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CSEET · Economic and Business Environment · AI and Business Environment

A company wants to adopt a generative AI tool but cannot explain to regulators how its model reached a particular customer decision. Which challenge does this mainly reflect?

The challenge is lack of transparency or explainability. Complex AI models often act as black boxes, so a firm cannot show how a specific decision was reached, which weakens accountability and makes regulatory scrutiny difficult. The other options have no link to explaining model outputs.

  1. ALack of transparency or explainability of AI decisionsCorrect
  2. BExcess of skilled workers
  3. CReduction in cost of capital
  4. DFall in customer demand

Explanation

Many complex AI models work as black boxes, making it hard to explain individual outputs. This hinders accountability and regulatory compliance. The other options do not describe an inability to explain decisions.

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