AI Incident Response Playbook

When AI Systems Fail

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Every organization deploying AI will eventually face an AI incident. It’s not a question of if, but when. The difference between a manageable incident and an existential crisis often comes down to preparation and response.

AI failures differ from traditional software failures in important ways:

• Harms may be diffuse and delayed, affecting many people before detection
• Causation is often unclear, AI decisions are difficult to explain
• Evidence is ephemeral, model states, inputs, and outputs may not be logged
• Regulatory scrutiny is intense, AI failures attract special attention
• Reputational damage spreads fast, AI failures make headlines

This playbook provides a structured framework for responding to AI incidents, from the moment of detection through post-incident analysis and remediation.

Incident Classification Framework

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Not all AI incidents are created equal. Classify incidents to trigger appropriate response levels.

Severity Levels

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Immediate Response Steps

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When an AI incident is detected, follow these steps in order. Speed matters, but so does avoiding panic decisions that make things worse.

Phase 1: Assess (First 30 Minutes)

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Phase 2: Contain (First 2 Hours)

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The goal of containment is to stop ongoing harm while preserving your ability to investigate.

Containment Options (escalating severity):

1. Monitor Only, If harm is limited and you need data to understand the issue
2. Rate Limit, Reduce AI decision volume while maintaining some functionality
3. Human Review Gate, Require human approval for all AI decisions
4. Rollback, Revert to previous known-good model version
5. Disable AI Component, Remove AI from the workflow, use fallback process
6. Full System Shutdown, Take the entire system offline

Phase 3: Assemble Response Team

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Core Incident Response Team:

• Incident Commander, Single point of authority and coordination
• Technical Lead, AI/ML expertise to diagnose and remediate
• Legal Counsel, Privilege, notification obligations, liability assessment
• Communications, Internal and external messaging
• Business Owner, Decision authority for business impact tradeoffs

Extended Team (as needed):

• Privacy/compliance officer
• HR (if employment decisions affected)
• Customer support leadership
• Executive sponsor
• External forensics/consultants
• Insurance carrier (for potential claims)

Documentation Requirements

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Documentation serves multiple critical purposes: investigation, legal defense, regulatory compliance, and organizational learning. Start documenting immediately.

Incident Log

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Maintain a real-time log of all incident-related activities:

INCIDENT LOG TEMPLATE

Incident ID: AI-2025-001
System Affected: [AI system name]
Detection Time: [timestamp]
Severity: [1-4]
Incident Commander: [name]

TIMELINE (append entries, never delete):
[timestamp] - [who] - [what happened/action taken]
[timestamp] - [who] - [what happened/action taken]
...

Critical log entries:

• When and how the incident was detected
• Who was notified and when
• All containment decisions and rationale
• All communications (internal and external)
• Evidence collection activities
• Remediation steps taken
• Decisions made and by whom

Technical Documentation

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Impact Assessment

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Document the scope of harm as precisely as possible:

• Number of individuals affected (known and estimated)
• Types of decisions affected (hiring, lending, healthcare, etc.)
• Time period of affected decisions
• Geographic scope (jurisdictions involved)
• Demographic impact (if discrimination is suspected)
• Financial harm (to individuals and organization)
• Data exposure (types and volume)

Notification Obligations

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AI incidents may trigger legal notification requirements. Consult legal counsel, but know the landscape.

Regulatory Notifications

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Contractual Notifications

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Review contracts for notification obligations to:

• Customers whose data or decisions were affected
• Business partners and vendors
• Insurance carriers
• Integration partners

Timing matters. Many contracts require notification within specific timeframes (24-72 hours is common). Late notification can void coverage or breach contracts.

Internal Notifications

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Immediate (Severity 1-2):

• Executive leadership
• Board of directors (or designated committee)
• General counsel
• CISO/CIO

Within 24 hours:

• Affected business unit leadership
• Risk management
• Internal audit
• HR (if employee data or employment decisions affected)

Preservation of Evidence

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Evidence preservation is critical for investigation, legal defense, and regulatory compliance. Start preserving immediately, before you understand the full scope.

Legal Hold

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Issue a legal hold notice to preserve all potentially relevant materials:

Evidence Collection Best Practices

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Preserve the crime scene: Don’t modify systems until evidence is collected. If you must take action, document the state before and after.

Chain of custody: Document who collected evidence, when, from where, and how it’s been stored. This matters for litigation.

Integrity verification: Hash files and data to prove they haven’t been modified.

Authorized collection: Ensure evidence collection doesn’t violate privacy laws or employment contracts.

