Microsoft Copilot Security Risks

Microsoft Copilot is transforming how enterprises work — drafting emails, summarising meetings, generating reports, and querying internal data in seconds. But for IT and security teams, that same power raises a critical question: what happens when an AI assistant can access everything your users can?

The answer isn't pretty. Copilot inherits your existing permissions model — and in most organisations, that model is far more permissive than anyone realises. Overshared SharePoint sites, stale permissions, and broad access groups suddenly become attack vectors when an AI can surface their contents in conversational prompts.

This guide covers the real security risks of Microsoft Copilot, explains how data exposure happens, and provides practical mitigation strategies your team can implement before (or after) rollout. This isn't an anti-Copilot piece — it's the security briefing your CISO needs.

How Microsoft Copilot Accesses Your Data

Microsoft 365 Copilot operates within the Microsoft Graph — the same API layer that connects SharePoint, OneDrive, Teams, Exchange, and other M365 services. When a user asks Copilot a question, it searches across every data source that user has access to, using semantic search powered by large language models.

Here's the critical point: Copilot does not introduce new access permissions. It uses whatever permissions the user already has. The problem is that most organisations have a massive gap between intended access and actual access.

A 2023 Varonis study found that the average employee has access to 17 million files on day one. Copilot can now query all of them conversationally.

Before Copilot, the sheer volume of data provided a form of "security through obscurity" — users technically had access but would never stumble across sensitive files. Copilot eliminates that obscurity entirely, surfacing relevant content instantly regardless of where it lives.

The Top 5 Microsoft Copilot Security Risks

1. Data Oversharing and Exposure

This is the number one risk. Most M365 tenants have SharePoint sites, Teams channels, and OneDrive folders shared with "Everyone" or "Everyone except external users." These broad groups mean a junior marketing intern can potentially ask Copilot to "summarise the latest board financial reports" and get results.

• HR documents (salary bands, performance reviews, termination plans) shared on overly permissive SharePoint sites
• M&A documents, financial forecasts, and board presentations accessible via inherited permissions
• Customer PII stored in legacy Teams channels that were never archived
• API keys, credentials, and configuration files in shared OneDrive folders

2. Prompt Injection Attacks

Prompt injection is a class of attack where malicious instructions are embedded in documents or data that the LLM processes. An attacker can place hidden instructions in a SharePoint document, email, or Teams message. When Copilot retrieves that content to answer a query, it may execute those instructions — exfiltrating data, generating misleading summaries, or triggering actions via plugins.

Microsoft has implemented guardrails, but prompt injection remains an active research area with no silver-bullet defence. Security teams should treat this as a persistent, evolving threat rather than a solved problem.

3. Compliance and Regulatory Violations

For organisations under GDPR, HIPAA, SOX, PCI DSS, or industry-specific regulations, Copilot introduces new compliance surface area. When an AI generates summaries that include regulated data — patient records, financial statements, cardholder data — questions arise about data handling, retention, and auditability.

• Where are Copilot-generated outputs stored and for how long?
• Do AI-generated summaries of regulated data count as "processing" under GDPR?
• Can you demonstrate to auditors exactly what data Copilot accessed for a given response?

4. Shadow AI and Uncontrolled Adoption

Even if your organisation hasn't officially deployed Copilot, users may be accessing it through personal Microsoft accounts, browser-based Copilot chat, or Bing Enterprise Chat. This shadow AI usage bypasses your security controls entirely and can result in sensitive corporate data being sent to external AI services.

5. Sensitive Data in AI Training and Logs

Microsoft states that Copilot for M365 does not use customer data to train foundation models. However, interaction logs, prompt histories, and cached responses still exist within Microsoft's infrastructure. For high-security environments, the question of where prompts and responses are processed and stored remains relevant.

Pre-Deployment Security Checklist

Before enabling Copilot licenses, run through this checklist. Each item directly reduces your exposure:

1. Audit SharePoint permissions — Identify sites shared with "Everyone" or "Everyone except external users." Tighten to specific security groups.
2. Review Microsoft 365 group memberships — Remove stale members, especially from groups linked to sensitive Teams channels or SharePoint sites.
3. Deploy sensitivity labels — Use Microsoft Purview sensitivity labels to classify and protect sensitive content. Copilot respects these labels.
4. Enable Data Loss Prevention (DLP) policies — Configure DLP rules in Purview to detect and block sensitive data patterns in Copilot interactions.
5. Archive stale content — Old Teams channels and SharePoint sites with sensitive data should be archived or permissions removed.
6. Conduct a Copilot-specific risk assessment — Evaluate your AI risk posture using a structured framework. See our AI risk assessment templates for a ready-to-use checklist.
7. Start with a pilot group — Roll out Copilot to a small, security-aware group first. Monitor usage patterns before expanding.

