Annex III is the operational backbone for identifying high-risk AI contexts under the EU AI Act. Many teams misread it as a technical complexity list; in reality, it is an impact-context list. A relatively simple model can be high-risk if it influences employment, access to essential services, education outcomes, safety-related operations, or other rights-sensitive domains.
Why Annex III classification is critical
Classification affects compliance depth. If a use case is treated as high-risk candidate, teams need stronger governance: risk management, data quality controls, technical documentation, logging, oversight, and lifecycle monitoring. If classification is skipped, control design is usually under-scoped.
Practical SME interpretation by domain
Employment and worker management
Screening, ranking, and evaluation tools can materially affect opportunity and income. This is often the first high-risk exposure for SMEs.
Essential service access
Credit, insurance, and eligibility logic can affect inclusion and economic mobility. Decision transparency and review pathways are crucial.
Education and training
Assessment and progression-related AI can influence educational outcomes and long-term opportunity.
Safety and infrastructure-adjacent contexts
Systems that influence operational safety, critical process control, or high-consequence environments require heightened reliability and governance.
Sensitive public functions
Certain migration, law-enforcement, and justice-adjacent contexts carry elevated rights and due-process implications.
Annex III mapping workflow
- Document exact use context per AI workflow.
- Map workflow to candidate Annex III category.
- Record rationale with legal/compliance review notes.
- Assign control depth based on confirmed classification.
- Reassess after substantial modification or workflow expansion.
Classification quality controls
- No category assignment without written rationale.
- No high-impact deployment without oversight design.
- No unresolved "unknown" category entries in production.
- Quarterly review of Annex III mapping register.
Common misclassification errors
- Classifying by model type instead of use impact.
- Assuming vendor responsibility replaces deployer duties.
- Not reclassifying when business process changes.
- Ignoring rights impact in "advisory" outputs that shape decisions.
Final takeaway
Annex III should be embedded in product and procurement gates. Early mapping prevents both over-compliance on low-impact workflows and under-compliance on high-impact ones. For SMEs, this precision is the fastest path to efficient compliance.