Expert involvement: For serious incidents, consider forensic experts who can testify about collection procedures.

What to Preserve

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High Priority:

• Model state at time of incident (weights, configuration, version)
• Input data for affected decisions
• Output decisions and explanations
• System logs covering incident period
• Training data and preprocessing pipeline
• Bias testing results and audit reports
• Contracts and vendor documentation

Medium Priority:

• Development communications (email, Slack, Jira)
• Model development history
• Prior testing and validation records
• Change management records
• User feedback and complaints

Communication Templates

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Prepare communications in advance. In a crisis, you won’t have time to wordsmith from scratch.

Internal Incident Notification

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SUBJECT: [SEVERITY LEVEL] AI Incident - [System Name] - Immediate Attention Required

INCIDENT SUMMARY:
An issue has been identified with [AI System Name] that [brief description of impact].

STATUS: [Investigating / Contained / Resolved]

AFFECTED SYSTEMS: [List systems]
AFFECTED TIMEFRAME: [Start time] to [End time or "ongoing"]
ESTIMATED IMPACT: [Number of users/decisions affected]

IMMEDIATE ACTIONS TAKEN:
- [Action 1]
- [Action 2]

INCIDENT COMMANDER: [Name]
NEXT UPDATE: [Time]

DO NOT:
- Discuss this incident outside approved channels
- Delete any data, logs, or communications related to this system
- Make public statements without Communications approval

QUESTIONS: Contact [Incident Commander] via [channel]

Customer Notification (Data Breach)

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SUBJECT: Important Notice About Your Data

Dear [Customer Name],

We are writing to inform you of a security incident that may have affected your information.

WHAT HAPPENED:
On [date], we discovered that [brief, factual description of incident].

WHAT INFORMATION WAS INVOLVED:
[Specific types of data affected - be precise]

WHAT WE ARE DOING:
- [Remediation step 1]
- [Remediation step 2]
- [Ongoing monitoring]

WHAT YOU CAN DO:
- [Recommended action 1]
- [Recommended action 2]

We take the security of your information seriously and deeply regret this incident occurred.

If you have questions, please contact [dedicated support channel].

Sincerely,
[Appropriate executive]

Customer Notification (AI Decision Error)

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SUBJECT: Important Update About a Decision Affecting Your Account

Dear [Customer Name],

We recently identified an error in our automated decision system that may have affected your [application/account/claim].

WHAT HAPPENED:
[Brief factual explanation - avoid admitting liability without legal review]

WHAT THIS MEANS FOR YOU:
[Specific impact on this customer]

WHAT WE ARE DOING:
We are reviewing all affected decisions and will [specific remediation - reconsideration, refund, etc.].

YOUR NEXT STEPS:
[Clear instructions for the customer]

We apologize for any inconvenience and are committed to making this right.

Questions? Contact [support channel].

Sincerely,
[Name]

Regulatory Notification

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Work with legal counsel on all regulatory notifications. Template for reference only:

[Regulatory Body]
[Address]

Re: Notification of [Incident Type] Pursuant to [Regulation]

Dear [Regulator]:

[Organization Name] hereby provides notice of a [incident type] as required by [specific regulation/section].

SUMMARY OF INCIDENT:
[Factual summary - work with counsel on precise language]

DATE OF DISCOVERY: [Date]
DATE OF INCIDENT: [Date range if known]

AFFECTED INDIVIDUALS: [Number and categories]

NATURE OF INFORMATION/DECISIONS AFFECTED:
[Specific description]

REMEDIAL ACTIONS:
[Steps taken and planned]

CONTACT:
[Designated contact for regulatory inquiries]

We will provide updates as our investigation continues.

Respectfully,
[Authorized signatory]

Post-Incident Analysis

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Once the immediate crisis is resolved, conduct a thorough post-incident review. This is not about blame, it’s about learning.

Root Cause Analysis

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Incident Review Meeting

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Participants: All incident responders plus:

• Additional technical experts
• Risk management
• Legal (privileged discussion)
• Quality assurance

Agenda:

1. Incident timeline reconstruction
2. What went well in the response
3. What could have gone better
4. Root cause findings
5. Remediation actions and owners
6. Lessons for future prevention

Post-Incident Report

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Document the incident formally:

POST-INCIDENT REPORT

Incident ID: [ID]
Report Date: [Date]
Author: [Name]
Classification: [Confidential/Attorney-Client Privileged as appropriate]

