Data ProtectionLegal Dictionary

Algorithmic Impact Assessment

Emerging — no standalone Indian provision yet; related to DPDP Section 11(2)

Definition

An Algorithmic Impact Assessment (AIA) is a structured evaluation of the potential effects of an automated decision-making system on individuals and groups. While not yet mandated by a standalone Indian statute, AIAs are emerging as a best practice for organisations using AI for credit scoring (RBI-regulated), insurance underwriting (IRDAI), and employment decisions. Under the DPDP Act, Data Principals have the right to information about processing, which includes understanding how algorithmic decisions affect them. The EU AI Act (2024) requires AIAs for high-risk AI systems, and Indian regulators are expected to follow with similar sectoral requirements.

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