Prioritize the severe missed-fraud scenario before: Which risk | AIGP
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Prioritize the severe missed-fraud scenario before: Which risk should receive priority?

AIGP Understanding How to Govern AI Development Hard

Prioritize the unlikely missed-fraud event because its potential harm is materially greater under constrained testing resources.

The question

A company is procuring software that screens supplier invoices for fraud. A missed fraud case is unlikely but could cause substantial financial and regulatory harm; false alerts are frequent but usually resolved within a day. Procurement has limited testing funds and cannot address both issues equally before approval. Which risk should receive priority?

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  1. Approve procurement while documenting both risks for later mitigation.
    Documentation supports governance, but deferring the severe unresolved exposure leaves approval unsupported under the stated resource constraint.
  2. Prioritize the severe missed-fraud scenario before approving procurement. ✓
    Low likelihood does not erase substantial potential harm; constrained resources should address the severe exposure before routine false alerts.
  3. Prioritize frequent false alerts because their observed likelihood is higher.
    Frequency alone should not dominate when the alternative involves substantially greater potential harm and approval consequences.
  4. Divide testing funds evenly between both risk categories.
    Equal allocation ignores the stated severity difference and does not ensure the serious exposure receives adequate treatment.
The trap
Do not rank risks by frequency alone; examine consequence magnitude and the decision point requiring support.

How to remember it

Prioritize the unlikely missed-fraud event because its potential harm is materially greater under constrained testing resources.

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