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Common AI Failure Modes in Production

Fri Jan 10 2025

Hallucinations, tool misuse, policy drift, and escalation loops—how to identify and fix them.

Production AI systems fail in predictable patterns. Understanding these failure modes is the first step to building reliable systems.

**1. Hallucinations (Confident Wrong)** The model generates plausible but incorrect information. Common in RAG systems with poor retrieval or insufficient grounding.

Fix: Citation requirements, factuality evaluators, confidence thresholds.

**2. Tool Misuse** Agents call tools incorrectly, with wrong parameters, or at inappropriate times.

Fix: Tool boundary specifications, input validation, execution sandboxing.

**3. Policy Drift** The model gradually deviates from intended behavior as context accumulates or prompts evolve.

Fix: Regular eval runs against policy test suites, prompt versioning, drift detection alerts.

**4. Escalation Loops** The system escalates to humans too often (defeating automation) or too rarely (missing critical issues).

Fix: Calibrated confidence thresholds, escalation analytics, feedback loops from human reviewers.

**5. Prompt Injection** Malicious inputs manipulate the model into unintended behavior.

Fix: Input sanitization, adversarial testing, output guardrails.

Map your failure modes, measure their frequency, and prioritize fixes by business impact.

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