Residual risk remains one of the biggest barriers to responsible artificial intelligence (AI) adoption. AI systems promise major efficiency and productivity gains, yet even small failures can lead to costly legal, financial, or reputational harm. For businesses, the challenge is not just how to adopt AI, but how to manage its risks.
A new Ivey Publishing case, Virtually Guaranteed by Armilla AI: Market Solutions for Responsible AI, developed by Nuria Teodorescu (MBA '25) and Romel Mostafa (Professor and LNC Director), explores how Toronto-based start-up Armilla AI is building a market-driven approach to AI safety. Founded by Karthik Ramakrishnan, Armilla provides independent AI assurance—auditing models for reliability, fairness, and regulatory compliance, and is pioneering the use of AI warranties and insurance to protect organizations from AI-related failures.
The case follows Armilla’s strategic journey in a fast-moving and rapidly evolving market. With three offerings at different stages of maturity, Karthik must decide whether to focus on Armilla’s proven AI assurance product or invest in the emerging AI insurance market, or attempt to do both.
For instructors and practitioners, the case offers a timely teaching tool at the intersection of strategy, innovation, finance, and public policy. It highlights how market solutions can complement regulation, strengthen trust in AI systems, and advance responsible deployment across industries.
Generous support from the Lawrence Family, Baran Family Foundation and Power Corporation of Canada is gratefully acknowledged.