> ## Documentation Index
> Fetch the complete documentation index at: https://docs.aigoframework.com/llms.txt
> Use this file to discover all available pages before exploring further.

# AIGO AI Risk Management v0.1

# AIGO — AI Governance Operating Framework

## AI Risk Management

**Version:** 0.1
**Status:** Draft
**Working Name:** AIGO
**Full Name:** AI Governance Operating Framework

***

### 1. Purpose

The AIGO AI Risk Management model provides a structured, risk-based approach for identifying, assessing, treating, monitoring, and communicating risks associated with artificial intelligence.

AI risk management should be integrated throughout the AI governance lifecycle rather than performed as a single assessment activity.

The purpose of this document is to provide organizations with a common approach for managing AI-related risks while allowing the specific methods, tools, and assessment techniques to be adapted to organizational context.

***

### 2. AI Risk Management Principles

AIGO AI risk management should be based on the following principles:

* risk management should begin as early as practical;
* risk should be managed throughout the AI system lifecycle;
* risk assessment should be proportionate to potential impact;
* material risks should have clearly assigned owners;
* risk decisions should be supported by appropriate evidence;
* controls should be selected according to identified risks;
* residual risk should be explicitly considered;
* significant risks should be escalated appropriately;
* risk assessments should be updated when circumstances change; and
* risk management should support continuous improvement.

***

### 3. AI Risk Management Scope

AIGO AI risk management may apply to:

* AI systems;
* AI applications;
* AI models;
* generative AI systems;
* large language model applications;
* retrieval-augmented generation systems;
* AI agents;
* agentic workflows;
* AI-enabled business processes;
* third-party AI services;
* AI APIs;
* AI infrastructure; and
* other AI-enabled capabilities.

The scope should be determined according to the organization's AI governance requirements and risk profile.

***

### 4. AI Risk Management Context

AI risks should be assessed within the organizational context in which the AI system operates.

Context may include:

* organizational objectives;
* business processes;
* affected stakeholders;
* geographic environment;
* regulatory environment;
* technology environment;
* data environment;
* security environment;
* third-party dependencies;
* operational environment; and
* organizational risk tolerance.

The same AI capability may present different risks depending on its context and intended use.

***

### 5. AI Risk Management Lifecycle

AIGO defines the following primary AI risk management activities:

1. Establish Context
2. Identify Risks
3. Analyze Risks
4. Evaluate Risks
5. Treat Risks
6. Approve Residual Risk
7. Monitor Risks
8. Communicate and Report Risks
9. Review and Improve Risk Management

These activities should be integrated with the AI Governance Lifecycle defined in `05-lifecycle`.

***

### 6. Establishing AI Risk Context

#### 6.1 Purpose

The organization should establish sufficient context before performing a detailed AI risk assessment.

#### 6.2 Context Information

Context may include:

* intended purpose;
* intended users;
* affected stakeholders;
* system architecture;
* AI capabilities;
* data sources;
* model characteristics;
* level of autonomy;
* external dependencies;
* business criticality;
* potential impacts;
* applicable requirements; and
* existing controls.

#### 6.3 Risk Criteria

Organizations should establish criteria for evaluating AI risks.

Criteria may consider:

* likelihood;
* impact;
* severity;
* duration;
* affected population;
* reversibility;
* detectability;
* uncertainty; and
* organizational risk tolerance.

***

### 7. AI Risk Identification

#### 7.1 Purpose

AI risk identification determines what could adversely affect the organization, individuals, stakeholders, systems, or other relevant interests.

#### 7.2 Risk Sources

Risk sources may include:

* technology;
* data;
* models;
* users;
* suppliers;
* processes;
* infrastructure;
* human factors;
* organizational decisions;
* malicious actors;
* environmental conditions; and
* unexpected system behavior.

#### 7.3 Risk Identification Methods

Organizations may use:

* workshops;
* structured assessments;
* interviews;
* threat modeling;
* privacy assessments;
* security assessments;
* scenario analysis;
* testing;
* historical incident analysis;
* expert review; and
* automated assessment tools.

The selected method should be appropriate to the AI system and its risk.

***

### 8. AI Risk Categories

AIGO recognizes that AI risks may arise across multiple categories.

Organizations may define additional categories according to their context.

