AI tools, like Copilot in Microsoft 365 or ChatGPT, are already part of your business, even if you didn’t plan it. Every day, tools your team uses may process sensitive customer data. Without an AI policy for SMEs, you risk leaks, GDPR breaches, lost trust or legal costs. It doesn’t matter if you’re sceptical about AI or think your business doesn’t use it – your software likely already does.
What is an AI policy, and why does your SME need one?
An AI policy is your rulebook. It sets out how your people can use AI-powered tools and what’s off limits. It explains what they can share, what must stay locked down, and who’s responsible. This doesn’t need to be complicated. You’re not writing legal code. You’re just writing down what’s allowed, what isn’t, and what happens if someone crosses a line.
The point of an AI policy isn’t to chase trends or keep up with tech firms. It’s to reduce the risk of accidents, protect your customer data, and help you avoid legal or reputational problems when staff use tools powered by artificial intelligence.
UK regulators are paying attention
The Information Commissioner’s Office (ICO) updated its guidance on AI and data protection in 2023. It focused on risks like bias, data misuse, and a lack of transparency. In early 2025, the ICO published new advice on how UK businesses can use personal data in generative AI tools like ChatGPT without breaking data protection rules. If something goes wrong and you’ve got no written policy in place, you may be left with fewer options and higher risks.
This isn’t about preparing for some future change. This is already being enforced. SMEs are expected to take action, at the very least, to show they’ve thought it through.
Real examples of AI policy failures
Samsung rolled out ChatGPT internally in 2023. Within 20 days, three engineers had fed confidential data into it: source code, transcripts, and notes from private meetings. That data was absorbed into the model. It couldn’t be deleted or retracted.
This wasn’t intentional sabotage. It was just a few people trying to save time. But the consequences were serious. It’s the same pattern seen across smaller companies too, staff using public AI tools without thinking through what data they’re putting at risk.
AI is already in your business – even if you didn’t ask for it!
Even if you haven’t “deployed AI” in your business, chances are your team or tools already use it. Microsoft 365 includes Copilot by default in many licences. Canva uses AI to auto-generate design content. Zoom has AI-based meeting summaries and transcription. Even someone using ChatGPT to write a polite customer email could be feeding business-sensitive data into a public tool.
If you don’t set any boundaries, you’re relying on people’s best guesses and that’s a risk you don’t need to take.
Where to start with your AI policy
This doesn’t have to be a technical document. One page is enough. List the tools your business uses that might include AI. Decide what’s allowed and what isn’t. For example, you might allow Copilot in Outlook but ban staff from pasting customer details into ChatGPT. Write that down clearly, and add a review date.
That’s a working AI policy. It can evolve later.
If you’re a Microsoft 365 user, you’ve already got tools that help you manage AI access. Admin controls let you limit what Copilot can see and do, or switch it off entirely for certain users. That’s one reason we require our clients to be in the Microsoft environment—it gives us better visibility and control over what’s running in the background.
An AI policy is mostly practical, but there are legal implications too. It crosses over with employment policy, data protection, and intellectual property. You don’t need an in-house legal team to deal with this. Trusted, local firms can support small businesses with contracts and policy writing. They’re well-placed to review your wording and flag any gaps.
AI policy for SMEs isn’t optional anymore
You don’t have to like AI, use it, or agree with it. But it’s already operating inside your business. That means ignoring it is no longer a safe option. Writing an AI policy doesn’t mean you’re going all-in on automation. It just means you’re making conscious choices and avoiding unnecessary exposure.
Doing nothing leaves the door open to mistakes – mistakes that could easily have been avoided with a short, clear policy. If you’re not sure where to start, talk to Lee.
Further reading: Are AI job applications a problem for businesses?
