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Practical Governance for Enterprise AI

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Vendor Risk

Vendor risk refers to the potential threats and compliance gaps introduced when enterprises rely on third-party AI providers, tool makers, and service vendors. In AI governance, vendor risk encompasses concerns about data security, model transparency, regulatory compliance, and the vendor's own governance practices since enterprises remain liable for how external AI systems perform and handle sensitive information. Managing vendor risk requires rigorous vendor assessment, contractual controls, audit rights, and ongoing monitoring to ensure third-party AI solutions meet organizational and regulatory standards.

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