Core categories may include:

* strategic risk;
* business risk;
* operational risk;
* technology risk;
* cybersecurity risk;
* privacy risk;
* data risk;
* model risk;
* legal and regulatory risk;
* ethical risk;
* safety risk;
* human factors risk;
* third-party risk;
* financial risk;
* reputational risk; and
* societal or stakeholder impact risk.

***

### 9. Strategic AI Risk

Strategic AI risk relates to the possibility that AI adoption or use may negatively affect organizational strategy, objectives, or long-term interests.

Examples may include:

* misalignment with organizational strategy;
* inappropriate AI investment;
* dependency on unsuitable technologies;
* excessive vendor dependency;
* failure to adapt to changing AI capabilities; and
* AI initiatives that do not deliver expected value.

Organizations should consider strategic risk when approving significant AI investments and capabilities.

***

### 10. Business and Operational Risk

Business and operational risks may arise when an AI system:

* produces unreliable results;
* disrupts business processes;
* causes operational failures;
* creates excessive dependency;
* performs outside expected conditions;
* creates inaccurate decisions;
* reduces service quality; or
* causes unexpected business consequences.

Operational risks should be assessed according to the importance of the affected business process.

***

### 11. Technology and Model Risk

Technology and model risk relates to failures or limitations of the technical components used by an AI system.

Potential sources include:

* model limitations;
* inaccurate outputs;
* model degradation;
* model drift;
* insufficient testing;
* infrastructure failure;
* integration failure;
* dependency failure;
* configuration errors; and
* unsupported technical assumptions.

Organizations should identify technical risks appropriate to the architecture and AI technology used.

***

### 12. Cybersecurity Risk

AI systems may introduce or amplify cybersecurity risks.

Potential risks may include:

* prompt injection;
* malicious inputs;
* unauthorized access;
* data exfiltration;
* model extraction;
* insecure integrations;
* excessive permissions;
* tool abuse;
* compromised dependencies;
* supply-chain attacks; and
* unauthorized system actions.

Cybersecurity risk should be assessed throughout the AI lifecycle.

***

### 13. Privacy and Data Protection Risk

AI systems may create privacy and data protection risks when processing personal or otherwise protected information.

Potential risks may include:

* unauthorized processing;
* excessive collection;
* inappropriate retention;
* data leakage;
* inappropriate disclosure;
* re-identification;
* unauthorized secondary use;
* insufficient transparency; and
* inappropriate third-party processing.

Privacy risk should be assessed according to applicable organizational and legal requirements.

***

### 14. Data Risk

Data-related AI risks may include:

* poor data quality;
* incomplete data;
* inaccurate data;
* outdated data;
* inappropriate data sources;
* insufficient provenance;
* unauthorized data;
* data contamination;
* data leakage; and
* inappropriate data transformations.

Organizations should assess whether the data used by an AI system is appropriate for its intended purpose.

***

### 15. Model Risk

Model risk relates to the possibility that an AI model does not perform as expected or is unsuitable for its intended use.

Potential causes may include:

* inappropriate model selection;
* insufficient training;
* insufficient validation;
* distribution shift;
* model drift;
* unexpected behavior;
* inaccurate predictions;
* unreliable generated content; and
* limitations that are not sufficiently understood.

Model risk should be assessed according to the characteristics and intended use of the model.

***

### 16. Generative AI Risk

Generative AI systems may introduce additional risks related to generated content and probabilistic behavior.

Potential risks may include:

* inaccurate or misleading outputs;
* hallucination;
* harmful content;
* inappropriate content;
* prompt manipulation;
* information disclosure;
* intellectual property concerns;
* excessive user reliance;
* inconsistent outputs; and
* uncontrolled downstream use.

Organizations should define controls appropriate to the intended use of generative AI.

***

### 17. AI Agent and Agentic Risk

AI agents and agentic workflows may introduce additional risks because they can interact with tools, systems, data, and external environments.

Potential risks may include:

* unauthorized actions;
* excessive permissions;
* unintended tool use;
* action chaining;
* failure propagation;
* autonomous decision making;
* insufficient human oversight;
* malicious manipulation;
* unexpected system interactions; and
* inability to stop or contain actions effectively.

Organizations should assess the level of autonomy and authority granted to each agent or agentic workflow.

***

### 18. Human Factors Risk

AI systems may create risks related to human behavior, judgment, interaction, and reliance.

