artificial intelligence (AI) system
What It Means
An AI system is any computer-based tool that can analyze data and make decisions, predictions, or recommendations that affect real business operations or customer experiences. These systems can work independently to varying degrees, from requiring constant human oversight to operating fully autonomously within defined parameters.
Why Chief AI Officers Care
CAIOs must understand that every AI system in their organization carries governance responsibilities, regardless of how simple or complex it appears. The definition's emphasis on 'influencing environments' means even basic recommendation engines or chatbots fall under AI governance frameworks and compliance requirements. This broad scope affects risk management strategies, audit processes, and regulatory reporting across the entire AI portfolio.
Real-World Example
A retail company's inventory management system that automatically adjusts product orders based on sales patterns, weather forecasts, and supplier data qualifies as an AI system because it generates purchasing recommendations that directly impact store operations and customer availability of products.
Common Confusion
People often think only sophisticated machine learning models or chatbots count as AI systems, but the definition includes any automated system that makes decisions affecting business operations. Simple rule-based systems or basic predictive algorithms that influence real outcomes also fall under this category.
Industry-Specific Applications
See how this term applies to healthcare, finance, manufacturing, government, tech, and insurance.
Healthcare: In healthcare, AI systems encompass diagnostic tools, clinical decision support systems, and patient management platform...
Finance: In finance, AI systems are deployed across trading algorithms, credit scoring models, fraud detection platforms, and reg...
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Includes:
- 6 industry-specific applications
- Relevant regulations by sector
- Real compliance scenarios
- Implementation guidance
Technical Definitions
NISTNational Institute of Standards and Technology
"an engineered or machine-based system that can, for a given set of objectives, generate outputs such as predictions, recommendations, or decisions influencing real or virtual environments. AI systems are designed to operate with varying levels of autonomy"Source: NIST AI RMF (Adapted from: OECD Recommendation on AI:2019; ISO/IEC 22989:2022).
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