An AI start-up is developing a system for automated loan approvals.

The correct answer is C because it follows a structured, risk-based AI governance approach aligned with best practices and regulatory expectations. AI governance frameworks emphasize identifying and assessing risks through probability and severity analysis before deployment. This allows organizations to prioritize the most critical risks, such as bias and discrimination in loan approvals. Applying a risk mitigation hierarchy ensures that controls are implemented proactively rather than reactively. Only after risks are assessed and mitigated should pilot testing occur to validate system performance in a controlled environment. Other options either delay risk assessment until after deployment or focus on limited aspects like benchmarking or explainability without addressing core risk management principles. A proactive, risk-first approach is essential for compliance, fairness, and responsible AI deployment.