A Mathematical Framework for Legacy, Governance, and Decision Integrity in Enterprise AI

Enterprise artificial intelligence is increasingly embedded in decisions that must remain lawful, explainable, adaptable, and accountable despite personnel turnover, model replacement, regulatory change, and shifting organizational incentives. Existing governance frameworks provide important principles but do not by themselves supply a compact mathematical language for evaluating whether an institution can preserve sound judgment over time. This paper develops a design-science framework for institutional legacy: the durable capacity of a decision system to continue producing beneficial, lawful, explainable, and adaptable outcomes after its original designers have stepped away. The framework contributes: (i) a normalized Legacy Score based on a penalized geometric mean of knowledge retention, governance, human oversight, adaptability, feedback learning, and jurisdictional fidelity; (ii) Decision Confidence and Decision Risk models separating evidentiary confidence from consequence; (iii) authority-aware retrieval and calibrated abstention; (iv) Decision Memory for governed organizational learning; (v) Regulatory Change Velocity mapping change exposure to review intervals; and (vi) a federated regulatory knowledge-graph architecture preserving provenance and legal hierarchy. The paper also proposes eight AI Decision Integrity Rules, an evaluation protocol, and a reproducible computational demonstration. The demonstration combines a deterministic stress test with 200 Monte Carlo replications of 10,000 synthetic decisions each, illustrating Legacy Score non-compensation and comparing consequence- and authority-aware routing with a matched-coverage confidence-only baseline. The contribution remains conceptual rather than field-validated; the simulation tests internal behavior, not production performance, and all parameters require context-specific calibration.

From Regulation to Implementation: A Critical Evaluation of LLM-Assisted Regulatory Compliance in Industry

The European Union (EU) has emerged as a leading regulatory body in the development of sustainability and privacy regulations. While new regulation requirements vary, many include a documentation artifact to ensure compliance. Notably, the Ecodesign for Sustainable Products Regulation (ESPR) introduces Digital Product Passports (DPPs) for life cycle transparency, while the General Data Protection Regulation (GDPR) mandates Data Protection Impact Assessments (DPIAs) to mitigate privacy risks. Creating these compliance artifacts, however, is challenging. Industrial data, which often exists in heterogeneous formats and is scattered across company and supplier systems, is required for DPPs and can be difficult to extract into compliant DPP formatting. Furthermore, DPIA documents require interdisciplinary expertise and follow no standardized format, making development difficult for novel systems. To address the particular complexity of compliance artifact creation for both regulations, researchers have proposed the use of LLMs in the generation process; however, the impact of the aforementioned problems on the output of these systems is largely unaddressed. This work investigates the existing research gap by exploring how data extraction instructions and regulatory vagueness impact the quality and consistency of LLM-produced compliance artifacts. The resulting artifacts are evaluated by benchmarking different models against manually created ground-truth schemas. The results reveal that less strict guidelines, such as DPIA formatting, require higher context prompts to maintain consistency and completeness. Stricter guidelines, such as formatting for Digital Battery Passports (DBP), result in consistent results regardless of prompt context, but may lead to more hallucinations in the output

Evaluating Large Language Model Performance on International Maritime Dangerous Goods Code Compliance

The transport of dangerous goods by sea is a high-consequence activity governed by the International Maritime Dangerous Goods (IMDG) Code, a complex regulatory framework where errors in classification, packaging, stowage, or segregation can result in fire, explosion, toxic release, or loss of life or vessel. Correct compliance requires accurately interpreting hundreds of pages of interacting provisions, updated on a two-year amendment cycle. Practitioners increasingly use Large Language Models (LLMs) as decision-support tools, yet no systematic evaluation exists of whether they can reliably interpret IMDG requirements for safety-critical use. This paper introduces DGEval, the first benchmark for evaluating LLM knowledge of IMDG Amendment 42-24. Built from expert-written questions on the NCB Hazcheck e-learning platform and structured lookups from the Dangerous Goods List (DGL), it comprises 1,678 questions across multiple-choice, open-ended, DGL lookup, and regulatory identification tasks. We evaluate 13 models from six providers across multiple thinking configurations, including one maritime domain-specific fine-tuned model, and test the effect of web search. Although the best-performing model exceeds the human practitioner baseline on multiple-choice questions, all models are weakest in the operationally safety-critical areas of stowage, segregation, and regulatory recall. These results indicate that LLMs may support compliance tasks, particularly structured DGL lookups with web search, but unreliability in operational areas and regulatory-text recall means human oversight and authoritative source verification remain necessary before deployment in any safety-critical context. DGEval is designed as a safety assurance instrument to be applied continuously as models evolve, not as a settled characterisation of current capability.