Potential risks may include:

* automation bias;
* over-reliance;
* insufficient training;
* misunderstanding of AI limitations;
* inappropriate user behavior;
* insufficient human oversight;
* decision fatigue; and
* failure to challenge AI outputs.

Organizations should consider how people are expected to interact with and rely upon AI systems.

***

### 19. Legal and Regulatory Risk

AI systems may create legal or regulatory risks depending on their use, jurisdiction, industry, and affected stakeholders.

Potential areas may include:

* regulatory obligations;
* contractual requirements;
* intellectual property;
* consumer protection;
* privacy;
* employment;
* discrimination;
* product liability;
* sector-specific requirements; and
* reporting or transparency obligations.

Organizations should identify applicable requirements according to their own legal and regulatory context.

***

### 20. Ethical and Responsible AI Risk

AI systems may create risks related to organizational values, fairness, accountability, transparency, human dignity, or other responsible AI considerations.

Potential concerns may include:

* unfair outcomes;
* discriminatory impacts;
* lack of transparency;
* insufficient accountability;
* inappropriate manipulation;
* harmful uses;
* inadequate human oversight; and
* negative stakeholder impacts.

Ethical considerations should be incorporated into risk assessment where relevant to the AI system and organizational context.

***

***

### 21. Safety Risk

AI systems may create safety risks when their outputs, decisions, recommendations, or actions can contribute to physical, psychological, operational, or other significant harm.

Safety risk assessment may consider:

* potential harm;
* severity of consequences;
* likelihood of occurrence;
* system operating conditions;
* human intervention;
* failure modes;
* safeguards;
* emergency procedures; and
* ability to stop or contain the system.

Higher-risk AI systems should receive additional safety assessment where appropriate.

***

### 22. Third-Party and Supply Chain Risk

AI systems may depend on external providers, models, APIs, datasets, infrastructure, software, or other services.

Third-party risk assessment may consider:

* provider reliability;
* provider security;
* provider privacy practices;
* data handling;
* model provenance;
* service availability;
* contractual obligations;
* subcontractors;
* geographic dependencies;
* service changes;
* provider concentration;
* exit options; and
* business continuity.

Organizations should identify material dependencies and establish appropriate controls.

***

### 23. Financial Risk

AI systems may create direct or indirect financial risks.

Potential sources include:

* inaccurate financial decisions;
* unexpected operating costs;
* excessive infrastructure consumption;
* unauthorized transactions;
* fraud;
* business interruption;
* contractual exposure;
* regulatory penalties; and
* loss resulting from incorrect AI outputs or actions.

Financial risk should be assessed according to the intended use and financial significance of the AI system.

***

### 24. Reputational Risk

AI-related incidents or failures may negatively affect an organization's reputation and stakeholder trust.

Potential sources include:

* harmful AI outputs;
* inappropriate use of AI;
* privacy incidents;
* security incidents;
* discriminatory outcomes;
* inaccurate public information;
* lack of transparency;
* failure to respond to incidents; and
* inappropriate autonomous actions.

Organizations should consider reputational impact when assessing material AI risks.

***

### 25. Stakeholder and Societal Risk

Some AI systems may affect individuals, groups, communities, customers, employees, or society more broadly.

Risk assessment may consider:

* affected stakeholders;
* vulnerable populations;
* potential unequal impacts;
* access and exclusion;
* social consequences;
* public trust;
* human rights considerations; and
* unintended downstream effects.

The level of assessment should be proportionate to the potential impact.

***

### 26. Risk Analysis

Risk analysis determines the characteristics and significance of identified risks.

Analysis may consider:

* likelihood;
* impact;
* severity;
* exposure;
* duration;
* reversibility;
* detectability;
* uncertainty;
* existing controls; and
* dependencies.

Organizations may use qualitative, quantitative, or hybrid methods.

The selected method should be appropriate to the risk and the organization's established risk methodology.

***

### 27. Likelihood Assessment

Likelihood represents the estimated possibility that a risk event or condition may occur.

Organizations may assess likelihood using categories such as:

1. Rare
2. Unlikely
3. Possible
4. Likely
5. Almost Certain

Organizations may use alternative scales where appropriate.

Likelihood assessments should be supported by available evidence, expert judgment, historical information, testing, or other appropriate sources.

