AI and Data Security: What to Know Before Your Team Starts Using AI Tools

AI tools are already in use at most businesses — whether IT approved them or not. Employees are using ChatGPT, Claude, Copilot, and others to get work done faster, which is largely a good thing. The problem is that most businesses haven't thought carefully about what data is going into these tools and what happens to it once it does. Here's what you need to understand before that becomes a problem.

Where data actually goes when you use AI

When an employee types something into a consumer AI tool — ChatGPT, Claude, Gemini — that input is sent to the AI provider's servers for processing. On free and standard consumer plans, that data may be retained by the provider and, depending on their terms, used to improve the model. This is the core security risk: an employee pastes a client contract, a financial report, or confidential HR information into an AI tool to get a quick summary — and that data has now left your environment.

Business and enterprise plans from OpenAI, Anthropic, and Microsoft typically include data privacy provisions that prevent your inputs from being used for model training and provide stronger data handling guarantees. The upgrade from consumer to business tier is usually modest — $20–$30/user/month — and the data protection difference is significant.

The data types that should never go into AI tools without controls

• Client or customer personal information — names, contact details, financial data, health information
• Confidential business information — contracts, financials, M&A activity, unreleased product plans
• Employee data — HR records, salary information, performance reviews
• Regulated data — anything covered by HIPAA, PCI DSS, GDPR, or other compliance frameworks
• Credentials or access tokens — never paste passwords, API keys, or authentication data into AI tools

Microsoft Copilot and the M365 environment

Microsoft 365 Copilot operates differently from consumer AI tools. It runs within your M365 tenant, meaning your data stays in your environment — Copilot accesses your emails, documents, and Teams messages through the Microsoft Graph API, subject to your existing M365 permissions. Data is not sent to train external models. This is one of the meaningful security advantages of Copilot over standalone tools for businesses already on M365. That said, Copilot respects the permissions model in your tenant — if your SharePoint permissions are poorly configured, Copilot can surface data to employees who shouldn't see it.

Practical steps to take now

• Audit what AI tools your team is already using

  You probably don't have full visibility. A quick survey or a review of browser extensions and app authorizations in your M365 or Google Workspace tenant will tell you what's already in use.

• Upgrade to business-tier plans for the tools you're keeping

  If employees are using ChatGPT or Claude, move them from free consumer accounts to business accounts. The data handling difference justifies the cost.

• Write a simple AI usage policy

  Employees need clear guidance on what types of data they can and can't use with AI tools. A one-page policy that defines acceptable use is far more effective than a blanket ban.

• Review your M365 permissions if you're deploying Copilot

  Copilot will surface any document a user has permission to access. If your SharePoint permissions are overly broad, tighten them before rolling out Copilot.