The high-stakes gamble of non-compliant AI vendors: What enterprises must know

The race to develop AI solutions is moving faster than ever before. AI vendors are under intense pressure to innovate quickly, introducing new tools and features at a breakneck pace. While this speed might seem like a win for enterprises eager to adopt AI, it comes with a significant downsides: safety, compliance, and reliability.

In many cases, vendors prioritize launching a product first and fixing potential (legal) issues later. This "move fast, fix later" mentality might work for consumer tech, but for enterprises, it can have catastrophic consequences, such as:

• Bias and inaccuracies - generative AI tools have produced biased or inaccurate outputs, leading to reputational damage for companies that rely on them.
• Hidden vulnerabilities - poorly tested AI systems can expose enterprises to data breaches, adversarial attacks, or other security risks.
• Lack of transparency - vendors often fail to provide clear documentation on how their AI models operate, making it hard to assess risks and ensure compliance.
• Failed task execution - If not used with a proper guardrail, autonomous AI agents can create many problems if for instance, they interact directly with customers.

For enterprises, even a minor oversight can result in millions in fines or lost customer trust. Yet, the pressure to adopt AI grows stronger every day. Businesses often assume their vendors have done the necessary due diligence—but that assumption is a gamble no enterprise can afford to lose.

As regulations tighten and risks become harder to ignore, enterprises need to take a hard look at their AI vendor relationships. Let’s take a closer look at the emerging AI regulations shaping this landscape.

As AI adoption grows, governments around the world are stepping in to regulate its development, deployment, and use. The EU AI Act, which starts to take a gradual effect in 2025, is a prime example of this shift. This groundbreaking legislation categorizes AI applications based on risk levels and introduces strict compliance requirements for high-risk systems. Penalties for non-compliance are severe, with fines reaching up to 7% of global revenue—far more than what GDPR mandates.

But Europe isn’t the only region tightening the reins. Countries like the United States, Canada, South Korea, and China are also accelerating the development of their AI legal frameworks. For enterprises operating across borders, this patchwork of regulations creates a daunting challenge: How do you ensure compliance in multiple jurisdictions while maintaining operational efficiency?

The complexity doesn’t stop at fines or legal risks. Non-compliance can delay product launches, disrupt operations, and even prevent entry into key markets. For example:

• Delayed time-to-market - enterprises working with non-compliant AI vendors may face regulatory roadblocks that slow down their ability to deploy AI solutions.
• Customer trust erosion - using AI solutions that fail to meet transparency or ethical standards can damage relationships with customers and partners.
• Missed opportunities - companies that fall behind in compliance may struggle to compete in regulated industries like healthcare, finance, or telecom.

For enterprises, staying compliant isn’t just about avoiding penalties—it’s about preserving their reputation, maintaining customer trust, and staying competitive in an increasingly AI-driven world.

With regulations rapidly evolving, enterprises must ask themselves: Are their AI vendors prepared for this new reality? Let’s now explore the barriers enterprises face when adopting AI—and why vendor selection is a critical piece of the puzzle.

While the benefits of AI are undeniable, enterprises face a range of challenges that slow down or block adoption entirely. These barriers don’t just make it harder to implement AI—they also increase the risks associated with vendor selection and long-term usage. Here are the top five blockers holding enterprises back.

Regulatory, Operational, Financial, Ethical, and Reputational Risks

AI adoption introduces a range of complex risks that enterprises can’t afford to ignore:

1. Regulatory risk:

• Non-compliance with laws like the EU AI Act or GDPR can result in:some text
  • Fines as high as 4-7% of global revenue.
  • Delayed market entry due to missing or inaccurate documentation.
  • Operational disruptions as enterprises scramble to meet compliance requirements.

2. Operational risk:

• Poorly managed AI systems by vendors can lead to:some text
  • Model drift, adversarial attacks, or data breaches.
  • System failures that result in high remediation costs and downtime.
  • Gaps in how vendors manage AI models within their applications, increasing exposure to vulnerabilities.

3. Financial risk:

• Non-compliance and failures come with severe financial penalties, such as:some text
  • Regulatory fines, legal fees, and potential investor confidence loss.
  • Hidden costs of fixing vulnerabilities or addressing operational disruptions.
  • Losing business.

