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Systemic Risk
Systemic risk in AI governance refers to the potential for AI system failures, biases, or misuse to cascade across interconnected organizations and infrastructure, creating widespread harm to markets, institutions, or society. This matters for enterprise AI governance because a single organization's poorly managed AI deployment can trigger failures in partner systems, supply chains, or financial networks, exposing multiple entities to regulatory penalties and operational disruption. Enterprises must assess how their AI systems interact with critical infrastructure and implement safeguards to prevent contagion effects across their industry ecosystem.
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