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A technology organization is developing an artificial intelligence (AI) program for use on its social media platform. The AI program is meant to help content creators with images and posts that will acquire followers more efficiently. The internal audit function is planning an engagement of the AI program development. Which of the following should be considered a significant, immediate, and inherent risk?
Correct Answer: C
Inherent risk is the susceptibility of an activity to material error, fraud, or noncompliance before considering controls. For an AI program in development, the immediate and significant risk lies in copyright and intellectual property violations if the program captures and uses images owned by others. This risk exists inherently and could lead to lawsuits, reputational damage, and regulatory sanctions. Options A and B represent possible outcomes but not immediate risks. Option D is a compliance issue but not immediate, as the regulation comes into force later. The most urgent and inherent risk is Option C, the unauthorized use of third-party content.