Imagine this scenario: an AI-powered assistant pulls together insights from multiple documents to help you quickly generate a summary. What you may not realize is that one of the documents contains sensitive financial data, while the others are general reports. Without proper safeguards in place, this confidential information could unintentionally be shared inappropriately, leading to data exposure, compliance breaches, or even legal repercussions.

This is where sensitivity labels come into play. Sensitivity labels, part of Microsoft’s data protection framework, help you classify and protect your organization’s most valuable information. When combined with the powerful capabilities of Microsoft 365 Copilot, they ensure that sensitive data remains secure, even when AI tools are working with it.

In this post, I’ll explain how sensitivity labels in Microsoft 365 work, how they interact with Copilot, and the critical steps you need to take to ensure your data stays protected.

What Are Sensitivity Labels?

Sensitivity labels are part of the Microsoft Purview Information Protection suite, and they play an essential role in classifying and protecting your organization’s data. These labels allow users to classify documents, emails, and other types of content based on their sensitivity. For example, some content may be categorized as “General,” while other information may be marked as “Confidential” or “Highly Confidential.” The label you apply dictates the restrictions on how that content can be shared, accessed, or edited.

When a sensitivity label is applied to a piece of content, it helps enforce policies that protect the information. This might include restricting the ability to copy, share, or print the content, as well as applying encryption to prevent unauthorized access. Sensitivity labels allow organizations to define and apply these rules automatically, ensuring that sensitive data remains secure, even in collaborative environments.

Now that we understand what sensitivity labels are, let’s dive into how Microsoft 365 Copilot works with them.

How Microsoft 365 Copilot Handles Sensitivity Labels

When Microsoft 365 Copilot interacts with data, it first checks whether a sensitivity label is applied. If the content is labeled, Copilot follows the specific policies attached to that label. For example, if you’re working on a document that is marked as “Confidential,” Copilot will respect the confidentiality of that data by ensuring that only users with appropriate access rights can see or interact with it.

This means that if you’re asking Copilot to summarize, generate insights, or assist in creating content based on a confidential document, the information will not be shared beyond the intended audience. Copilot will not surface confidential details to unauthorized users, even if those users are working within the same organization.

In short, when Copilot engages with a single source of data that has a sensitivity label, it works entirely within the boundaries defined by that label. This ensures that sensitive data is protected throughout the process.

What about using multiple data items that are labeled differently?

Things become a bit more nuanced when Copilot is asked to pull information from multiple sources that carry different sensitivity labels. In this scenario, the system adheres to the most restrictive label across all the content being used.

For instance, if Copilot accesses data from both a “General” document and a “Highly Confidential” email, the final output or insights generated by Copilot will be treated with the same protections as the “Highly Confidential” content. This approach ensures that sensitive data is not inadvertently mixed with less sensitive content in a way that reduces its protection.

The purpose of this process is to prevent the accidental exposure of sensitive information. By always defaulting to the strictest label, Copilot helps ensure that confidential data is not downgraded and exposed to unauthorized parties.

Why this matters?

While Copilot is designed to respect sensitivity labels, it’s crucial to ensure these labels are applied consistently across all content within your organization. Failing to properly implement or enforce sensitivity labeling could result in unintended consequences.

Data Exposure: Without the proper application of sensitivity labels, sensitive information could be inadvertently exposed. For example, Copilot might surface confidential details in a summary or suggestion that is visible to users who shouldn’t have access to that data. This can happen when sensitivity labels are either missing or incorrectly applied.
Regulatory Violations: Many organizations operate under strict data protection laws and compliance requirements. Not properly managing sensitive data, especially when working with AI-driven tools, could result in violations of these regulations. This includes breaches of privacy regulations, such as the General Data Protection Regulation (GDPR), which could lead to financial penalties and legal action.
Inconsistent Data Handling: If sensitivity labels are applied inconsistently, there’s a risk that sensitive information could be mishandled within different contexts. For example, a document marked as confidential might be merged with public content, creating confusion about its proper classification and handling. This inconsistency can complicate collaboration and lead to unintentional data breaches.

Best Practises

To maximize the benefits of Copilot while ensuring data security, it’s important to follow these best practices when working with sensitivity labels:

Ensure Consistent Labeling Across Content: Ensure that all data, documents, and communications are properly labeled with sensitivity labels. Inconsistent labeling can lead to gaps in protection, especially when Copilot is involved in generating new content or insights.
Educate Your Team on Labeling Practices: It’s essential to train users on how and when to apply sensitivity labels. Even the most sophisticated AI systems rely on correct input, so employees need to understand the importance of applying the correct label to each piece of content.
Review and Audit Labeling Policies Regularly: Implement regular reviews of how sensitivity labels are being used across your organization. Microsoft Purview’s auditing capabilities allow you to monitor how labeled data is being accessed and shared. Regularly auditing the use of sensitivity-labeled content ensures that policies are being followed and that no sensitive information is being exposed improperly.
Consider Additional Security Controls: Beyond sensitivity labels, consider using other security features like Data Loss Prevention (DLP) policies. DLP works alongside sensitivity labels to help prevent accidental sharing of sensitive information. When DLP and sensitivity labels are used together, they create a more comprehensive security framework.

Conclusion

The integration of Microsoft 365 Copilot with sensitivity labels provides an additional layer of protection for your organization’s data. By ensuring that content is properly labeled and following the right policies, you can take advantage of Copilot’s productivity-enhancing features without sacrificing data security. However, without the proper implementation and use of these features, sensitive data could be at risk of exposure.

By being mindful of how Copilot handles sensitivity labels—whether working with a single source of labeled data or pulling from multiple sources—you can ensure that your organization’s most valuable information remains secure. Taking steps to educate your team, enforce consistent labeling practices, and regularly audit data use will help you leverage Copilot responsibly and safely.

More information

Microsoft Learn: https://learn.microsoft.com/en-us/purview/ai-microsoft-purview

Ensuring Safe Use of Microsoft 365 Copilot with Sensitivity Labels