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The Security Risks of Microsoft 365 Copilot

Dvir Sasson
June 11, 2024
6 mins

AI-powered assistant Microsoft 365 Copilot is integrated with Word, Excel, PowerPoint, Teams, and other Microsoft 365 applications. It promises to boost productivity through content creation, process automation, and inference from user data. In this article, let’s look at the security concerns surrounding Microsoft 365 Copilot, focusing on potential weak points, data management practices, and mitigating strategies to ensure safe and secure use in business settings.

Technological Foundation

A variety of modern technologies enable Microsoft 365 Copilot to function as a powerful tool for increasing productivity. The fundamental components of Copilot's ability to produce human-like writing and imaginative material are generative AI models, including those built on GPT-4.

These models play an integral role in document writing, information summarization, and data analysis since they are skilled at comprehending and creating natural language. Below is a table outlining the key technologies and their specific roles in powering Microsoft 365 Copilot:

Technology Description Role in Microsoft 365 Copilot
Generative AI Models Advanced AI models like GPT-4 that produce human-like text and creative content Enable Copilot to generate text, summarize information, and analyze data, enhancing productivity through natural language understanding
Microsoft Graph API that connects various data sources within the Microsoft 365 ecosystem Aggregates user data from documents, emails, calendars, and more, allowing Copilot to provide personalized and contextually relevant responses
Microsoft Azure Scalable cloud platform providing necessary infrastructure and compute resources Supports the processing of large data volumes and real-time insights, ensuring robust security features like data encryption and regulatory compliance

Data Handling and Privacy

Data security has become essential in today's digital environment, especially when using modern AI tools like Microsoft 365 Copilot. Copilot uses advanced artificial intelligence and machine learning techniques to process and evaluate user data. Microsoft 365 Copilot uses several important strategies and compliance controls to keep user data private and safe.

Privacy-Preserving Techniques

To protect private information, Microsoft 365 Copilot uses data anonymization. By using this method, personally identifiable information (PII) can be removed from the data used for AI processing and training, protecting the privacy of personal information. Copilot complies with strict data handling requirements, in addition to anonymizing data. These rules greatly lower the danger of data exploitation by ensuring that user data is neither saved nor used again to train the underlying AI models.

Encryption Mechanisms

End-to-end encryption is a method used by Microsoft 365 Copilot to protect data while it is being transmitted. All communications between the user's device and Microsoft servers use encryption to prevent interception. Data encryption at rest is also used to safeguard the data that is stored. This implies that without the decryption key, the data is illegible even if it is compromised.

Compliance Standards

Copilot complies with the General Data Protection Regulation (GDPR), which requires that it minimize data, obtain consent from users, and respect their right to be forgotten. Users can manage their data through controls that enable them to access and correct it.

Copilot also offers tools for handling data subject access requests (DSARs) and enables users to choose not to have their data sold to comply with the California Consumer Privacy Act. In addition, consumers are notified of data breaches affecting their personal information through quick breach notification procedures.

EU Data Boundary Compliance

Microsoft 365 Copilot makes sure that EU client data stays within the EU in order to comply with local data protection legislation. Data residency options ensure that data remains within designated regions and complies with national data residence requirements.

Potential Risks and Attack Vectors

Despite its productivity boost, Microsoft 365 Copilot includes certain technological flaws that need to be managed carefully. By understanding these potential risks, companies can take appropriate measures to mitigate risks and enhance their security posture:

Risk Description Potential Impact Mitigation Strategies
Incorrect Access Controls Lack of proper permission settings allowing unauthorized access Data leakage and unauthorized data exposure Regular permission audits and implementing least privilege
Model Inversion Attacks Attacks that extract sensitive information from AI models Exposure of confidential and sensitive information Robust model security and continuous monitoring
Data Leakage Inadvertent exposure of sensitive data through AI-generated content Loss of sensitive information and potential regulatory violations Data classification, labeling, and strict access controls
Inconsistent Data Classification Errors in applying sensitivity labels to new AI-generated content Inadequate protection of sensitive data, leading to breaches Automated data classification tools and regular reviews
Excessive User Permissions Users having more access than necessary Increased risk of data misuse and breaches Implementation of role-based access controls (RBAC)

Permissions Management Challenges

There are several difficulties in managing permissions in Microsoft 365 Copilot, especially when it comes to role-based access and the least privilege concept. Here are the key challenges and considerations.

Complex Permission Structures

One of the main challenges is the complexity of permission structures. Users can gain access through various channels, including direct permissions, group memberships, SharePoint local permissions, guest access, external access, public access, and link access. This complexity makes it challenging to maintain strict access controls. Additionally, inherited permissions from group memberships and nested groups can lead to users having broader access than necessary, complicating efforts to enforce the least privilege principle.


