Strengthening Security for Microsoft 365 Copilot

Artificial intelligence is reshaping how work gets done, and Microsoft 365 Copilot sits at the center of that shift. By combining large language models with the data and tools employees use every day, from Word and Excel to Outlook and Teams, Copilot can help organizations unlock meaningful productivity gains.

But this capability also raises the stakes. Copilot doesn’t work from public information. It learns and reasons over your organization’s documents, emails, chat threads, meeting notes and business intelligence using Microsoft Graph to connect context across services. If the environment is misconfigured or poorly governed, Copilot can unintentionally surface sensitive information or amplify existing permission gaps at AI scale.

As organizations move quickly to adopt Copilot, security and compliance teams need to be equally prepared. A secure, well-governed Microsoft 365 foundation is essential before turning on AI-powered assistance.

Understanding Copilot’s Data Exposure Risks

Copilot’s capabilities are only as secure as the data it draws from. When you ask Copilot to summarize a project or draft an email, it relies on Microsoft Graph to gather context across SharePoint, OneDrive, Outlook, Teams and other Microsoft 365 services. This means pre-existing issues such as overshared files, legacy permissions or inconsistent governance can expose more information than you intend.

Common risk areas

AI doesn’t create new risks so much as it amplifies those already present in your environment. Typical vulnerabilities include:

• Over-permissioned SharePoint libraries or Teams sites where sensitive data is accessible to too many users
• Shadow IT repositories that fall outside Microsoft 365 policies and may appear in Copilot responses
• Unclassified or mislabeled information that limits visibility into what is confidential
• Weak identity protections or MFA gaps that increase the likelihood of compromised credentials being used with Copilot

Strengthening security with Microsoft 365’s built-in protections

Microsoft 365 includes a comprehensive set of security and compliance tools designed to safeguard the data Copilot relies on. The key is making sure these capabilities are configured, aligned and monitored before you introduce AI into your environment.

If your organization already operates with zero-trust principles, many of these capabilities will feel familiar, and they map closely to Copilot security best practices:

• Microsoft Purview Information Protection classifies and labels sensitive data so Copilot can interpret and handle it appropriately
• Data Loss Prevention (DLP) restricts the sharing of confidential information and reduces accidental exposure
• Conditional Access policies through Entra ID confirm that only trusted users and compliant devices can access Copilot
• Microsoft Defender for Cloud Apps monitors activity across Microsoft 365 and detects anomalous or risky behavior
• Audit and eDiscovery tools provide visibility into Copilot prompts, responses and data usage for compliance and investigative needs

Together, these capabilities create the baseline security foundation Copilot depends on, but they deliver the most value when they’re actively tuned to your organization’s governance and access model.

Making your environment Copilot-ready

Before you activate Copilot, it’s important to perform a comprehensive readiness assessment. This means looking beyond technical configuration to evaluate how your organization manages data access, identity, permissions and governance across Microsoft 365.

Key readiness assessment actions:

• Data inventory and classification: Identify where sensitive information lives and apply Microsoft Purview labels such as “Confidential” or “Internal use only” to improve visibility and guide Copilot’s handling of the data.
• Access and permissions audit: Review who has access to sites, files and Teams channels. Remove unnecessary sharing links and enforce least-privilege access to reduce the chance of oversharing.
• Identity and device security: Strengthen authentication requirements by enabling multifactor authentication and device compliance through Intune or Entra ID Conditional Access policies.
• Data governance policy enforcement: Verify that lifecycle management policies, including retention, archiving and deletion, are in place to prevent stale or orphaned content from being exposed to Copilot.
• Compliance alignment: Map Copilot use to your industry’s regulatory frameworks such as ISO 27001, NIST 800-53, HIPAA or GDPR to help confirm that AI adoption fits within established compliance requirements.
• User training and awareness: Educate employees on how Copilot accesses information and why responsible prompt writing matters. Reinforce guidelines for avoiding unnecessary exposure of sensitive data.

The role of partners in securing Copilot deployment

The deployment of Copilot requires coordinated focus on identity, data governance, compliance and ongoing monitoring. Many organizations work with a Microsoft AI Cloud Partner or Azure Expert MSP such as Rackspace Technology to guide readiness and implementation.

Pre-Flight Checks for Microsoft 365 Copilot and Microsoft 365 security and governance assessments can help you:

• Identify data and identity risks before Copilot is enabled
• Validate configurations for Purview, Defender and Conditional Access
• Develop security and governance frameworks that balance productivity with compliance requirements
• Establish ongoing monitoring and managed services to support continuous protection and operational maturity

Building this foundation early helps you avoid post-deployment surprises and create a more secure, predictable path for Copilot adoption.

Advancing security with a continuous improvement model

Once Copilot is live, your security and governance controls should continue to evolve. AI-driven productivity creates new data and new usage patterns, which means your environment benefits from a continuous improvement model that adapts over time. Adopting a continuous improvement model requires regularly reviewing how Copilot is being used and adjusting your security controls to keep pace with new data patterns, user behavior and operational needs.

Your continuous improvement model should include the following actions:

• Monitor and adjust DLP and Purview policies as user behavior changes and new data types appear
• Review access and sharing reports regularly to detect oversharing or permission drift
• Use Microsoft Defender for Cloud Apps and Microsoft Sentinel to identify anomalous activity and support incident response
• Track key metrics such as reductions in overshared files, access violations or compliance exceptions to evaluate your security posture over time

A continuous improvement plan helps your security posture mature alongside Copilot adoption. Increased productivity generates new data, and that new data informs the next wave of governance and monitoring.

Balancing innovation with responsible adoption

Microsoft 365 Copilot introduces new opportunities for productivity, creativity and collaboration. To support those benefits, organizations should treat security as an intentional, well-aligned part of Copilot adoption rather than something addressed after deployment. Strong identity, governance and access controls help create an environment where Copilot can operate effectively and where sensitive information is handled appropriately.

When security is treated as a strategic enabler, it supports innovation instead of slowing it. By aligning data access, permission models and governance practices ahead of Copilot rollout, your organization is better positioned to take advantage of AI-driven collaboration while managing risk responsibly.

Addressing the rise of BYOAI

As Copilot adoption grows, many organizations are also seeing an increase in bring-your-own-AI (BYOAI) tools entering the workplace. Employees often turn to browser extensions, personal GPT apps or free online assistants to complete tasks more quickly. While well intentioned, these tools may store prompts, extract sensitive content or transmit data to external systems that lack enterprise controls.

This creates a new form of shadow IT — one where AI-driven tools operate outside your organization’s governance framework and increase the risk of unintentional exposure at scale.

A secure, well-governed foundation for Microsoft 365 Copilot positions you to introduce AI innovation intentionally rather than by accident. With clear policies, user education and strong data governance, you can support responsible AI use while reducing reliance on unsecured third-party tools.

Preparing for responsible, secure Copilot adoption

As organizations accelerate toward AI-assisted work, the focus shifts from what Copilot can do to how responsibly and securely it can operate within your environment. By strengthening identity, governance and data management practices upfront, you create a foundation that supports Copilot’s capabilities and reduces the likelihood of unintentional exposure.

Effective Copilot adoption isn’t accidental. It comes from deliberate preparation, thoughtful configuration and ongoing attention to how your environment evolves as AI usage grows. With a well-governed Microsoft 365 environment, your organization is better positioned to benefit from AI-driven collaboration while managing risk in a responsible, sustainable way.

Pre-Flight Checks for Microsoft 365 Copilot can help you assess your readiness, identify potential gaps and support a more secure and predictable rollout.