policy
This glossary entry explains policy for AI governance and model risk programs. The sections below summarize what the term means in plain language, why chief AI officers and cross-functional committees track it, where teams often get confused, and—when you are signed in—how it shows up across major industries and in expectations tied to the EU AI Act and NIST AI RMF. Use related links at the end of the page to explore neighboring concepts without losing context.
What It Means
A policy is a set of rules or guidelines that determines how decisions should be made in specific situations. In AI systems, it's the decision-making framework that tells the system what action to take based on the current situation or data it observes.
Why Chief AI Officers Care
Policies directly impact AI system behavior and business outcomes, making them critical for ensuring compliance with regulations and ethical standards. Poor policy design can lead to biased decisions, regulatory violations, or systems that optimize for the wrong business objectives, creating significant legal and reputational risks.
Real-World Example
A credit approval AI system has a policy that automatically rejects applications when the debt-to-income ratio exceeds 40%, but approves applications under 30% if credit score is above 650. This policy determines every lending decision the system makes, directly affecting revenue, risk exposure, and regulatory compliance.
Common Confusion
People often confuse policies with the AI models themselves, but a policy is specifically the decision-making rules, while the model is the underlying technology that processes information to support those decisions.
Industry-Specific Applications
See how this term applies to healthcare, finance, manufacturing, government, tech, and insurance.
Healthcare: In healthcare AI, a policy defines the clinical decision-making rules that determine patient care recommendations, treat...
Finance: In finance, a policy defines the automated decision-making rules for AI systems handling trading, lending, risk assessme...
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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
"The general principles by which a government is guided in its management of public affairs, or the legislature in its measures. This term, as applied to a law, ordinance, or rule of law, denotes its general purpose or tendency considered as directed to the POLICY"Source: law_policy_2023
"A policy defines the learning agent’s way of behaving at a given time"Source: sutton_reinforcement_2018
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