***

### 28. Impact Assessment

Impact represents the potential consequences if a risk materializes.

Impact may be assessed across dimensions such as:

* financial;
* operational;
* security;
* privacy;
* legal;
* regulatory;
* safety;
* reputational;
* individual;
* stakeholder; and
* societal impact.

Organizations may use categories such as:

1. Minimal
2. Minor
3. Moderate
4. Major
5. Severe

The organization should define the meaning of each impact category.

***

### 29. Risk Rating

Organizations may combine likelihood and impact to determine an overall risk rating.

A representative model may use:

**Risk Rating = Likelihood × Impact**

The actual calculation method may be adapted to the organization's established risk methodology.

Risk ratings should not replace professional judgment.

Where uncertainty is significant, organizations should consider whether additional assessment or conservative treatment is appropriate.

***

### 30. Inherent Risk

Inherent risk represents the level of risk before considering applicable controls or risk treatments.

Organizations should identify inherent risk where this is useful for understanding:

* the original risk exposure;
* control effectiveness;
* treatment requirements; and
* residual risk.

Inherent risk should reflect the intended operating context of the AI system.

***

### 31. Control Assessment

Existing controls should be considered when analyzing AI risks.

Control assessment may consider:

* control existence;
* control design;
* control implementation;
* control effectiveness;
* control coverage;
* control ownership; and
* control evidence.

Controls should not automatically be considered effective merely because they are documented.

***

### 32. Residual Risk

Residual risk represents the remaining risk after applicable controls and treatments have been considered.

Residual risk should be:

* identified;
* assessed;
* documented where material;
* assigned to an appropriate owner; and
* accepted or otherwise treated according to organizational requirements.

Residual risk should remain within the organization's defined risk tolerance unless appropriately escalated.

***

### 33. Risk Appetite and Risk Tolerance

Organizations should define how much AI-related risk they are willing to accept.

Risk appetite represents the broad level and type of risk the organization is willing to pursue or retain.

Risk tolerance defines acceptable variation around established risk expectations or thresholds.

AI governance decisions should consider organizational risk appetite and tolerance.

***

### 34. Risk Evaluation

Risk evaluation compares assessed risks against established criteria to determine whether further treatment is required.

Evaluation may result in a determination that a risk is:

* acceptable;
* acceptable with conditions;
* requires treatment;
* requires escalation;
* requires additional assessment; or
* unacceptable.

Risk evaluation should be performed by appropriately authorized roles.

***

### 35. Risk Treatment

Risk treatment determines how identified risks will be managed.

Treatment options may include:

* avoid;
* reduce;
* transfer;
* accept;
* restrict;
* monitor; or
* discontinue.

Treatment decisions should consider:

* risk severity;
* effectiveness of available controls;
* cost;
* feasibility;
* business objectives;
* legal requirements;
* stakeholder impact; and
* residual risk.

***

### 36. Risk Avoidance

Risk avoidance involves changing or eliminating the proposed activity so that the relevant risk does not arise or is materially reduced.

Examples may include:

* not deploying the AI system;
* removing a high-risk feature;
* restricting a use case;
* removing autonomous functionality; or
* selecting an alternative approach.

Risk avoidance should be considered where risks cannot be adequately controlled.

***

### 37. Risk Reduction

Risk reduction involves implementing controls or changing system design or operation to reduce likelihood, impact, or both.

Risk reduction measures may include:

* access controls;
* human oversight;
* validation;
* testing;
* monitoring;
* rate limits;
* output filtering;
* data controls;
* security controls;
* segregation;
* approval workflows; and
* operational restrictions.

***

### 38. Risk Transfer

Risk transfer involves allocating some risk responsibility or consequence to another party through mechanisms such as:

* contractual arrangements;
* insurance;
* supplier agreements;
* service-level agreements; or
* other organizational mechanisms.

Risk transfer does not necessarily eliminate the organization's accountability for governing its AI system.

***

### 39. Risk Acceptance

Risk acceptance occurs when an authorized role determines that the remaining risk is acceptable within established organizational criteria.

Acceptance should consider:

* residual risk;
* risk appetite;
* risk tolerance;
* applicable requirements;
* available controls;
* business justification; and
* potential impact.

Material risk acceptance should be documented.