1. EXECUTIVE SUMMARY
[2-3 paragraph summary for leadership]

2. INCIDENT TIMELINE
[Detailed chronological account]

3. IMPACT ASSESSMENT
- Individuals affected: [number]
- Decisions affected: [number and type]
- Financial impact: [estimate]
- Regulatory implications: [assessment]
- Reputational impact: [assessment]

4. ROOT CAUSE ANALYSIS
[Findings from investigation]

5. RESPONSE ASSESSMENT
- What worked well
- Areas for improvement

6. REMEDIATION ACTIONS
| Action | Owner | Due Date | Status |
|--------|-------|----------|--------|

7. PREVENTION RECOMMENDATIONS
[Systemic changes to prevent recurrence]

8. APPENDICES
- Detailed logs
- Evidence inventory
- Communications record

Remediation and Prevention

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Immediate Remediation

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Before returning the AI system to production:

Long-Term Prevention

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Technical improvements:

• Enhanced testing coverage for identified failure modes
• Improved monitoring and alerting
• Better logging for future investigations
• Model performance thresholds and automatic safeguards

Process improvements:

• Updated change management procedures
• Enhanced pre-deployment validation
• Improved incident response procedures
• Regular tabletop exercises

Organizational improvements:

• Training on AI risks and incident response
• Clear escalation paths and decision authority
• Adequate resourcing for AI safety
• Culture that encourages raising concerns

Frequently Asked Questions

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Should we involve legal counsel immediately?

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Yes, for Severity 1-2 incidents. Key reasons:

• Privilege protection: Early involvement can protect investigation materials
• Notification obligations: Counsel can advise on legal requirements
• Liability management: Framing matters for future litigation
• Regulatory strategy: Counsel can advise on regulatory engagement

For Severity 3-4, involve legal if there’s any potential for escalation or external exposure.

When should we notify our insurance carrier?

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Immediately for any incident that might result in a claim. Most policies require prompt notification, and late notice can void coverage. Your carrier may also provide valuable resources:

• Breach response vendors
• Forensic investigators
• Crisis communications
• Legal defense coordination

How do we balance transparency with legal risk?

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This is the hardest question in incident response. General principles:

• Don’t lie. Ever. It always makes things worse.
• Be factual. Avoid speculation or admissions of fault.
• Be timely. Delayed disclosure often increases liability.
• Be consistent. Internal and external messages should align.
• Get legal review. Before any external communication.

What if we’re not sure if an incident occurred?

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Document your uncertainty and investigate promptly. Treat ambiguous situations seriously, the cost of over-responding to a non-incident is much lower than under-responding to a real one.

How do we handle incidents involving AI vendors?

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Your contract should define responsibilities. Generally:

• Notify the vendor immediately
• Invoke contractual audit and cooperation rights
• Document vendor response (or lack thereof)
• Preserve evidence from your side
• Consider whether vendor met their contractual obligations

Quick Reference Card

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Print this and post it where your incident responders can see it.

AI INCIDENT RESPONSE QUICK REFERENCE

FIRST 30 MINUTES:
□ Assess scope and severity
□ Assign incident commander
□ Open incident channel/ticket
□ Notify on-call team
□ Determine if shutdown needed

FIRST 2 HOURS:
□ Implement containment
□ Notify legal counsel (Sev 1-2)
□ Assemble response team
□ Begin documentation
□ Issue legal hold (if needed)
□ First internal notification

FIRST 24 HOURS:
□ Complete impact assessment
□ Determine notification obligations
□ Begin evidence preservation
□ Prepare external communications
□ Notify insurance carrier
□ Document everything

AFTER RESOLUTION:
□ Conduct root cause analysis
□ Complete post-incident report
□ Implement remediation
□ Update procedures
□ Conduct lessons learned
□ Monitor for recurrence

Conclusion

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AI incidents are inevitable. How you respond determines whether an incident becomes a manageable event or an organizational crisis.

Key principles:

1. Prepare before incidents occur. Have playbooks, teams, and communications ready.
2. Act quickly but deliberately. Speed matters, but panic makes things worse.
3. Document everything. Your documentation is your defense.
4. Preserve evidence immediately. You can’t investigate what you don’t save.
5. Communicate appropriately. Transparency and legal prudence must coexist.
6. Learn and improve. Every incident is an opportunity to get better.

The AI standard of care includes not just preventing failures, but responding appropriately when they occur. Organizations that handle incidents well, quickly, transparently, and fairly, often emerge with their reputations enhanced rather than damaged.

Use this playbook as a starting point. Adapt it to your organization, your systems, and your risk profile. Practice it before you need it. And when an incident occurs, remember: the goal is not perfection, it’s appropriate response.