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Designing agents that know when to stop

The most important design decision in an AI agent is the boundary: what it must not attempt, and what happens when it reaches the edge.

3 March 2026 6 min read Nadia Farouk

Agent design attracts attention to what the agent can do. The decisions that determine whether it is safe to deploy are about what it must not do, and what it does when it does not know.

Three boundaries worth designing explicitly

  1. Knowledge boundary: which questions are in scope. An agent grounded on HR policy should decline a question about contract law rather than improvise from general knowledge.
  2. Action boundary: which operations it may perform. Reading a leave balance is different from submitting a request, which is different from approving one.
  3. Confidence boundary: what happens when the answer is uncertain. Escalation to a person is a successful outcome, not a failure.

Refusal is a feature

An agent that says it does not have information about that, and here is who does, is more useful than one that produces a plausible answer from adjacent content. Designing good refusals, specific and with an onward route, is worth as much design attention as designing good answers.

Make the boundary visible to users

Tell people what the agent covers before they ask. A short scope statement at the start of the conversation prevents the most common disappointment, which is asking something entirely outside the design and concluding the technology does not work.

Log the edges

Every refusal, escalation and low-confidence answer is information about where the design or the content falls short. Reviewing that log weekly is the single most effective way to improve an agent after launch, considerably more effective than adjusting prompts on instinct.

Written by

Nadia Farouk

Nadia leads Avanteria work on Copilot, agents and retrieval. She spends most of her time on the part of generative AI that decides whether it succeeds: the content it is grounded on, the permissions it inherits, the review points around it, and whether people still use it three months after launch.

  • Microsoft 365 Copilot
  • Copilot Studio
  • Retrieval design
  • Responsible AI
  • Adoption measurement

Relevant industries

  • Insurance
  • Telecommunications
  • Financial Services

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