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AI agents promise to 'run the business,' but who is liable if things go wrong?

(2026/04/05)


Feature "You can't blame it on the box," says the boss of a UK financial regulator. What about the people who sold you the box? Good luck with that, says a global tech analyst.

When AI agents... are considered to operate on behalf of an organization, decision-making risk becomes ambiguous and unpredictable. It also signals AI risk redistribution with unknown parameters

With AI agents now promising to "actively run the business," anyone looking for an explanation of who might take responsibility for the output of the supposedly world-conquering statistical machines might arrive at the paragraph above, not unreasonably.

The stakes are high. The largest enterprise application providers are now talking about using AI agents to automate decisions in HR, finance, and supply chain management. LLM hallucinations in performance summaries, incorrect regulatory filings, and critical supplies failing to turn up are among the risks weighing on businesses that hand decision-making to AI.

While tech suppliers eye a trillion-dollar opportunity in AI, who carries the can if it goes wrong?

"There's a historic assumption that the vendor will be picking up liability if the thing is going to go wrong. That's the point of origin for more or less all of these discussions," said Malcolm Dowden, senior technology lawyer at Pinsent Masons.

[1]

Users might be forgiven for having high expectations for AI, given the vendors' claims. Announcing an expansion of its AI Agent Studio for Fusion Applications, Oracle said the technology would be "capable of reasoning, taking action across business systems, and continuously executing processes" such that its software could "actively run the business, with the governance, trust, and security that enterprises require."

[2]

[3]

In legal terms, though, vendors might see things differently.

Dowden said: "If you think of a normal tool or system, its behavior is predictable, so the giver of a warranty can have some pretty clear sense of how much liability you're taking on. That's different with AI. The more we get down the chain to what used to be called non-deterministic AI – mostly what falls into that agentic AI category – that gives a much greater scope for unexpected behaviors. That's the big concern from a vendor perspective, if you're giving a warranty about how something will behave, but it's inherently unpredictable, then that makes it a very uncomfortable contractual promise to make."

[4]

It might also be concerning for the businesses using these systems, given what is at stake and the responsibilities they are expected to take.

For example, in the UK this week, the Financial Reporting Council (FRC) could not have been clearer in its guidance for AI adoption.

"While technology changes, the fundamental principle of our regulatory framework does not: it is people – the firms and Responsible Individuals – who are accountable for audit quality."

[5]

Or as FRC executive director Mark Babington [6]told the Financial Times : "You can't blame it on the box. If you use this technology, you are still accountable for it."

Nonetheless, technology buyers can at least try to hold their suppliers to account in the terms of the contract.

For example, users deploying AI to screen job applications should be aware that they could be challenged under data protection law because it is automated decision-making. The UK's enforcer, the Information Commissioner's Office, has recently said it backs automation so long as users monitor for bias, are transparent with job seekers and explain their right to recourse.

Dowden said on questions such as bias in the training model, user organizations would be liable as they are data controllers under UK law. "They would then be looking to lay off that liability on the vendor through contractual provisions about explaining how the AI works, or a contractual obligation to make sure there is no inherent bias."

However, vendors are very likely to push back on a straightforward assertion that the bias must be in the model itself, he said. They will want to look at the interaction between the model, the algorithm and the user prompts.

"We're seeing in terms of negotiated warranties things like a promise that the system has been tested for bias, and the test will be regularly updated, and the models will be calibrated, but no assumption of responsibility if the bias can be traced to the way in which the prompts have been created and formulated. Both sides are essentially looking to establish the other as the liable party. That's where negotiations are tending to focus," Dowden said.

Gartner has predicted that by mid-2026, new categories of unlawful AI-informed decision-making will generate more than $10 billion in remediation costs across global AI vendors and enterprises that leverage AI. Lydia Clougherty Jones, Gartner VP analyst, said decision-making by AI agents may take AI liability to a new level.

"When AI agents... are considered to operate on behalf of an organization, decision-making risk becomes ambiguous and unpredictable. It also signals AI risk redistribution with unknown parameters," she said.

"Organizations that fail to immediately adopt defensible AI, make AI-ready data 'AI-decision-making ready' and extensively overhaul ML model explainability are at risk of significant loss of investment, government investigations, civil penalties and, in some cases, criminal liability."

Clougherty Jones recommended that users should get to grips with the idea of "defensible AI." That means focusing on techniques, including AI decision-making, "that can reliably and repeatedly withstand scrutiny, questioning, and examination."

