The European AI Act: What Businesses Need to Do Before August 2025

The European AI Act: A Turning Point for Businesses

With the rapid rise of artificial intelligence (AI), the European Union has decided to take the lead in regulation. The European AI Act represents a major initiative aimed at regulating the use of this technology across various sectors. Companies must prepare for this new legislation, which will come into effect in August 2025. This article explores the implications of this act for businesses and the measures they need to take now.

Understanding the European AI Act

The European AI Act was proposed to ensure that the use of AI is safe and ethical. It aims to establish a legal framework that protects citizens while promoting innovation. Companies need to understand the different categories of risks associated with AI, ranging from low to high, and the obligations that arise from them.

AI Risk Categories

The regulation classifies AI systems into four main categories:

• Low risk: AI systems that do not have a significant impact on individuals' rights.
• Limited risk: AI systems that require transparency obligations.
• High risk: AI systems that may affect fundamental rights and require rigorous assessment.
• Unacceptable risk: AI systems that are prohibited, such as those that manipulate human behavior.

Obligations for Businesses Under the Act

Companies must prepare to comply with several obligations depending on the risk category of their AI systems. Here is an overview of the main requirements:

Compliance and Risk Assessment

Companies must conduct a risk assessment for all high-risk AI systems. This involves analyzing the potential impacts on users' rights and implementing mitigation measures.

Documentation and Traceability

Companies must maintain detailed documentation of their AI systems, including the data used for training, the algorithms employed, and the results of risk assessments. This documentation must be accessible to the relevant authorities.

Transparency and User Information

For limited and high-risk AI systems, companies must inform users about how the AI works, the data used, and the decisions made by these systems. This includes implementing mechanisms that allow users to contest automated decisions.

Steps to Take Before August 2025

To comply with the European AI Act, companies must take proactive measures. Here is a multi-step action plan:

1. Assess Existing AI Systems

Companies should start by identifying all AI systems they currently use. This includes data analysis tools, chatbots, and any other AI-based systems. Once identified, it is essential to assess the risk level associated with each of these systems.

2. Establish a Dedicated Team

It is advisable to form a dedicated team for compliance with the European AI Act. This team should include experts in AI, law, and ethics to ensure a multidisciplinary approach.

3. Employee Training

Raising awareness and training employees is crucial. Companies should organize training sessions to inform their teams about the Act's requirements and best practices for using AI.

4. Update Internal Policies

Companies must review and update their internal policies regarding the use of AI. This includes policies on data protection, privacy, and ethics.

5. Collaborate with External Experts

It may be beneficial to collaborate with consultants or external experts to ensure that all Act requirements are met. These experts can provide guidance on best practices and assist with compliance.

Consequences of Non-Compliance

Failure to comply with the European AI Act can result in severe penalties. Companies could face fines of up to 6% of their global revenue. Additionally, non-compliance could harm the company's reputation and lead to a loss of trust from customers.

Opportunities Offered by the Act

While the European AI Act imposes obligations, it also presents opportunities. By complying with these new regulations, companies can enhance consumer trust and position themselves as leaders in ethical and responsible AI use.

Innovating with Responsible AI

Companies that take a proactive approach to compliance can innovate responsibly. This may allow them to develop products and services that meet consumer expectations for safety and ethics.

Enhancing Company Reputation

By complying with the Act, companies can improve their brand image. Consumers are increasingly sensitive to ethical issues, and a company that demonstrates its commitment to responsible AI use can stand out from the competition.

Conclusion: Preparing Now

In summary, the European AI Act represents both a challenge and an opportunity for businesses. By taking steps now to comply with this legislation, companies can not only avoid penalties but also position themselves as responsible players in the AI field. It is essential to start today by assessing AI systems, training employees, and implementing appropriate internal policies. The August 2025 deadline is approaching rapidly, and it is time to act.