Mandato: Protocol-Level Enforcement of Digitally Signed Mandates on AI Agent Actions with Cryptographically Chained Audit Trails

AI agents increasingly act on external systems through standardized tool-calling protocols such as the Model Context Protocol (MCP), yet no infrastructure layer constrains their actions to what a principal has verifiably authorized: authorization logic lives in application code, is neither signed nor independently auditable, and the resulting logs lack evidentiary value. We present Mandato, a governance proxy that enforces digitally signed mandates on agent actions at the protocol level. A mandate is a machine-readable, cryptographically signed authorization artifact specifying which tools an agent may invoke, under which parameter constraints and contextual conditions, for how long, and on whose behalf; the proxy evaluates every tool call against the applicable mandate chain, blocks non-conforming calls in line, and records every decision -- permit, deny, and the evidence for each -- in an append-only, hash-chained audit log designed for evidentiary use and periodically anchored via qualified timestamps. The mandate is deliberately modeled on the civil-law institution of delegation of authority, making the artifact legible to lawyers and auditors, not only to engineers. We give the mandate model and its decision semantics, the reference architecture as an MCP-transparent proxy with separated decision and enforcement points, and a mapping of the mechanism onto EU AI Act Articles 12 and 14, GDPR accountability, NIS2, and eIDAS 2, including a roadmap to qualified attestation through Qualified Trust Service Providers (QTSPs). We describe the implementation status of the reference system and a quantitative evaluation plan covering enforcement overhead, audit completeness, and tamper-evidence verification cost.

A Security-Oriented Lifecycle Model for Large Language Model Systems

Large language models are being integrated into critical infrastructure and enterprise workflows at unprecedented scale,yet the lifecycle frameworks governing their development and operations were designed for operational efficiency rather than security analysis. As a result, security-relevant activities such as data provenance verification, artifact signing, agentic permission control, and decommissioning are often left implicit or assumed to receive due care. Governance frameworks, in turn, organise requirements around risk levels or management processes without clearly linking them to the lifecycle stages where they apply. This paper addresses both deficiencies. We propose a lifecycle model for LLM systems that supports security analysis by structuring it around security-relevant boundaries rather than workflow optimisation. The model comprises 32 stages across four core pipeline layers (Data, Model, Distribution, Application), supported by a 12-stage LLMOps pillar and a 9-category governance pillar. Thirteen stages are introduced here as separate units because they expose distinct security concerns that existing frameworks do not clearly distinguish. A governance mapping synthesising the NIST AI RMF, the EU AI Act, and ISO/IEC 42001 reveals a structural property of the current regulatory landscape: governance evidence concentrates at deployment-facing stages, where systems are visible to regulators, while the most consequential decisions, data selection, alignment strategy, and capability boundaries, are made at development-facing stages, where regulatory visibility is lowest.

Retrieval-Augmented Large Language Models as Components of Cognitive Computing architecture for Regulatory Knowledge Management

The aim of this article is to verify whether integrating large language models (LLMs) with the Retrieval-Augmented Generation (RAG) architecture enables their transformation from standalone generative models into components of cognitive computing infrastructure with enhanced epistemic reliability. The study proposes an architectural approach based on locally deployed LLMs operating in on-premises environments without high-end GPU accelerators and examines their applicability in supporting regulatory management processes requiring continuous analysis and interpretation of legal acts. The proposed solution combines local LLMs with external knowledge repositories, creating a hybrid cognitive architecture in which the language model performs semantic interpretation while the RAG layer provides controlled knowledge retrieval, contextualization, and traceability of information sources. The implementation was validated using the Ollama and LM Studio execution environments together with the Polish language models Bielik and PLLuM running on consumer-class hardware. The results demonstrate that augmenting LLMs with RAG significantly improves the factual consistency, domain specificity and normative precision of generated texts while reducing the risk of unsupported content generation. Furthermore, the study shows that integrating RAG introduces auditability, controlled knowledge management and dynamic updating of regulatory information without retraining the language model. The findings indicate that locally deployed LLMs enhanced with RAG should be regarded not merely as text generation tools but as semantic processing modules within cognitive computing infrastructures supporting regulatory compliance and organizational decision-making in environments characterized by high legal and informational volatility.

