk officers, developers, and regulators, and it will regularly undergo iteration as we continue to expand it and make it more robust. The community can access the interactive framework here: https://arc.responsible.ai/

Hannah M. Liu, Rhea Saxena, Shiv Asthana

Responsible AI Institute · Imperial College London

AI Risk Management AI Agent Governance

Jul 8, 2026cs.LG

Predicting LLM Safety Before Release by Simulating Deployment

Pre-deployment safety evaluations aim to inform the downstream risks of releasing a new AI model. Yet most evaluations provide limited evidence about how often undesired model behavior will occur in deployment: they generally have insufficient coverage, are unrepresentative, and are generally recognizable as tests. To address these concerns, we study a simple way to simulate a model deployment: starting from de-identified conversations from a previous model deployment, we hold fixed the initial conversation prefix and regenerate the next response using a candidate model. The resulting responses can then both be audited for novel misalignments and used to estimate the prevalence of model misbehavior before deployment. We evaluate deployment simulation across four GPT-5-series deployments, using registered, outcome-blinded predictions for GPT-5.4 and retrospective analyses of three earlier releases. We find that deployment simulation produces informative estimates of post-deployment misbehavior rates and outperforms baselines based on adversarially selected production data; its evaluation-awareness point estimates were also much closer to production traffic than those from traditional evaluations. We also identify the realism of tool resampling as a central challenge for further improving predictions and share results suggesting that this challenge is surmountable even in complex tool-use settings. Finally, we show that deployment simulation can be seeded from public chat datasets and remain informative about production misbehavior rates, suggesting a path for external researchers to run deployment-grounded evaluations without access to private production logs. Overall, deployment simulation helps evaluators forecast how language models will behave in the real world and supports more quantitative assessment of deployment risk.

Marcus Williams, Hannah Sheahan, Cameron Raymond +8

OpenAI

LLM Evaluation AI Risk Management Language Model Safety Evaluation

Jul 7, 2026cs.SE

Deployment Risk Assessment Using Diff-Aware Features: A Case Study at Prime Video

At Amazon Prime Video, we face the critical operational challenge of managing code deployments during live events and rapid feature releases without causing service outages. Current change control approaches use blanket deployment freezes that block all changes regardless of risk, creating significant developer toil. While prior research has explored risky change predictors, these rely on developer-specific metadata or extensive historical data, raising privacy concerns and limiting applicability to new projects. We introduce a framework centered on diff-aware features, characteristics derived directly from code modifications. Our key contribution is the systematic identification of which quantitative metrics (code-level and change-level metrics) and qualitative indicators (coding style violations, change type classification) are necessary for risk prediction. We employ LLMs as multi-language feature extractors, demonstrating their effectiveness for code analysis beyond generation tasks and eliminating the need for language-specific tooling. We evaluated our framework on two datasets: Prime Video's production environment and the public ApacheJIT dataset. Our best-performing model achieves an average recall of 0.83 and F1 score of 0.81 across both datasets for detecting risky code changes. Notably, ablation analysis reveals that change-level volume metrics (e.g., lines added/deleted) are noisy predictors, while structural code complexity provides a substantially stronger risk signal. These results demonstrate that thoughtful feature curation enables effective change risk assessment across different programming languages and organizational contexts while avoiding privacy concerns.

Mayur Kurup, Hyunjae Suh, Swathi Vaidyanathan +3

Amazon.com Austin, Texas, USA · University of California Irvine, California, USA · Amazon.com Seattle, Washington, USA

AI Risk Management

Jul 6, 2026q-fin.RM

SHARC: SHAP-Based Interpretability in Machine Learning Risk Models for Regulatory Capital under ICAAP and CCAR

The adoption of non-parametric machine learning models for regulatory capital estimation introduces a fundamental governance challenge: the inability to explain model outputs in a manner auditable by supervisory bodies. This 'black box' problem remains a major barrier to the adoption of Gaussian Process Regression (GPR) and related ML architectures in ICAAP and CCAR workflows despite their predictive advantages over traditional parametric approaches. This paper addresses this barrier through SHARC (SHAP for Regulatory Capital), an explainability framework for the Hybrid GPR-HS architecture and its stress-testing extension. SHapley Additive exPlanations (SHAP), derived from cooperative game theory and satisfying the properties of Local Accuracy, Missingness, Consistency, and Efficiency, are applied to Stressed Value-at-Risk (SVaR) outputs under three macro scenarios: West Asia War, Climate Risk, and AI Bubble/Regulatory Burden. SHARC decomposes SVaR into baseline, mean-driven, and volatility-driven components, enabling transparent linkage between scenario design and capital outcomes. Two findings emerge. First, SHARC consistently links non-linear SVaR outputs to underlying scenario inputs, confirming framework fidelity and providing auditable traceability of capital drivers. Second, under stress conditions, the mean return component (directional loss magnitude) dominates the variance component (volatility baseline) in determining capital levels, with implications for capital limit-setting, position management, and hedging strategy. The results establish SHARC as a regulator-aligned explainability layer that makes the Hybrid GPR-HS framework fully auditable and consistent with FRTB, ICAAP Pillar 2, and CCAR transparency requirements.

