Indemnify AI Submits Comment Letter to SEC Urging Dollar-Based AI Risk Disclosure
The Californer/10347956

NEWPORT BEACH, Calif. - Californer -- Indemnify AI, Inc. today announced its comment letter submission to the U.S. Securities and Exchange Commission regarding the SEC Investor Advisory Committee's December 4, 2025 recommendation on "Disclosure of Artificial Intelligence's Impact on Operations". The recommendation addresses the growing use of generative AI by issuers and the need for more consistent, decision-useful AI disclosure for investors.

In its comment letter, Indemnify AI urged the Commission to make AI disclosure more financially meaningful by encouraging issuers to disclose management's best dollar estimate of material AI deployment risk under existing Regulation S-K obligations.

"Investors accept that AI risk exists. What they need is management's estimated financial magnitude of that risk. Pricing AI risk is the most efficient way to make AI disclosure useful, comparable, and relevant to capital allocation."

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— Josh Bottum, Co-founder and CPO, Indemnify AI

The company's position is existing federal securities disclosure framework already provides the foundation. Regulation S-K Items 101, 103, and 303 address business description, legal proceedings, and management's discussion and analysis where information is material. Item 303 MD&A's "reasonably likely" threshold is well-suited to forward-looking AI risk estimates, a substantively lower bar than ASC 450's "probable" standard. The IAC recommendation itself contemplates integrating AI disclosure into existing Regulation S-K items rather than creating a standalone AI disclosure regime.

Accordingly, Indemnify AI believes the Commission can operationalize the IAC's recommendation through interpretive guidance, without the need for new rulemaking.

The comment letter advances three core points:

1. AI risk disclosure should be financially quantified when material. Issuers should disclose management's best dollar estimate, or range, for material AI deployments.
2. Existing Regulation S-K already provides the framework. Items 101, 103, and 303 can accommodate material AI disclosure through existing business, legal, and MD&A reporting obligations.
3. Priced AI risk is superior to technical narrative disclosure. Issuers cannot reasonably be expected to disclose models, prompts, training data, or integration architecture at audit-grade detail without risking competitive harm. Also, investors cannot reliably compare AI exposure across issuers from partial narrative descriptions. Financial quantification solves both problems: it protects competitively sensitive implementation details while translating material AI risk into a comparable disclosure investors can use.

Indemnify AI encourages financial reporting leaders, audit professionals, model risk teams, legal departments, and AI governance executives to engage in the discussion around practical methods for estimating, benchmarking, and disclosing material AI risk.

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The SEC Investor Advisory Committee recommendation and Indemnify AI comment letter are available on the SEC's website.

About Indemnify AI

Indemnify AI's work focuses on translating AI risk into decision-useful financial terms for boards, executives, risk leaders, auditors, legal teams, and investors.
https://indemnifyai.org