Confidently Wrong: Exception Chain Collapse in Frontier LLM Rule Evaluation

We document a failure class in frontier large language models -- exception chain collapse -- observed in eligibility evaluation under nested conditional rules of the form "A is required UNLESS B applies, UNLESS C overrides B". The failure reproduces at first observation, but its empirical surface is unstable: between March and April 2026 several failure cells closed silently under the same model alias, with no version bump (GPT-5.4 on construction insurance moved from 96.6% to 100%, same prompt and harness). For regulated workflows, frontier-model accuracy is a moving compliance boundary that shifts without notice. We present the Aethis Eligibility Module, a neuro-symbolic architecture in which LLMs author rules from authoritative sources and an SMT-based layer executes them deterministically, consistent with the authored specification regardless of model drift, reasoning-effort defaults, or prompt format. Three evidence bases: (i) a controlled benchmark of 225 scenarios across four regulatory domains documents the pattern and, in replication, the drift that partially closed it; (ii) a 20-scenario adversarial extension on construction insurance, where the engine scores 20/20, as does one of four frontier configurations (GPT-5.4 at low reasoning effort), while the other three, including Anthropic's strongest model at evaluation time, fail the same coverage-gap edge case; (iii) external validation on nine peer-reviewed LegalBench tasks, 949 held-out cases, where the engine is significantly more accurate than all three frontier models (combined McNemar's p <= 0.003), with margins up to +41 points on the curated multi-prong tasks against the Anthropic models. The contribution is to relocate uncertainty from the inference boundary, where it is silent, to the specification boundary, where it is deliberate and audited. All scenarios, rule encodings, and results are public and reproducible.

Scoping Review of AI, Metrology, and ESG in the Semiconductor Sector: Implications for Safe and Sustainable by Design (SSbD)

The semiconductor sector faces a dual transition: scaling manufacturing execution through Artificial Intelligence (AI) while satisfying stringent sustainability mandates, such as the EU Carbon Border Adjustment Mechanism (CBAM). This paper presents a scoping review of 1,465 documents indexed in Web of Science and Scopus, spanning AI-integrated metrology, supply chain ESG, and federated industrial data spaces. Network analysis reveals a highly fragmented "core-periphery" knowledge structure, emphasizing a critical structural hole between AI-driven process optimization and downstream sustainability governance. To close these gaps, this study proposes a 6-layer Safe and Sustainable by Design (SSbD) architecture grounded in a System of Systems (SoS) paradigm. By establishing distinct "grid-to-core" and "standards-through-supply-chain" integration pathways, the proposed framework demonstrates how virtual metrology (VM), localized federated learning, and defensive RegTech mechanisms can build provenance-aware data fabrics. Ultimately, this architecture positions regulatory compliance as a driver for innovation, enabling secure, climate-neutral, and circular value chains in semiconductor manufacturing.

RegDivergence-101: An LLM Benchmark for Cross-Jurisdiction Regulatory Contradiction Detection in Life Sciences

Pharmaceutical sponsors developing a drug for both the United States and the European Union must reconcile guidance issued independently by the FDA and the EMA. Where the two agencies require substantively the same thing, a sponsor can file once; where they diverge, a single trial design risks rejection in one region; where one agency is silent on a point the other regulates, the sponsor must infer obligations. Today this reconciliation is performed manually by regulatory-affairs experts. We introduce cross-jurisdiction regulatory divergence detection: given an FDA requirement and an EMA requirement on the same topic, classify their relationship as AGREE, DIVERGE, or SILENT. SILENT is inherently directional (SILENT_FDA vs. SILENT_EMA); we record direction per pair and report per-direction F1 alongside the collapsed label. We release RegDivergence-101, a 101-pair expert-grounded pilot evaluation benchmark (labels grounded in three peer-reviewed FDA/EMA comparison studies and primary FDA/EMA/ICH guidance text; dual-annotation inter-annotator kappa = 0.85), and systematically characterise a four-method baseline hierarchy: lexical heuristic (0.511 macro-F1, 95% CI [0.411-0.605]), NLI cross-encoder (0.233), obligation-level Graph-RAG (0.663 [0.570-0.747]), and flat LLM judge / Claude Haiku (0.830 [0.747-0.908]). Three directional observations emerge at pilot scale (n = 101): SILENT is semantically detectable but invisible to entailment-only formulations; pair-level obligation graphs improve over lexical methods but trail flat-LLM context (CIs partially overlapping); and corpus-level graph construction is the indicated architectural target for large-scale silent-detection. RegDivergence-101 is a pilot release establishing the task formulation and baseline hierarchy; four unrepresented regulatory domains and an expansion roadmap are described in Section 7.