Over-permissioning is another challenging issue. Many users have more permissions than required for their roles, increasing the risk of unauthorized data access and potential data breaches. Regularly auditing and adjusting permissions is resource-intensive and challenging, particularly in large organizations with dynamic access needs. This difficulty in auditing can lead to prolonged periods where excessive permissions go unchecked, increasing security risks.

Inconsistent Application of Sensitivity Labels

The inconsistent application of sensitivity labels poses a risk to data security. Errors and inconsistent results may result from depending on users to manually apply sensitivity labels. In the absence of automated solutions, it becomes challenging to keep all data and documents' sensitivity labels current, which leads to security holes. These openings may allow unwanted access and even intrusions of private data.

Guest and External Access Risks

Additional dangers are introduced by guests and external access. Sensitive information may be exposed if this access isn't properly monitored and observed. An additional level of complexity is introduced by keeping an eye on external user behavior and making sure they follow security guidelines. Without strong monitoring tools, it can be difficult to make sure that third-party users respect the organization's security regulations, which raises the possibility of unauthorized data exposure.

Public and Link Access Risks

Significant problems might occur from public and link access. Public access and frequently shared links could cause sensitive material to spread uncontrollably, increasing the risk of data leaks. Controlling and keeping an eye on access becomes challenging if data is shared across open networks. Establishing connection expiration dates can help lower the risk of extended data exposure, but ensuring that these safety measures are followed consistently could pose challenges.

Ensuring Compliance with the Least Privilege Principle

Permissions must be updated frequently and constantly tracked to uphold the concept of least privilege. Teaching users the value of least privilege and effective permission management techniques is crucial for reducing risks. Automated tools can help streamline this process. Companies like Reco provide solutions to manage data exposure by offering visibility into data access across SaaS apps, identifying access, and enabling secure sharing. Further, its platform automates the discovery and classification of sensitive data, ensuring continuous protection and compliance. Using Reco's data exposure management helps mitigate risks associated with over-privileged and unauthorized access.

Data Exposure Concerns with Microsoft 365 Copilot

The main cause of Microsoft 365 Copilot's data exposure issues is its extensive connectivity with other Microsoft 365 apps. Here are the key concerns and scenarios where data might be unintentionally exposed.

Unintentional Data Leakage

One of the primary risks is unintentional data leakage through generated outputs. Copilot may include sensitive data in outputs such as reports or summaries, which can be distributed beyond the intended audience. Additionally, in applications like Teams, Copilot's real-time capabilities may record action items and summarize conversations. If not properly maintained, these summaries can accidentally reveal private information.

Insecure Data Storage

Insecure data storage is another significant concern. Sensitive data might be stored in less secure locations, such as personal OneDrive accounts, due to Copilot's fluid data restoration. This raises the risk of unauthorized access. Furthermore, data in transit between integrated applications may not always be properly protected, increasing exposure risks.

Challenges with New Data Generation

The creation of fresh content by Copilot poses particular difficulties. How? It’s simple. Newly created content by Copilot may not automatically inherit the security classifications of the source material, leading to less protected and more easily exposed sensitive information. Ensuring that Copilot-generated content is appropriately labeled and protected requires strong data governance and continuous monitoring.

Data Labeling and Sensitivity Challenges

Accurately labeling and handling sensitive data within Microsoft 365 Copilot is crucial for maintaining data security and compliance. However, this process is fraught with challenges. The table below outlines the key difficulties, potential impacts, and strategies for mitigating these challenges to ensure robust data protection and regulatory adherence.

Challenge Description Potential Impact Mitigation Strategies
Human Error Uneven sensitivity tag application or inaccurate labeling due to human mistakes Sensitive data may not be adequately protected, increasing disclosure risk - Implement automated data classification tools
- Provide comprehensive training for staff
Dynamic Data Environment Data in an enterprise setting is constantly changing, requiring frequent updates to sensitivity labels Inadequately updated labels can lead to security and compliance issues - Regularly review and update data classification policies
- Use AI tools for continuous monitoring and updates
New Content Creation by Copilot Copilot-generated content may not inherit sensitivity labels from source materials Newly created data might lack appropriate protection, increasing exposure risk - Ensure Copilot includes sensitivity tagging in its content generation process
- Conduct regular audits of generated content
Resource Intensive Maintaining proper labeling and updating requires significant resources High resource demand can strain compliance and security efforts - Leverage automated solutions to reduce manual workload
- Optimize resource allocation for data governance
Complexity of Data Handling Complexity in accurately categorizing and tagging diverse types of data Incorrectly categorized data can lead to compliance breaches - Establish clear and robust data processing protocols
- Use standardized sensitivity tags and guidelines

