AI Representation Risk and the Emerging Requirement for Audit-Grade Evidence

Executive Summary

Artificial intelligence systems now influence how organizations are represented to customers, partners, regulators, and the public. This influence often occurs outside the organization’s control, visibility, or ability to correct in real time.

The primary risk is no longer technical error. It is misrepresentation with potential legal, financial, and reputational consequences, occurring without preserved evidence.

This memo outlines:

1. The nature of the emerging risk

2. Why existing controls are insufficient

3. Why audit-grade evidence is becoming mandatory

4. A governance checklist for board-level oversight