From Regulation to Requirements: An Automated Requirement Derivation and Explanation Pipeline

Ensuring software compliance with regulations such as the General Data Protection Regulation (GDPR) and the Artificial Intelligence Act (EU AI Act) poses a significant challenge, as requirements engineers must translate complex legal text into actionable software requirements - a process that remains largely manual and error-prone in practice. We present an automated regulation-to-requirements pipeline that identifies requirement-bearing clauses in regulatory documents and derives system-agnostic software requirements, accompanied by plain-language explanations, traceable to their legal sources. We evaluate the pipeline on the full clause sets of the GDPR (398 clauses) and the EU AI Act (574 clauses). For requirement-bearing clause identification, the approach achieves macro-averaged F1 scores of 0.82 and 0.78, respectively, outperforming a SetFit-based baseline. Human evaluation shows high completeness (4.60 and 4.45) and correctness (3.74 and 3.54) of derived requirements, while explanation clarity scores are near-ceiling (4.92 and 4.94) on a 1-5 scale. We implement the approach in Reg2Req, a publicly released tool that further supports requirement classification, use case seeding, cross-reference analysis, definition indexing, and a traceability matrix to operationalize regulatory compliance in practice. A user study with 25 practitioners shows that the plain-language explanations significantly improve comprehension of derived requirements and confidence in acting on them (p < 0.001), and that all participants would use Reg2Req as a starting point for deriving software requirements from a regulation.

From Naive RAG to Deep Agentic Retrieval: An Evolving Context Engineering Pipeline for Regulatory Compliance

Retrieval-augmented generation (RAG) is the dominant paradigm for applying large language models (LLMs) to enterprise document corpora, yet naive implementations encounter hard limits as corpus scale and query complexity grow. This paper traces the evolution of a production retrieval pipeline at Ontario Power Generation (OPG) for regulatory compliance and rate case analysis under Ontario Energy Board (OEB) reporting requirements. We examine successive stages: naive RAG, hybrid retrieval with re-ranking, agentic function-calling retrieval, and a deep multi-agent architecture with code-based tool synthesis and explicit planning, and identify the failure modes and tradeoffs that motivated each transition. We formalize the mature architecture as Progressive Evidence Acquisition with Cost-Aware Escalation (PEA-CAE): begin with low-cost, high-precision retrieval and escalate to full-document reads only when the expected evidence gain justifies latency and cost. Our findings show that context engineering is a more tractable and economically viable path than domain-specific fine-tuning for large, evolving regulatory corpora. More broadly, the progression toward deep agentic retrieval mirrors classical information retrieval ideas, introducing adaptive query reformulation, progressive document discovery, and hierarchical subagent summarization as practical system primitives. Operational traces further support the search-based nature of modern retrieval systems, where iterative evidence acquisition and adaptive planning increasingly replace single-pass retrieval as the foundation for enterprise-scale question answering.

α-Fair Insurance Pricing: A Fairness Continuum

Fairness in insurance pricing remains a long-standing and deeply debated puzzle. On one hand, insurers, driven by profitability considerations, set premiums that differentiate across individual risks to achieve actuarial fairness. On the other hand, insurance serves a critical societal function by pooling risks across a population, motivating cross-subsidization among groups to promote solidarity fairness. The tension between these two competing notions of fairness makes insurance pricing inherently complex, particularly in modern settings where granular data allow for increasingly fine risk differentiation and regulators face growing pressure to protect vulnerable groups. To address this challenge, we propose an $α$-\textbf{F}air \textbf{I}ndividual \textbf{S}olvent \textbf{P}remium ($α$-FISP) framework for insurance pricing that explicitly captures the trade-off between actuarial and solidarity fairness while guaranteeing solvency, a fundamental requirement in insurance operations. We formulate the pricing problem as a constrained optimization task, where actuarially fair premiums are adjusted subject to budget constraints on cross-subsidization within each risk class. This formulation naturally yields a family of solutions parameterized by $α$, tracing a continuum between purely actuarial and purely solidarity-based pricing and enabling decision-makers to select an operating point along this fairness spectrum. We derive theoretical guarantees for the proposed framework. Numerical experiments show that $α$-FISP is computationally tractable and aligns well with the U.S. regulatory regimes featuring heterogeneous state-level fairness requirements.

