Governance & Program Mgmt
A global fast-fashion e-commerce retailer purchases a cyber insurance policy that explicitly covers losses arising from AI system failures, including reputational damage from AI-generated discriminatory recommendations. After the AI system causes a publicized bias incident, the insurer pays a settlement covering direct financial losses. A board member asks the AI security manager whether the organization's accountability and governance obligations have now been discharged. What is the MOST accurate response?
Show the answer & rationale
Correct: B. Insurance is a financial instrument — it transfers monetary impact of a covered loss. It does not transfer the organization's legal accountability to regulators, its governance obligations to demonstrate corrective action, or its reputational standing with customers. The deploying organization remains the accountable party. Per OECD AI Principles (2024), Principle 5 (accountability): insurance transfers financial impact only; legal, regulatory, and reputational accountability remain with the deploying organization.