4. Ethical risk:

• AI systems often face criticism for bias, harmfulness, fairness, and lack of transparency. Risks include:some text
  • Lawsuits and reputational damage due to privacy and other concerns in AI-driven features.
  • Lose of trust by company’s own workforce due to unethical behavior.

5. Reputational risk:

• Public backlash over unethical AI usage or compliance failures can erode trust, leading to:some text
  • Brand damage and loss of market share.
  • Loss of customer trust if vendors fail to uphold ethical standards.
  • Long-term challenges in regaining customer loyalty.

Each of these risks compounds when enterprises work with non-compliant vendors, highlighting the need for robust evaluation and oversight.

Lengthy Procurement Processes

For enterprises, the procurement process for AI solutions is often painfully slow. Evaluating AI vendors, checking compliance, and assessing risks are typically manual and time-consuming tasks. Without automation, these processes drag out for weeks or even months, delaying AI adoption and leaving enterprises at a competitive disadvantage.

This inefficiency also amplifies risk. Long procurement cycles make it harder to stay ahead of evolving regulations and expose enterprises to risks that could have been addressed earlier.

No Standardization for AI Vendor Evaluation

Enterprises lack a consistent framework to assess AI vendors, making it difficult to compare vendors objectively or ensure compliance across the board. The absence of standardization leads to:

• Subjective and inconsistent evaluations.
• Missed red flags in vendor compliance or operational capabilities.
• Challenges in scaling AI adoption across multiple vendors and regions.

Without a standardized process, enterprises risk partnering with vendors that don’t align with their business needs or regulatory requirements.

Manual Workflows Slow Progress

Despite AI’s promise of efficiency, enterprises often rely on manual workflows for:

• Vendor risk assessments
• Compliance verification
• Monitoring ongoing vendor performance

These processes are not only slow but also prone to human error. For example, manually reviewing vendor compliance documentation or monitoring AI models for drift can result in overlooked vulnerabilities, leading to greater risk exposure.

Enterprises need automated solutions to replace these outdated workflows and enable faster, more accurate vendor evaluations.

Risk vs. Reward Uncertainty

One of the biggest blockers to AI adoption is uncertainty. Many enterprises hesitate to adopt AI because they aren’t sure if the potential rewards outweigh the risks. Common concerns include:

• Will the cost of managing compliance and risks outweigh the operational benefits of AI?
• What happens if a vendor fails to meet its obligations, exposing the enterprise to financial or reputational harm?

This risk vs. reward paradox often leaves enterprises paralyzed, preventing them from leveraging AI to its full potential.

Next up: These barriers highlight why enterprises need a better way to evaluate and manage AI vendors. Let’s explore how TrustPath eliminates these blockers and helps businesses adopt AI confidently.

Overcoming the barriers to AI adoption requires more than just awareness of the risks—it demands the right tools to mitigate them effectively. TrustPath provides enterprises with a comprehensive platform designed to eliminate the challenges of vendor compliance, streamline procurement processes, and ensure AI adoption is safe and scalable.

Here’s how TrustPath addresses the key blockers enterprises face.

Automated Compliance Checks

TrustPath continuously monitors AI vendors for alignment with regulations like the EU AI Act, GDPR, and other emerging frameworks. This ensures enterprises stay ahead of regulatory changes without relying on manual oversight.

Standardized Vendor Assessments

TrustPath creates a consistent framework for evaluating vendors, offering clear metrics on compliance, operational security, and ethical considerations. Enterprises can easily compare vendors and make informed decisions.

Real-Time Vendor Monitoring

TrustPath tracks vendor activities, identifying risks such as model drift, adversarial attacks, or system vulnerabilities before they impact the business. With automated alerts, enterprises can take immediate action.

Streamlined Procurement

By automating vendor assessments and compliance verification, TrustPath drastically reduces the time it takes to onboard AI solutions. Enterprises no longer need to spend weeks navigating lengthy procurement processes.

Comprehensive Risk Management

From regulatory and operational risks to ethical and reputational concerns, TrustPath provides enterprises with a holistic view of vendor risks. This enables businesses to adopt AI confidently without gambling on unknowns.

TrustPath doesn’t just simplify the adoption of AI—it safeguards enterprises against the very risks that often hold them back. By partnering with TrustPath, businesses can focus on leveraging AI to improve efficiency and reduce costs while staying compliant and competitive.

Schedule a demo today.