***

### 40. Risk Treatment Plans

Where treatment is required, organizations should establish a risk treatment plan.

The plan may identify:

* risk identifier;
* risk description;
* risk owner;
* treatment decision;
* required actions;
* responsible parties;
* target dates;
* required controls;
* residual risk; and
* approval status.

Treatment plans should be monitored until required actions are completed or otherwise formally resolved.

***

### 41. Risk Ownership

Each material AI risk should have an identified risk owner.

The risk owner should have sufficient authority and responsibility to:

* understand the risk;
* coordinate treatment;
* monitor the risk;
* escalate material changes; and
* support risk acceptance decisions.

Risk ownership should not be assigned solely based on technical responsibility.

***

### 42. Risk Escalation

AI risks should be escalated when they exceed defined authority, tolerance, or governance thresholds.

Escalation may be required when:

* residual risk exceeds tolerance;
* material controls are unavailable;
* risk treatment is ineffective;
* significant uncertainty exists;
* an incident occurs;
* risk characteristics materially change;
* regulatory concerns arise; or
* appropriate approval cannot be obtained.

Escalation paths should be defined by organizational governance procedures.

***

### 43. Risk Monitoring

AI risks should be monitored throughout the AI system lifecycle.

Monitoring may include:

* risk indicators;
* control performance;
* incidents;
* system changes;
* model changes;
* data changes;
* environmental changes;
* regulatory developments;
* stakeholder feedback; and
* emerging threats.

Monitoring frequency should be proportionate to risk.

***

### 44. Risk Triggers

Organizations should define events that trigger reassessment.

Risk reassessment may be triggered by:

* material system changes;
* model changes;
* data changes;
* new use cases;
* increased autonomy;
* new integrations;
* security incidents;
* privacy incidents;
* harmful outputs;
* significant performance degradation;
* new legal requirements;
* changes in organizational context; or
* significant stakeholder concerns.

***

### 45. Risk Register

Organizations should maintain an AI risk register where appropriate.

A risk register may contain:

* risk identifier;
* AI system;
* risk description;
* risk category;
* cause;
* consequence;
* likelihood;
* impact;
* inherent risk;
* existing controls;
* residual risk;
* treatment;
* risk owner;
* approval;
* status; and
* review date.

The level of documentation should be proportionate to risk.

***

### 46. Risk Evidence

Risk management activities should produce sufficient evidence to demonstrate that risks were appropriately considered and managed.

Evidence may include:

* risk assessments;
* risk registers;
* treatment plans;
* control assessments;
* approval records;
* testing results;
* monitoring records;
* incident records;
* review records; and
* risk acceptance decisions.

Evidence should be maintained according to applicable organizational requirements.

***

### 47. Risk Communication

Material AI risks should be communicated to stakeholders who require the information to perform their responsibilities.

Communication may include:

* risk reports;
* management reporting;
* governance committee reporting;
* incident notifications;
* control-owner notifications;
* audit reporting; and
* regulatory or contractual reporting where required.

Risk communication should be accurate, timely, and appropriate to the recipient.

***

### 48. Risk Reporting

Organizations may establish regular AI risk reporting.

Reporting may include:

* current risk profile;
* significant risks;
* emerging risks;
* overdue treatments;
* control deficiencies;
* accepted risks;
* incidents;
* exceptions;
* changes in risk exposure; and
* trends.

Reporting frequency should reflect the organization's risk profile.

***

### 49. Emerging AI Risks

Organizations should maintain awareness of emerging risks associated with changes in AI technology, threats, regulation, business use, and societal expectations.

Emerging risks may include:

* new attack techniques;
* new model capabilities;
* new forms of autonomous behavior;
* new data risks;
* new regulatory requirements;
* new dependency risks;
* new misuse scenarios; and
* unexpected system interactions.

Emerging risk information should be incorporated into relevant risk assessments where appropriate.

***

### 50. AI Risk Review

AI risk assessments should be reviewed periodically and when significant changes occur.

The review should determine whether:

* identified risks remain valid;
* new risks have emerged;
* risk ratings remain appropriate;
* controls remain effective;
* treatment remains appropriate;
* residual risk remains acceptable; and
* escalation is required.

Risk review should be integrated with the AI Governance Lifecycle.

***

### 51. AI Risk Continuous Improvement

Organizations should use risk management outcomes to improve AI governance.