Compliance and Regulatory Concerns

Compliance with various regulations is crucial when using Microsoft 365 Copilot. Below are the key regulations and the specific compliance measures and features of Microsoft 365 Copilot that address these requirements:

GDPR (General Data Protection Regulation)

  • Data Encryption: Ensures all personal data is encrypted both at rest and in transit to prevent unauthorized access.
  • Data Anonymization: Uses techniques to anonymize data, removing personally identifiable information (PII) to protect user privacy.
  • User Consent Management: Implements mechanisms to obtain and manage user consent for data processing activities.
  • Right to be Forgotten: Provides procedures to ensure users can request the deletion of their personal data from all systems.
  • Data Processing Agreements: Establishes comprehensive agreements outlining how data is processed in compliance with GDPR.
  • Data Access and Rectification: Offers controls allowing users to access and correct their personal data.
  • Regular Audits and Compliance Checks: Conducts regular audits to ensure ongoing compliance with GDPR requirements.

HIPAA (Health Insurance Portability and Accountability Act)

  • Business Associate Agreements (BAAs): Provides agreements to ensure HIPAA compliance when handling Protected Health Information (PHI).
  • Strict Access Controls: Implements stringent access controls to ensure only authorized personnel can access PHI.
  • Data Encryption: Encrypts PHI both at rest and in transit to protect sensitive health information.
  • Audit Trails and Monitoring: Maintains robust audit trails and monitoring systems to track access and changes to PHI.
  • Risk Assessments and Compliance Reviews: Conducts regular risk assessments and compliance reviews to identify and mitigate potential vulnerabilities.
  • Incident Response Protocols: Establishes protocols for responding to data breaches involving PHI, including notification and mitigation procedures.

Data Residency Controls

  • EU Data Boundary Compliance: Ensures that data from EU customers remains within the EU, complying with regional data protection laws.
  • Data Residency Options: Provides options to store data in specific geographic locations to meet local regulations.
  • Adherence to National Laws: Complies with various national data residency laws and regulations.
  • Data Localization: Implements data localization strategies to ensure data stays within specified borders.
  • Transparent Storage Practices: Maintains transparent data storage practices and documentation to support compliance efforts.

CCPA (California Consumer Privacy Act)

  • Data Subject Access Requests (DSAR) Management: Manages requests from individuals to access their personal data.
  • Opt-Out Mechanisms: Offers mechanisms for users to opt out of the sale of their personal data.
  • Data Minimization: Ensures that only necessary data is collected and processed, minimizing the risk of overexposure.
  • Disclosure Practices: Provides clear disclosures about data collection practices and how personal data is used.
  • Breach Notification: Implements timely notification processes to inform users of data breaches affecting their personal information.

Incident Response and Mitigation

Mitigating and responding to incidents effectively is essential for controlling the security risks associated with Microsoft 365 Copilot. Here are the key elements and steps for a powerful incident response and mitigation strategy.

Establishing Strong Protocols

Creating detailed incident response strategies is vital for effectively detecting, responding to, and mitigating security events. By putting real-time threat detection into practice and continuously monitoring Copilot operations, it becomes easier to identify suspicious behavior or potential breaches and take immediate action.

Immediate Actions Upon Incident Detection

Build up an incident response strategy in advance of the discovery of a security incident. It's necessary to act quickly to minimize the attack by isolating affected systems and limiting access to exposed data. Effective action cooperation also depends on incident response team members maintaining fast communication.

Comprehensive Records and Assessments

Keeping accurate logs and records helps determine the scope and aftermath of the occurrence. A detailed picture of the situation is provided by carrying out comprehensive evaluations, which assist in identifying the extent of the breach and the data impacted.

Customer Notification Procedures

Develop mechanisms that allow affected parties to be notified as soon as possible, ensuring transparency while promoting trust. Included in notifications should be details on the incident, exposed data, and the steps being taken to minimize the harm. Deliver regular updates to clients as the situation develops and new information becomes accessible.

Regular Drills and Plan Revisions

Consistently practice incident response exercises to make sure you are prepared and effective in managing security threats. To apply lessons learned and adjust for new dangers, the incident response plan needs to be reviewed and updated regularly.