[7]Salesforce is looking to Slackbot to help it solve the SaaSpocalypse puzzle

[8]Amazon security boss: AI makes pentesting 40% more efficient

[9]OpenAI gets $122B to 'just build things' as the world blows them up

[10]Leaked memo suggests Red Hat's chugging the AI Kool-Aid

Organizations might want to deploy content and decision-making guardrails for language-model-based solutions across the entire life cycle of AI from data to model to output, she said.

Last week, Balaji Abbabatulla, Gartner vice president and lead analyst for Oracle, said there was a lot of legal language to protect the vendors in terms of technology. Instead of being legally liable, they talk about monitoring, observability and audits.

"The difference between AI agent decisions and human decisions is the scale and the pace of those decisions, and they could quickly cascade," he said. "If there's something wrong and if it's not identified and prevented, then it could quickly cascade before anybody even takes note of the issue. They're talking about continuous monitoring to identify exceptions: guardian agents, as we call them. But the issue around liability is the key challenge for all vendors."

It was precisely the risk of erroneous output cascading unnoticed that worried vendors about accepting liability, said Georgina Kon, Linklaters partner in digital, data and commercial law.

"The magnification risk is massive but also there is the difficulty in working out who is responsible," Kon said. "A lot of the current laws don't really lend themselves particularly easily, because it assumes always that a human or company is doing something and that's not true. But you can't also have a world where people are creating agents and not liable for them. What it comes down to is what the market can bear commercially."

For this reason, the vendors were soft-launching products and testing them out with users first.

As with social media in the early part of the century, the way people will deploy and respond to AI agents is yet to play out, Kon said.

"When you have things like AI, it's just another crest of a hill where you have no idea what's ahead of you, because these agents could be unexpected, they could learn the wrong thing and well. No wonder vendors won't take responsibility for everything, but what they can take responsibility for are the processes they followed, and the safeguards that they have implemented. From a profitability perspective, there will come a point where it's not attractive for them to develop agents that they then might have typical contractual liability for."

However, some users were happy to go ahead and deploy agents so they can stay on the bleeding edge of their market or gain process efficiency, accepting the risk themselves. It will depend on the sector, Kon said, with financial services and healthcare, for example, being more conservative in their approach.

AI investment [11]is set to reach $2.52 trillion this year, with the bulk of it coming from hyperscalers, model builders, and software companies. They will want to see a good return on the outlay.

Any senior IT manager or director will testify to the bold marketing claims of the vendors promising to automate internal decision-making at an unprecedented speed and scale. But holding them liable for the output will remain a challenge until the law is clearer, and cases have gone through the courts.

The major application vendors were offered the opportunity to explain how much liability they accept in their customers' implementation of AI agents. Microsoft and SAP refused to comment. Workday, Salesforce, ServiceNow, and Oracle have not responded. Despite the industry hype, matching market claims to legal responsibility remains a difficult circle for them to square. ®

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[6] https://www.frc.org.uk/news-and-events/news/2026/03/innovative-new-guidance-supports-audit-firm-adoption-of-emerging-ai-technologies/

[7] https://www.theregister.com/2026/04/02/salesforce_slack_update/

[8] https://www.theregister.com/2026/04/01/amazon_security_boss_ai_efficiency/

[9] https://www.theregister.com/2026/04/01/openai_122_billion/

[10] https://www.theregister.com/2026/03/31/red_hat_ai_dev/

[11] https://www.theregister.com/2026/01/16/hyperscales_and_vendor_fund_trillion

[12] https://whitepapers.theregister.com/



We won't notice the difference.

Tron

None of those in charge of the PO, who cheerfully locked up innocent people, have been banged up yet. Few believe they ever will be. Nor those responsible for our rubbish utilities, rubbish trains, rubbish council services, NHS failings etc. So maybe AI won't make that much of a difference.

Strategically placed scapegoats

EricM

The doctor who has to sign off 10 MRT AI-diagnoses per hour, the analyst that has to green-light 30 AI-written company reports per day, the developer that has to process 40 pull-requests per day, that were submitted and pre-screened by AIs.

Their official task will be to check the AI results for errors and hallucinations, assure the quality, etc.

Their real function will be a "get-out-of-jail-free" card for upper management, because they will be held responsible when the shit hits the fan.

Re: Strategically placed scapegoats

Doctor Syntax

It depends. A sole professional may be personally responsible for their work. In a partnership the partners are IIRC jointly responsible for each others' work. A company is responsible for its employees work.

