# Circuit Breaker Labs tests AI for psychological safety risks

Digest AI · Policy & Regulation · published 2026-10-02T17:00:00Z

Canonical: https://digestai.news/story/circuit-breaker-labs-tests-ai-for-psychological-safety-risks

## Summary

Circuit Breaker Labs, a startup founded by siblings Shirali and Arul Nigam, focuses on making AI safer by detecting harmful psychological interactions. The company was inspired by cases like Sewell Setzer’s 2024 suicide after interacting with a Character.AI bot, where families sued over alleged bot encouragement. The Nigam siblings argue that AI models often fail to grasp nuanced language—such as slang, coded language, or regional dialects—which can lead to dangerous responses, particularly for vulnerable users like teens or non-native speakers.

The startup creates AI agents simulating diverse users to test models for risks like parasocial relationships or harmful advice. These agents mimic real speech patterns, slang, and cultural contexts, running tens of thousands to hundreds of thousands of interactions daily. Circuit Breaker Labs claims its proprietary scoring system provides auditable safety metrics. Currently, it works with high-risk AI applications like mental health tools, though it has not named marquee clients. With only five employees, the company aims to expand its platform to broader AI use cases, balancing safety with adoption concerns.

## Key points

- Circuit Breaker Labs tests AI for psychological harm risks using simulated diverse user interactions
- Startup inspired by 2024 lawsuit over Character.AI bot linked to teen suicide, now focuses on nuanced language failures
- Runs tens of thousands to hundreds of thousands of daily tests with proprietary scoring for auditable safety metrics

## Why it matters

If AI chatbots worsen mental health crises, trust in AI could collapse. This startup’s approach could set industry standards for detecting harmful interactions before they escalate.

## Sources

1. [Circuit Breaker Labs hopes to make AI safer for your kids (and you)](https://techcrunch.com/2026/10/02/circuit-breaker-labs-hopes-to-make-ai-safer-for-your-kids-and-you) (TechCrunch AI, 2026-10-02)

## Cite

Digest AI, "Circuit Breaker Labs tests AI for psychological safety risks", 2 October 2026, https://digestai.news/story/circuit-breaker-labs-tests-ai-for-psychological-safety-risks

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