Mitigation Strategies for Microsoft 365 Copilot Security

Implementing effective strategies and guidelines is a crucial step to reduce the security risks associated with Microsoft 365 Copilot. Here are the key measures to enhance security:

Strategy Description
1. Uphold the Principle of Least Privilege - Regular Permission Reviews: Routinely assess and modify user permissions to ensure individuals only have access to the data required for their tasks.
- Access Controls: Implement strict access controls to minimize the risk of unauthorized data disclosure.
2. Implement Strong Data Classification and Labeling Policies - Accurate Data Identification: Ensure sensitive data is accurately identified and appropriately labeled to prevent mishandling.
- Automated Tools: Use Data Loss Prevention (DLP) solutions to automate the discovery and classification of sensitive data, ensuring continuous protection and compliance.
3. Regular Training and Awareness Campaigns - User Education: Conduct regular training sessions to educate users on the security risks associated with using Copilot and best practices for handling sensitive data.
- Awareness Programs: Implement awareness campaigns to keep security as a priority in employees' minds.
4. Ongoing Auditing and Monitoring - Continuous Monitoring: Monitor Copilot operations continuously to identify and address potential security incidents quickly.
- Regular Audits: Conduct regular audits to ensure compliance with security policies and identify any vulnerabilities.
5. Governance and Policy Enforcement - Enforce Governance Policies: Use automated tools to enforce governance policies and detect at-risk accounts due to excessive permissions.
- Policy Updates: Regularly update governance policies to adapt to new security challenges and ensure robust data protection.

Best Practices for Secure Deployment

The first step towards a secure Microsoft 365 Copilot implementation is to identify and categorize critical data. Below is a comprehensive list of key steps and actions for secure deployment:

1. Identify and Categorize Critical Data

Finding every confidential record within your company requires the use of data discovery tools. Once located, carefully categorize and identify important data to ensure safe handling and preservation. This basic phase promotes strong security measures and helps prevent unauthorized use of data.

2. Apply Stringent Access Restrictions

A secure installation requires compliance with the least privilege principle. By frequently reviewing and modifying permissions, you can be sure that only authorized individuals have access to important data. By doing this, the risk of unwanted access decreases, and the overexposure of sensitive information is prevented.

3. Implement Data Loss Prevention (DLP)

Enabling Data Loss Prevention (DLP) systems helps keep an eye on data flows and identify unauthorized data transfers. By automatically implementing data protection laws, these solutions prevent data breaches and guarantee that sensitive data is continuously protected.

4. Conduct User Training and Awareness Programs

Regular training on security best practices is necessary for all users. Emphasize the importance of data protection and develop ongoing awareness campaigns to inform users about new security threats and protocols. Keeping users informed and alert is a key component of a secure deployment strategy.

5. Continuous Monitoring and Auditing

Implement continuous monitoring of Copilot operations to quickly identify and mitigate potential security incidents. Performing regular security audits ensures compliance with established policies and helps identify potential risks. This ongoing awareness is essential to maintaining a secure environment.

Future Considerations and Conclusion

With the ongoing development of AI and data privacy technologies, solutions such as Microsoft 365 Copilot will encounter novel security issues and opportunities. Advanced phishing schemes and sophisticated cyber-attacks are emerging security risks that will call for constant watchfulness and flexible security solutions. Organizations need to stay current on the most recent advancements in AI security to protect their digital assets.

AI developments can potentially improve data security and privacy. To strengthen defenses against possible breaches, better encryption methods, more precise data classification, and AI-driven threat detection can be implemented. To address emerging vulnerabilities, these developments also need regular upgrades to security policies and compliance measures.

In a nutshell, Microsoft 365 Copilot presents several security threats that need to be properly addressed, in addition to its notable productivity benefits. Organizations can safely use Copilot to boost operational efficiency while protecting sensitive data by putting strong security measures in place, keeping up with new risks, and using developments in AI and data privacy.


Dvir Sasson

Dvir is the Director of Security Research Director, where he contributes a vast array of cybersecurity expertise gained over a decade in both offensive and defensive capacities. His areas of specialization include red team operations, incident response, security operations, governance, security research, threat intelligence, and safeguarding cloud environments. With certifications in CISSP and OSCP, Dvir is passionate about problem-solving, developing automation scripts in PowerShell and Python, and delving into the mechanics of breaking things.

Technical Review by:
Gal Nakash
Technical Review by:
Dvir Sasson

Dvir is the Director of Security Research Director, where he contributes a vast array of cybersecurity expertise gained over a decade in both offensive and defensive capacities. His areas of specialization include red team operations, incident response, security operations, governance, security research, threat intelligence, and safeguarding cloud environments. With certifications in CISSP and OSCP, Dvir is passionate about problem-solving, developing automation scripts in PowerShell and Python, and delving into the mechanics of breaking things.

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