AI GLOSSARY

EU AI Act

The world’s first comprehensive AI regulation. What the EU AI Act means for your business, what deadlines apply, and how you can set up AI systems to be compliant right now.

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4

Risk
Classes

as defined in the EU AI Act

24

Months
until full implementation starting in 2027

35

Millions of euros
Maximum fines for violations

8

Mandatory
modules

for High-Risk AI

Why the EU AI Act Is Relevant for Businesses

The EU AI Act has been in effect since August 2024 and will be phased in by 2027. Anyone who uses AI in their business—whether as a provider or an operator—must fulfill specific obligations by certain deadlines. Addressing these issues early on is a requirement, not an option.

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Legal Certainty

Clear requirements enable AI investments with predictable risk. Without AI Act compliance, projects may face corrections or be halted.

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Competitive Advantage

Companies with AI Act-compliant processes can win contracts in regulated industries (finance, healthcare, public sector).

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Customer Trust

Transparent use of AI strengthens the trust of B2B customers and end consumers—and is increasingly expected.

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Heavy Fines

Violations of the EU AI Act can result in fines of up to €35 million or 7% of global annual revenue.

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GDPR Compliance

The EU AI Act supplements the GDPR with AI-specific requirements. Much of it builds on existing processes—but with significantly greater depth.

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Explainable AI

Documentation and transparency requirements lead to better, more robust AI systems. Compliance and quality go hand in hand.

What is the EU AI Act?

The EU AI Act (Regulation (EU) 2024/1689) is the world’s first comprehensive regulation of artificial intelligence. It entered into force in August 2024 and will become fully applicable in phases by 2027. Objective: Safety, fundamental rights, and trust in AI applications within the EU.

The approach is risk-based: AI systems are classified into four categories—ranging from unacceptable risk (prohibited) to high-risk AI (subject to strict requirements), transparency obligations, and minimal risk (freely usable).

The EU AI Act applies to both providers (who develop or place AI systems on the market) and operators (who use AI in their businesses). For small and medium-sized enterprises, this means that almost every company is affected as soon as it uses AI in a productive capacity.

Important: The EU AI Act does not replace the GDPR. It supplements it with AI-specific requirements such as training data governance, risk analysis, monitoring, and transparency toward users.

prodot EU AI Act Consulting

Overview of Obligations for High-Risk AI

If your AI application falls into the high-risk category, a comprehensive list of obligations applies. You must be able to demonstrate compliance with these eight requirements:

Risk Management

Systematic assessment and management of risks throughout the entire lifecycle of the AI system.

Data Quality

Training, validation, and test data must be relevant, representative, and largely error-free.

Technical Documentation

Detailed documentation on architecture, training data, metrics, and security measures—available for review at any time.

Record-keeping Requirement

Logging of automatic events and usage to ensure traceability over the years.

Transparency Requirements

Clear information for users: Communicate the purpose, limitations, and risks of the AI system in an understandable way.

Human supervision

Human oversight must be possible—with clear responsibilities and avenues for intervention.

Accuracy & Robustness

Proven performance, cybersecurity, and resilience against attacks and errors.

Conformity Assessment

Formal conformity assessment, CE marking, and registration in the EU database prior to market access.

Best Practices for Implementing the AI Act

Based on prodot projects preparing for the AI Act, six principles have proven effective in making the difference between panic and planning:

  • Take stock: First, identify which AI systems are in use—including “shadow AI” such as the use of ChatGPT in Teams.
  • Classify risks: Determine the AI Act class for each system—high risk or subject to transparency requirements?
  • Establish governance: Document roles, approvals, and responsibilities—integrated with GDPR and IT compliance.
  • Train in AI literacy: Employees who use AI must understand how to handle it—mandatory starting in February 2025.
  • Set up monitoring: Continuously measure and document hallucinations, bias, and drift.
  • New Vendor Standard: Contractually require AI-Act compliance for AI acquisitions.
prodot AI Act Best Practices
Class 1

Unacceptable Risk

Completely prohibited: social scoring, subliminal influence, and emotion recognition in the workplace.

Prohibited

Class 2

High-Risk AI

Strict requirements: HR selection, credit scoring, critical infrastructure, education, the judiciary, medical devices.

Conformity Assessment

Grade 3

Transparency Requirements

AI must be clearly identified: chatbots, deepfakes, and AI-generated content in the media.

Labeling

Common Mistakes in AI Act Preparation

In many companies, preparations for the AI Act are just getting underway. We see these mistakes time and time again—and they’re avoidable:

  • Starting too late: If you wait until August 2026, you won’t have enough time to establish robust processes—especially for high-risk AI.
  • Ignoring “shadow AI”: Individual use of ChatGPT by employees is covered by the AI Act—but is rarely tracked.
  • Treating it as an IT-only issue: The EU AI Act is a compliance, HR, legal, and business issue—not just an IT one.
  • No classification: If you don’t know whether a system is high-risk, you can’t fulfill your obligations.
  • Forgetting the GDPR: The AI Act and the GDPR are intertwined—separate silos lead to duplicate work and gaps.

EU AI Act vs. GDPR vs. ISO 42001

Three sets of regulations—which together form the compliance framework for AI in Europe:

  • EU AI Act: Regulatory, mandatory. Focus: Safety and fundamental rights in AI systems.
  • GDPR: Regulatory, mandatory. Focus: Protection of personal data—applies in addition to the AI Act.
  • ISO 42001: Voluntary certification. Management system standard for AI—useful as a framework for demonstrating compliance with the AI Act.
prodot AI Act: Common Mistakes

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Katja Kammilla as the contact person for AI consulting

Your contact person

Katja Kammilla
0203 3965080

Frequently Asked Questions About the EU AI Act

EU AI Act: Setting the Course Now

In a free initial consultation, we’ll work with you to assess the extent to which your company is affected by the EU AI Act—and identify the areas requiring the most urgent action.

As an AI partner for small and medium-sized businesses, we’ll guide you through the entire process—from conducting an initial assessment and classification to ensuring your AI systems operate in compliance with regulations.

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