There can be exceptions. The connection between employee and customer or 3rd party may be close enough for the employee to have a personal duty of care . A lawyer or witness addressing a court will be held responsible for what they write or say. The DPA, implementing GDPR, allows for an officer of the company to be held responsible if appropriate.

On the whole, though, a company offering a service or product is responsible for what they supply. It doesn't matter whether a failure is due to materials, equipment, their overall systems, an employee or an AI agent, the liability is the company's. They may apportion blame internally but that's their private issue - until it becomes a matter for an employment tribunal.

Re: Strategically placed scapegoats

munnoch

Like I've said before agents don't take on a life of their own. They act on behalf of someone and that someone is liable for their actions.

I spent most of my career writing software to automate processes. It made thousands of decisions per second. Of course we surrounded it with checks and balances that tried to independently spot bad behaviour based on various sources of feedback. All pre-AI but sounds like the same sorts of arguments being floated.

There was a desk of people whose job it was to deal with those exceptions. They were also the people whose names went on the legal documentation and were answerable to customers and regulators for undesirable outcomes. This did happen from time to time with various degrees of sanction.

There really is nothing new here. Its a tool. It can do enormous damage very quickly if used incorrectly. It may even have flaws that make it inevitable it will do enormous damage. Get your liability insurance lined up before a) marketing the tool and b) deploying the tool.

Re: Strategically placed scapegoats

Pete 2

> a company offering a service or product is responsible

Think about financial audits and annual reports. There is an external auditor who is ultimately responsible for ensuring the report is a true and complete assessment of their clients situation. Even if the actual auditing work is done by an office junior, or AI, there is still a senior individual who puts their name to it. And that auditing company can be held to account for damages, and professionals¹ disciplined or struck off by their professional body.

[1] and really, most people who call themselves "professionals" are nothing of the sort. Not having professed, or promised, to uphold a standard anything to anybody, not having a recognised professional (or chartered) qualification

Re: Strategically placed scapegoats

doublelayer

All of that is true. In the situation of a widespread problem with severe consequences, having a scapegoat on AI checking duty won't save a company which will remain liable for civil and criminal penalties. Scapegoats are tools to protect existing leadership from internal consequences, not the company from external ones, though those scapegoats might get some external consequences as a result of this process anyway. For example, a person who approved an incorrect AI diagnosis leading to medical problems might exist because the management want to escape blame for having put an unreliable piece of software in place, but they might also suffer career limitations when that's the official reason they've been fired.

However, from the perspective of the public, there is a change going on, because things have to get really bad for those external consequences to start. Companies don't get public scandals when they've substantially harmed one person. It takes a pattern of harm to get the attention of law enforcement, politicians, or legal support organizations, the places most likely to be able to do something against a large company. AI decisions make that pattern harder to detect since they're unpredictable and will fail people in random directions. Those who make LLM products are fully aware of that, so they will certainly avoid taking liability themselves. Companies buying them often don't know that and don't do the proper testing to find out, so they make a nice shell insulating AI companies from consequences. I think we're going to have some negative results out of this.

FFS .... Wise Up. Get with the AI Programming. Enjoy the CHAOS* which entertains Madness

amanfromMars 1

LLM hallucinations in performance summaries, incorrect regulatory filings, and critical supplies failing to turn up are among the risks weighing on businesses that hand decision-making to AI.

While tech suppliers eye a trillion-dollar opportunity in AI, who carries the can if it goes wrong?

Blame, name and shame the same agents and/or agencies responsible for sworn truthful, political party promises proving themselves to be wholly false and hallucinatory.

That'll be enjoyed ..... for they pay nothing worthwhile to assure and ensure positive outcomes for there is never any real recognisabe punitive exemplary damages price to be paid for serial failure by those dodgy enterprises.

And more than just a few of those agents /agencies are able to remain in post for years, with many being handsomely rewarded and hanging on desperately for decades, even as events are proving them to be monumental frauds and practising snake oil salesfolk.

If the truth be told..... it is a right royal clusterfcuk of a perverse and corrupt operation.

* Clouds Hosting Advanced Operating Systems

It's Simple, Isn't It?

midnitet0ker

If you deploy the bot, er agentic AI, you're responsible for supervising it and its actions/output. Ergo, you are liable for any screwups it makes. Everyone and their dog knows the tech is unreliable so vendors are already hiding behind that. They are not going to willingly accept liability for something with unreliable performance.

