Understanding AI Act Requirements: A Guide for SMBs

Understanding AI Act Requirements: A Guide for SMBs

The European Union’s AI Act (Regulation 2024/1689) aims to regulate artificial intelligence (AI) technologies in a way that ensures safety and respects fundamental rights. As a small to medium-sized business (SMB) with a workforce of 50-250 employees, understanding the AI Act requirements is crucial for smooth operations and compliance. This article will break down the key requirements of the AI Act and provide practical guidance on how your organization can adhere to them.

What is the AI Act?

The AI Act is a comprehensive regulatory framework that categorizes AI systems based on risk levels, imposing different requirements depending on the category. This regulation applies to all AI systems used within the EU or affecting EU citizens, regardless of where the provider is based.

Key AI Act Requirements

The AI Act classifies AI systems into four categories: minimal, limited, high, and unacceptable risk. Each category carries specific obligations. Here’s a breakdown of the requirements for each classification:

#### 1. Unacceptable Risk (Article 5)

• Prohibited AI Practices: AI systems that pose a threat to safety, livelihoods, or rights of people are banned, such as social scoring by governments.
• Immediate Compliance: If your technology falls under this category, cease its development and deployment immediately.

#### 2. High Risk (Annex III)

• Risk Assessment: High-risk AI systems must undergo a detailed risk assessment to identify potential hazards.
• Compliance Obligations: Must ensure:

- Data governance and management (Article 10)

- Technical documentation (Article 11)

- Human oversight (Article 14)

- Transparency in operations (Article 13)

• Conformity Assessment: Before deploying a high-risk AI system, a conformity assessment must be conducted, which may involve third-party evaluations.

#### 3. Limited Risk (Article 6)

• Transparency Requirements: Limited risk AI systems need to inform users that they are interacting with an AI system, ensuring transparency.
• Self-Assessment: Organizations may conduct self-assessments to ensure compliance with transparency and accountability but do not require third-party evaluations.

#### 4. Minimal Risk

• Voluntary Guidelines: Minimal risk AI systems are largely unregulated, but adhering to voluntary guidelines for ethical AI use is encouraged.

Practical Steps for Compliance

To ensure compliance with the AI Act, consider the following actionable steps:

• Conduct an Inventory: Identify all AI systems used in your organization and classify them according to the AI Act categories.
• Risk Assessment: For high-risk systems, perform a comprehensive risk assessment. Document potential risks and mitigation strategies.
• Establish Compliance Teams: Form teams responsible for overseeing compliance and staying updated on regulatory changes.
• Create Documentation: Maintain thorough documentation for all AI systems, including risk assessments, technical specifications, and user guidelines.
• Implement Training Programs: Educate employees about the AI Act requirements and encourage ethical AI practices.

Monitoring and Reporting

Regular monitoring and reporting are essential for staying compliant. Article 61 of the AI Act outlines the need for organizations to report any incidents of non-compliance. This necessitates a robust incident reporting mechanism within your organization.

#### Checklist for AI Compliance

• [ ] Inventory of AI systems completed.
• [ ] AI systems classified according to risk levels.
• [ ] High-risk systems have undergone risk assessment.
• [ ] Documentation for compliance has been established.
• [ ] Employees trained on compliance and ethical AI use.

How AI-Act.Click Can Help

AI-Act.Click offers a tailored compliance solution for SMBs navigating the AI Act requirements. Our platform simplifies the compliance process with tools for risk assessment, documentation management, and employee training. By integrating our services, you can focus on innovation while ensuring your AI systems remain compliant with EU regulations.

Conclusion

Understanding and implementing the AI Act requirements is essential for SMBs looking to operate successfully within the EU. By assessing your AI systems, categorizing them, and taking actionable steps toward compliance, you can mitigate risks and harness the potential of AI responsibly.

FAQ

Q1: What are the penalties for non-compliance with the AI Act?

A1: Non-compliance can lead to significant fines, up to 6% of a company's global annual turnover or €30 million, whichever is higher.

Q2: How can I determine if my AI system is high-risk?

A2: Refer to Annex III of the AI Act, which outlines specific criteria and applications that classify AI systems as high-risk.

Q3: Are there any exemptions to the AI Act?

A3: The AI Act applies universally to AI systems used within the EU, but certain limited risk systems may face fewer compliance obligations.