Risk Tolerance

Risk tolerance in AI refers to the level of uncertainty and potential loss that organizations or stakeholders are willing to accept to achieve their objectives. According to NIST’s AI Risk Management Framework (RMF), risk tolerance is influenced by legal and regulatory requirements (ISO Guide 73) and plays a key role in aligning with international AI standards (ISO/IEC 22989, ISO/IEC 23894). It involves assessing risks such as data privacy, algorithm bias, and decision-making accuracy. Understanding and managing risk tolerance helps organizations optimize AI performance, ensure compliance, foster innovation, and build trust in AI applications.

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