An AI system generates automated responses to tax authority inquiries on behalf of a business. During testing, the AI confidently provides an incorrect statutory reference that could result in an underpayment of taxes. Which risk control framework element should be applied to prevent this from reaching regulators?
Select an answer to reveal the explanation.
Short Explanation and Infographic
Here's the deal — b is correct because legal and regulatory correspondence has irreversible consequences — incorrect statutory references submitted to tax authorities can result in audits, penalties, and legal liability. A human-in-the-loop control requiring expert review before submission is the appropriate risk control for high-stakes, low-volume irreversible actions.
Full explanation below image
Full Explanation
B is correct because legal and regulatory correspondence has irreversible consequences — incorrect statutory references submitted to tax authorities can result in audits, penalties, and legal liability. A human-in-the-loop control requiring expert review before submission is the appropriate risk control for high-stakes, low-volume irreversible actions. Dictionary lookup (A) can catch exact reference errors but not logical reasoning errors in applying statutes. Retraining (C) may reduce errors but cannot eliminate them; a residual error rate is unacceptable for regulatory filings. A disclaimer (D) does not reduce the legal consequences of incorrect information submitted to a regulator.