AI agent observability refers to the measures put in place for monitoring and managing AI agents, including fully-searchable logs, rules to block or redact sensitive data, audit trails, custom alerts, and access controls. Observing AI agents is crucial as it prevents them from accessing and using sensitive data, enables teams to debug issues quickly, builds trust and credibility with prospects, provides insights into areas for improvement, and helps companies comply with key data privacy and protection frameworks. To perform AI agent observability, companies can set rules to keep sensitive information secure, leverage logs to track every action their AI agents take, implement alerts to detect security and performance issues in real-time, and use an audit trail to help admins address potential issues on time. By using AI agent observability tools, businesses can overcome challenges associated with observing and managing AI agents, such as scaling and resolving issues quickly, and can ensure that their AI agents are secure, compliant, and performing optimally.