The notion of AI system in this Regulation should be clearly defined and closely aligned with the work of international organisations working on artificial intelligence to ensure legal certainty, facilitate international convergence and wide acceptance, while providing the flexibility to accommodate the rapid technological developments in this field. Moreover, it should be based on key characteristics of artificial intelligence systems, that distinguish it from simpler traditional software systems or programming approaches and should not cover systems that are based on the rules defined solely by natural persons to automatically execute operations. A key characteristic of AI systems is their capability to infer. This inference refers to the process of obtaining the outputs, such as predictions, content, recommendations, or decisions, which can influence physical and virtual environments and to a capability of AI systems to derive models and/or algorithms from inputs/data. The techniques that enable inference while building an AI system include machine learning approaches that learn from data how to achieve certain objectives; and logic- and knowledge-based approaches that infer from encoded knowledge or symbolic representation of the task to be solved. The capacity of an AI system to infer goes beyond basic data processing, enable learning, reasoning or modelling. The term “machine-based” refers to the fact that AI systems run on machines. The reference to explicit or implicit objectives underscores that AI systems can operate according to explicit defined objectives or to implicit objectives. The objectives of the AI system may be different from the intended purpose of the AI system in a specific context. For the purposes of this Regulation, environments should be understood as the contexts in which the AI systems operate, whereas outputs generated by the AI system, reflect different functions performed by AI systems and include predictions, content, recommendations or decisions. AI systems are designed to operate with varying levels of autonomy, meaning that they have some degree of independence of actions from human involvement and of capabilities to operate without human intervention. The adaptiveness that an AI system could exhibit after deployment, refers to self-learning capabilities, allowing the system to change while in use. AI systems can be used on a stand-alone basis or as a component of a product, irrespective of whether the system is physically integrated into the product (embedded) or serve the functionality of the product without being integrated therein (non-embedded).