Improvement inputs may include:

* incidents;
* audit findings;
* control failures;
* assessment findings;
* stakeholder feedback;
* monitoring results;
* new threats;
* regulatory developments;
* lessons learned; and
* changes in AI capabilities.

The organization should update risk methods, controls, procedures, and guidance where appropriate.

***

### 52. Risk Traceability

AIGO risk management should support traceability between AI systems, risks, controls, evidence, and decisions.

A representative relationship is:

**AI System → Risk → Control → Evidence → Treatment → Residual Risk → Decision**

Traceability should support:

* accountability;
* assurance;
* auditability;
* governance reporting;
* change management; and
* continuous improvement.

***

### 53. Risk Exceptions

Organizations may establish controlled exceptions to defined risk management requirements.

An exception should:

* identify the requirement;
* document the reason;
* assess associated risk;
* identify compensating measures where appropriate;
* identify an authorized approver;
* define conditions; and
* establish a review or expiration date where appropriate.

Exceptions should be monitored and should not become a substitute for effective risk management.

***

### 54. Risk Assessment Independence

For higher-risk AI systems, organizations should consider whether risk assessment requires independent review.

Independent review may be performed by:

* risk functions;
* compliance functions;
* security functions;
* privacy functions;
* internal audit;
* qualified specialists; or
* other appropriately independent personnel.

The level of independence should be proportionate to risk and organizational requirements.

***

### 55. Risk Management and AI Lifecycle

AI risk management should operate throughout the lifecycle defined in `05-lifecycle`.

Risk activities should occur at appropriate lifecycle stages, including:

* initiation;
* initial assessment;
* concept definition;
* classification;
* design;
* development;
* testing;
* approval;
* deployment;
* operation;
* change;
* incident management;
* periodic review; and
* retirement.

Risk should not be treated as a one-time approval activity.

***

### 56. Risk Management and Controls

Risks should be connected to applicable controls defined within `07-controls`.

Organizations should be able to identify, where practical:

* which risks are addressed by each control;
* which controls address each material risk;
* who owns the controls;
* what evidence demonstrates control operation; and
* whether residual risk remains acceptable.

Control selection should be risk-based.

***

### 57. Risk Management and AI System Profiles

AI System Profiles defined in `09-profiles` may be used to identify common risk patterns and governance requirements for specific types of AI systems.

Profiles may identify:

* typical risks;
* relevant controls;
* assessment considerations;
* evidence requirements;
* monitoring expectations; and
* governance activities.

Organizations should still assess the actual risk of each individual AI system.

***

### 58. Risk Management and Maturity

Organizations may assess the maturity of their AI risk management capability.

Maturity considerations may include:

* defined risk methodology;
* risk ownership;
* consistent assessments;
* control integration;
* evidence;
* monitoring;
* reporting;
* independent assurance; and
* continuous improvement.

Maturity should be evaluated based on the effectiveness of risk management rather than solely on the existence of documented processes.

***

### 59. Risk Management Documentation

Organizations should maintain documentation appropriate to the AI system's risk and governance requirements.

Documentation may include:

* risk methodology;
* risk criteria;
* risk assessments;
* risk registers;
* treatment plans;
* control assessments;
* acceptance records;
* escalation records;
* monitoring records;
* review records; and
* risk reports.

Documentation should support traceability and assurance.

***

### 60. Risk Management Completion

AI risk management should continue for as long as material AI-related risks remain within the organization's governance scope.

Risk management should be updated when the AI system:

* changes;
* enters a new lifecycle stage;
* experiences an incident;
* changes operating context;
* introduces new capabilities;
* receives new data;
* gains additional autonomy; or
* is retired.

Retirement should include appropriate consideration of remaining risks and obligations.

***

### 61. Document Status

**Document:** AIGO AI Risk Management

**Version:** 0.1

**Status:** Draft

**Working Name:** AIGO

**Full Name:** AI Governance Operating Framework

**Document Type:** AI Risk Management

**Identifier Prefix:** `AIGO-RSK`

This document defines the foundational AI risk management model for the AIGO framework.

Organizations may adapt the model according to their organizational structure, AI systems, risk profile, regulatory environment, and governance maturity while maintaining appropriate accountability, risk assessment, treatment, monitoring, evidence, and assurance.