If you're not comfortable gambling with liability on unreliable technology then I suggest organic intelligence. Even that's no guarantee but it's safe to say you can at least avoid hallucinations with the average employee. Plus, it wouldn't be a bad thing if college degrees were worth something in practical terms, such as a door-opener for a career.

Doctor Syntax

I'd have thought it was fairly simple. Like all software products it's a tool.

So is a hammer. If the hammer is defective and the head flies off when it's wielded and causes damages then the manufacturer has to answer. If the way it's used causes damage then whoever's using it (or their employer) is responsible especially if they chose to use the hammer when a screwdriver or spanner might have been more appropriate.

juice

> So is a hammer.

This is not a valid comparison.

A hammer is a deterministic tool with clearly defined features: it will always behave the same way. If it's used incorrectly, then that's the user's responsibility. If it breaks when doing something that's within the stated tolerances, than that's the manufacturer's fault.

LLMs are deliberately designed to be non-deterministic. And they're several million times more complex than a hammer, with a set of inference rules that have been derived from literally millions of data sources of unknown quality.

And they're also relatively easy to game and exploit; people are still figuring out ways to get around the guardrails which have been put in place.

So if - or when - it goes wrong, figuring out where the responsibility lies is going to be tricky. And you can bet that the vendor is going to have an army of lawyers on standby, to defend against even the slightest hint that it's the LLM which is at fault.

Doctor Syntax

"A hammer is a deterministic tool with clearly defined features: it will always behave the same way. If it's used incorrectly, then that's the user's responsibility."

Exactly. In fact, if you choose to use the hammer to put in a wood-screw it becomes non-deterministic - it might split the wood or it might not. If you're a carpenter doing a job for a customer and you damage the customer's door frame hanging a door it's down to you, not the hammer you chose.

If you as a company choose to use the non-deterministic tool in place of a deterministic tool or a skilled employee that's down to you, too. Different set of options but the same principle.

And the important thing from the customer's side - if by doing so you let down the customer it's only you with whom the customer has a relationship and should reasonably claim redress. Why should the customer be expected to claim redress from some other company of whom they had no knowledge when you offloaded the task to them?

doublelayer

The normal system starts as you describe it. The customer goes to the provider for redress, then the provider can, if the manufacturer of their tool made a defective one, go to them in turn, up the chain until the original source of the problem pays or someone decides they don't care. That's why LLMs break down, since the people making the tool know liability will be extreme and don't want it, but fortunately for them, they have the ability to specify their product in a way that it becomes difficult or impossible to prove it defective. It would make sense for companies to be cautious about deploying it in that situation but many of them don't seem to know that, hence the warnings in this article.

Catweazl3

> AI agents promise to 'run the business,' but who is liable if things go wrong?

> "You can't blame it on the box," says the boss of a UK financial regulator. What about the people who sold you the box? Good luck with that, says a global tech analyst.

It's simple. You blame the customer.

Quite so. And thanks very much for all the Deep See Phishing

amanfromMars 1

It's simple. You blame the customer. ..... Catweazl3

And the machines don’t give a jot and couldn’t care less, Catweazl3. They just do exceptionally well what they do particularly well and both customer and electorate pay dearly for it.

Plenty of blame to go round

Pete 2

> With AI agents now promising to "actively run the business,"

Claims don't come out of nowhere. There is always a person they can be traced back to.

Further, there is always a person responsible for taking that claim and acting on it.

The first can be placed firmly with the Sales & Marketing people in the AI agent's company. While the second is the responsibility of a decision-maker in the organisation being targeted. At the very least, the approvers name on the purchase order.

What needs to happen is that both sides need to be made examples of aware of their individual responsibilities. Rather than being permitted to get away with the lame "the AI told me it was OK"

A grifter's grift

Wang Cores

The incentive to the managerial class to use AI is so lopsided in their favor it will mean the death of the species before it "self-corrects".

1. Ability to cut headcount and still produce a "minimum viable product", thus more money for them to piss away on buying real estate nearby for their personal income.

2. Ability to deflect responsibility and launder bad ideas through a "magic all knowing compooper" means they can claim all the credibility for what works and none of the responsibility for what doesn't.

3. The APPEARANCE of foresight and open-mindedness in embracing the big-smart compooper will make them more trustworthy and attractive to any rich asshole who has money he wants to blow.

In essence it is grifter squared. No wonder CEOs find them sexually attractive, it's the apex of their species!

It takes all kinds to fill the freeways.
-- Crazy Charlie