Ujjwala Vadrevu

AI Risk Management Black-Box Model Auditing

Jul 5, 2026q-fin.RM

Governing Generative AI Across Financial Institutions: A Framework for Generative AI Risk Control

Generative artificial intelligence is moving from general-purpose experimentation toward specialized applications across banking, capital markets, insurance, payments, and wealth management. Its main contribution is not limited to conversational interfaces. Modern generative systems can synthesize large document collections, extract information from unstructured data, generate software and analytical code, create scenario narratives, support research workflows, and coordinate multi-step tasks. These capabilities make generative AI especially relevant to finance, where decisions often depend on combining quantitative data with contracts, policies,filings, news, customer communications, and expert judgment. This paper presents an application-oriented view of generative AI in finance. It organizes potential uses around five capability patterns, including knowledge synthesis, content generation, analytical assistance, interaction, and workflow orchestration, and maps them to major financia functions. Representative applications include investment research, customer service, lending support, fraud investigation, financial reporting, operations automation, software development, and personalized financial guidance. The paper also discusses common technical architectures, such as retrieval-augmented generation, tool-using assistants, multimodal models, and agentic workflows, and identifies practical factors that shape business value. The resulting landscape provides a foundation for researchers and practitioners seeking to understand where generative AI may produce the greatest operational and analytical impact in financial services

Dennis Mao, Alessandra Lin, Yixin Kang +1

Florida State University, Tallahassee, FL, USA · Independent Researcher, Dallas, TX, USA · Independent Researcher, Chicago, IL, USA

Financial Services AI Risk Management AI Governance

Jul 2, 2026cs.CY

The Eticas AI Risk Taxonomy: Open Infrastructure for Operationalizing AI Audits

The rapid deployment of AI systems across high-stakes domains has created urgent demand for standardized evaluation, yet the field remains fragmented across competing risk taxonomies that catalog risks without showing how an audit is executed. At least 74 AI risk taxonomies exist, and almost all stop at the catalog. The hard part of auditing is not naming a risk but operationalizing it: turning it into a test run against a real system, a measured value, a calibrated severity, and a defensible grade. This paper leads with that bridge. We present the operationalization layer Eticas has built and run, shown end to end on a single risk (PII leakage) against a public benchmark, and then the open taxonomy that makes the method scale. On GPT-4-0314, a disclosure risk that seven external frameworks require be controlled is measured at 0%, 51%, and 84% disclosure as adversarial conditioning increases, mapping through calibrated severity bands to a subcategory grade of E with a SYSTEMIC pattern. Around this example, the Eticas AI Risk Taxonomy v2.0.0 organizes 76 active subcategories across 10 categories and 20 sub-groups, with mappings to 18 external frameworks across compliance, reference, and academic tiers. Its category and sub-group layer is published under CC BY 4.0 as open semantic infrastructure with stable URIs and SKOS/JSON-LD distributions, and a worked subcategory example shows the operational layer down to its severity thresholds. The contribution is the demonstrated bridge from concept to graded finding, anchored by a clean separation of risks from the mechanisms by which they surface, and framed by an open-core model in which the conceptual scaffold is open and the methodology calibration is the practitioner layer. This is the infrastructure the AI auditing field needs: shared, open, and demonstrably operable.

Gemma Galdon Clavell, Pablo Accuosto, Usman Gohar

AI Assurance AI Risk Management Algorithmic Auditing

Jul 2, 2026cs.CY

Overview of Risk Assessment and Management for Intelligent Systems under the AI Act and Beyond

The society and emerging risk-based regulatory frameworks for AI underscore the need for rigorous risk assessment to ensure safe and reliable AI systems. In response to this imperative, this paper presents an overview of AI risk assessment (identification and analysis) and management methodologies. It begins by reviewing the worldwide regulatory landscape that drives the need for systematic AI risk assessment. Then we characterize the spectrum of AI-related risks identified in the literature, from technical failures to ethical and social impacts. Subsequently, it reviews key risk assessment methodologies proposed for AI systems, focusing on general frameworks. The paper highlights best practices and illuminates methodological gaps, highlighting areas for further research on AI risk assessment.

Javier Irigoyen, Roberto Daza, Aythami Morales +5

BiometricsAI, Universidad Aut´onoma de Madrid (UAM), Spain · GHIA, Universidad Aut´onoma de Madrid (UAM), Spain · Universidad de Las Palmas de Gran Canaria (ULPGC), Spain

AI Risk Management AI Governance

Jul 1, 2026cs.SE

Risk Architecture for AI-Native Engineering Teams: An Organizational Framework for Agentic System Governance

Engineering management research has produced mature frameworks for software risk: ownership by feature, escalation by severity, and assurance by test coverage. These frameworks implicitly assume deterministic behavior, discrete and auditable change events, and clear component-to-owner mappings. Teams that build and operate agentic AI systems violate all three assumptions at once: outputs are probabilistic, systems take autonomous multi-step actions, and the risk surface mutates silently between deployments. Existing AI risk literature addresses this from above (policy frameworks such as the NIST AI RMF and ISO/IEC 42001) or below (threat taxonomies such as OWASP's agentic AI guidance), but not at the layer where an engineering manager (EM) operates: roles, decision rights, and escalation structures. This paper contributes (i) a seven-dimension profile distinguishing pure software-engineering, hybrid, and AI-native teams; (ii) a six-cluster failure-mode taxonomy including a previously unarticulated cluster, dependency-boundary determinism mismatch; and (iii) a synthetic framework-adequacy methodology scoring how well each profile's risk architecture detects, contains, and escalates a defined scenario set. Because the object of study is framework adequacy rather than human behavior, the evaluation yields derived rather than observed coverage claims. Coverage degrades as teams move from pure software engineering to AI-native operation, monotonically in the median and abruptly in the count of uncovered, high-consequence failures appearing only at the AI-native step. The degradation concentrates in specific failure-mode categories, and the most severe, least-covered failures arise not inside AI-native teams but at the organizational boundary where their probabilistic outputs are consumed by determinism-assuming dependencies.

Laxmipriya Ganesh Iyer

Independent Researcher

Agent Failure Analysis AI Assurance AI Risk Management AI Agent Governance AI Governance