A financial services company is building an AI-powered loan approval system. The AI governance team requires a formal AI risk tiering process before deployment. According to responsible AI principles and EU AI Act alignment, what risk tier would an automated loan approval AI system typically fall under?
Select an answer to reveal the explanation.
Short Explanation and Infographic
Here's the deal — b is correct because under the EU AI Act, AI systems used for creditworthiness assessment and credit scoring for natural persons are explicitly categorized as high-risk AI systems. High-risk systems require conformity assessments, technical documentation, human oversight mechanisms, logging capabilities, and registration in the EU database before deployment.
Full explanation below image
Full Explanation
B is correct because under the EU AI Act, AI systems used for creditworthiness assessment and credit scoring for natural persons are explicitly categorized as high-risk AI systems. High-risk systems require conformity assessments, technical documentation, human oversight mechanisms, logging capabilities, and registration in the EU database before deployment. A is incorrect because high-risk is not the same as unacceptable risk; unacceptable risk applications include social scoring by governments and cognitive behavioral manipulation. C is incorrect because limited risk applies to systems like chatbots that require transparency obligations. D is incorrect because credit scoring AI systems are explicitly listed as high-risk under the EU AI Act.