Artificial intelligence (AI) is revolutionizing industries, but its increasing complexity poses challenges in ensuring responsible and ethical use. AI observability emerges as a key solution, offering a deeper understanding of AI models beyond traditional monitoring by examining their decision-making processes, data usage, and performance over time. This comprehensive approach is crucial for building trust and mitigating risks, particularly in generative AI systems that present both innovative opportunities and potential pitfalls. Observability practices are integrated throughout the AI lifecycle, from problem definition to deployment, ensuring models remain effective, reliable, and ethical. Challenges such as data drift, model complexity, and explainability require careful management, while observability tools and strategies like LLM-specific solutions and risk management frameworks are evolving to address these issues. By prioritizing observability, organizations can enhance AI reliability and transparency, gaining a competitive edge and ensuring AI's positive societal impact.