Mitigation Strategies for IT Security Teams

Implement Least-Privilege Access

The single most impactful action is fixing your permissions model. Copilot's data exposure risk is directly proportional to how permissive your M365 access controls are. Adopt a zero-trust approach:

• Implement time-limited access for sensitive resources using Privileged Identity Management (PIM)
• Use access reviews in Azure AD Identity Governance to regularly certify permissions
• Replace broad groups with role-based security groups scoped to specific resources

Monitor and Audit Copilot Usage

Microsoft provides Copilot usage analytics in the M365 admin centre and audit logs in Microsoft Purview. Use these to:

• Track which users are interacting with Copilot and how frequently
• Identify anomalous query patterns that could indicate data reconnaissance
• Correlate Copilot access events with sensitivity labels to detect high-risk interactions

Establish an AI Acceptable Use Policy

Your existing acceptable use policies likely don't cover AI assistants. Create clear guidelines covering:

• What types of data and queries are appropriate for Copilot
• Requirements for reviewing AI-generated content before sharing externally
• Reporting procedures for unexpected or concerning Copilot outputs
• Restrictions on using Copilot with regulated or highly confidential data

For definitions of key security terms, check the Aona AI Glossary.

Copilot Security in Regulated Industries

If you operate in financial services, healthcare, government, or legal, the stakes are even higher. These industries face additional challenges:

• Financial services: SOX compliance requires demonstrable controls over financial data access. Copilot queries touching financial records need audit trails.
• Healthcare: HIPAA's minimum necessary standard means Copilot should not surface PHI beyond what's needed for a specific task.
• Government: Data sovereignty requirements may conflict with how Copilot processes and routes data across Microsoft's infrastructure.
• Legal: Attorney-client privilege concerns when Copilot summarises privileged communications or legal documents.

For a deeper dive into industry-specific requirements, see our industry compliance guides.

Building a Copilot Security Roadmap

Security teams should approach Copilot deployment in phases:

1. Phase 1 — Discovery (Weeks 1-2): Map your data landscape. Identify overshared resources, stale permissions, and sensitive data locations. Run access reports from SharePoint admin and Azure AD.
2. Phase 2 — Remediation (Weeks 3-6): Fix critical permission issues, deploy sensitivity labels on high-value content, configure DLP policies, and establish your AI acceptable use policy.
3. Phase 3 — Pilot (Weeks 7-10): Enable Copilot for a controlled group of 20-50 users. Monitor audit logs closely. Gather feedback on unexpected data access.
4. Phase 4 — Controlled Rollout (Weeks 11+): Expand incrementally by department. Continue monitoring and refining policies. Conduct quarterly access reviews.

The Bottom Line: Copilot Is Safe — If Your Foundations Are

Microsoft Copilot isn't inherently insecure. It's an amplifier — it amplifies the strengths and weaknesses of your existing security posture. If your M365 permissions are tight, labels are deployed, and governance policies are clear, Copilot becomes a powerful productivity tool with manageable risk.

If your permissions are a mess — and statistically, they probably are — Copilot will expose that mess to every user who has a licence.

The organisations that will succeed with Copilot aren't the ones with the most licences — they're the ones who treated deployment as a security project, not just an IT rollout.

How Aona AI Can Help

Managing Copilot security is really managing AI governance at scale. Aona AI's platform helps security teams maintain continuous visibility into AI usage, enforce data access policies, and demonstrate compliance to auditors and regulators.

• Discover and inventory all AI tools across your organisation — including Copilot, third-party AI, and shadow AI
• Assess and score AI risks using structured frameworks aligned with NIST, ISO 42001, and the EU AI Act
• Enforce AI policies and generate audit-ready reports for regulators and board stakeholders

Explore our comparison guides to see how Aona stacks up, or get started with our AI governance templates to begin securing your Copilot deployment today.