Trust but Verify: Mitigating Medical Hallucinations via Post-Hoc Adversarial Auditing and Multi-Agent Feedback Loops

Large Language Models (LLMs) are increasingly deployed in healthcare settings, yet their tendency to hallucinate poses risks when clinical decisions are involved. This study examine whether LLMs recommend recently banned or withdrawn pharmaceuticals when answering clinical questions and tests an agent-based method for reducing such errors. We developed a five-agent "Trust but Verify" system using a single LLM backbone. To measure regulatory knowledge obsolescence, we created an adversarial dataset of 103 clinical MCQs where historically correct answers now refer to banned substances. This scale ensures statistical significance across various therapeutic classes. We evaluated three open-access model families (GPT-OSS, Llama-3, Falcon-3) under vanilla and agentic conditions. Performance was measured via pointwise score, label accuracy, Hallucination Error Rate (HER), and Component Fidelity (CF) score. We also observed clinical safety regression in proprietary models. In default configurations, all models showed high hallucination rates, consistently selecting banned drugs that matched training data patterns. Our proposed agentic architecture reduced HER by approximately 53% across models. Pointwise scores shifted from -0.25 (unsafe recommendation) toward 0.0 (appropriate refusal). The safety audit intercepted dangerous outputs even when models' parametric knowledge favored the banned substance. The proposed multi-agent framework offers a model-agnostic method for enforcing regulatory compliance that prioritizes patient safety over fluent text generation. Our work demonstrates a practical approach for deploying autonomous AI systems in safety-critical healthcare settings. It shows how real-time regulatory data can be integrated into LLM pipelines to support clinical decision-making.

Hallucination in Medical Imaging AI: A Cross-Modality Analytical Framework for Taxonomy, Detection, and Mitigation under Regulatory Constraints

AI systems are being deployed across medical imaging faster than their failure modes are understood. At this point in time, the failure of greatest clinical concern is hallucination: clinically plausible but factually incorrect outputs, including fabricated anatomical structures, missed findings, incorrect laterality, and invented measurements in generated reports, with direct consequences, for example, for biopsy decisions, staging, and treatment planning. This structured narrative synthesizes peer-reviewed studies, benchmark datasets, and FDA regulatory guidance across five imaging modalities to produce a cross-modality analysis of hallucination taxonomy, etiology, detection, and mitigation. Specifically, we address three questions in this study: (1) how can existing taxonomies be unified across modalities?, (2) how do medical-specialized foundation models hallucinate less than general-purpose ones?, and (3) which mitigation strategies are effective and compatible with FDA lifecycle oversight? We note that three taxonomic frameworks together cover the imaging pipeline in a way no single framework does alone. We also highlight that general-purpose foundation models outperform medical-specialized models on hallucination-specific benchmarks, indicating that narrow domain fine-tuning can introduce overfitting-induced confabulation. At the same time, the oversight of radiologists remains essential; for instance, a very high percentage of of AI-generated flags required expert correction before clinical use. Physics-informed architectural constraints, Chain-of-Thought prompting, and human-in-the-loop safeguards each address different failure modes and is effective when combined. All findings are mapped to the FDA's Total Product Lifecycle and Predetermined Change Control Plan frameworks, which treat hallucination management as a lifecycle obligation rather than a pre-deployment checklist.

Toward Pre-Deployment Assurance for Enterprise AI Agents: Ontology-Grounded Simulation and Trust Certification

Pre-deployment verification of enterprise artificial intelligence (AI) agents remains a critical gap between large language model (LLM) capability benchmarking and production deployment. Post-deployment monitoring, human-in-the-loop controls, and prompt-level guardrails offer limited assurance once an agent is operating in production. We present an ontology-grounded verification framework -- to our knowledge the first to combine three components: an Agent Operational Envelope formalizing the certification space across permissions, domain constraints, safety properties, governance rules, and autonomy levels; an ontology-to-scenario generation pipeline that derives regulatory, operational, and adversarial test scenarios automatically; and a machine-verifiable Trust Certificate with graduated deployment verdicts. A controlled pilot across four regulated industries (Fintech, Banking, Insurance, Healthcare), instantiated as five industry-by-regulatory-regime cells across the United States and Vietnam (where Vietnam's 2025 AI Law makes such verification legally mandated for financial services), generated 1,800 scenarios evaluated against 125 primary-source regulatory requirements and 25 injected faults. Ontology-grounded generation significantly outperformed the dominant persona-based baseline on regulatory coverage (48.3% versus 33.1%; corrected p_c = .0006) and attained the highest domain specificity (4.77/5.0; p = 2e-6); transparently, its advantage over plain and retrieval-augmented prompting did not survive Bonferroni correction. Cross-validation across three LLM families (Claude Sonnet 4, Qwen 2.5 72B, Gemma 4 26B; 5,400 total scenarios) replicated the persona-versus-ontology pattern. The framework offers a reproducible, regulation-grounded route to pre-deployment assurance for enterprise AI agents, complementing runtime governance with an auditable deployment gate.