AI Governance for SMBs (Privacy, Security, Risk)

Common AI risks that can affect your business (even if you aren’t technical)
Easy privacy and security basics to put in place now
Habits and tools that protect your business and your customers
What to ask vendors and staff when using AI platforms
How to build AI confidence without hiring a full IT team

Plain-English Risks to Watch

Data Leaks

This can happen faster than you think. Copy-pasting customer data, internal strategies, or financial details into AI prompts might feel harmless—but many public AI tools store that info. Without proper controls, sensitive details can end up somewhere they shouldn’t.

Spoofing or Fake Outputs

AI is smart, but not perfect. Sometimes it just makes things up. Industry folks call this “hallucination.” If your team doesn’t double-check, it could mean sending wrong info to a client or making a decision based on bad data.

Built-in Bias

AI models are trained on massive datasets and can reflect societal biases. That means tools used in hiring, support, or marketing might unfairly favor or exclude certain groups—often without anyone realizing it.

Minimum Viable Security for AI Use

Start with Access Controls

Decide who in your business can use AI tools—and for what. Not everyone needs full access. Keep it simple: limit use to trained staff, and give clear rules on what’s okay to input or generate.

Turn On or Create Audit Trails

Even free or low-cost tools may offer logging. Enable them. If not, track usage manually—who did what, when, and why. It’s also a great way to spot mistakes early and encourage accountability.

Set Backups and Version Control

AI tools can overwrite, delete, or misinterpret information. Keep backups of your original content and create versions before and after edits. That way you can reverse any unexpected output.

PII Handling 101: Don’t Paste Secrets in Prompts

What Counts as PII (Personally Identifiable Information)

If it can identify someone, it counts. That includes:

Customer names and emails
Order histories or addresses
Payment details or invoices
Employee IDs, resumes, or HR data

The Risks of Sharing in AI Prompts

Many public AI tools use what you type in as training material unless you opt out (and many don’t let you). That means your prompt could end up in the model that serves someone else… not great.

A Simple Best Practice

Treat every prompt like it’s going on a billboard. If it’s not safe to share publicly, don’t paste it into the AI. Use placeholder info or summaries when testing ideas.

Vendor Checklist: Where the Data Goes

Ask Your AI Vendor These Questions

Where is our data stored?
Do you keep a copy of our prompts and outputs?
Can we delete our data? If so, how?
Is our data used to train your models?

Understand Data Retention and Sharing Policies

Even if you’re not inputting sensitive data, it’s important to know how long your interactions are kept and who else (if anyone) can access them. Transparency here is a good sign.

Tip

If a vendor can’t answer these questions clearly, you might be better off with a simpler or better-documented tool. Learn how we can help you cut through AI confusion.

Prompt/Response Logging for Oversight

Why It Matters

Logging AI prompt-and-response history gives you a record of what was said, when, and by whom. This helps catch errors, understand how your team is using AI, and improve future prompts.

How to Set It Up

Use platform logging tools, if available
Or create a shared document or secure drive folder where employees copy-paste their AI sessions

Bonus Benefit

Over time, you’ll build a library of great prompts and use cases. This helps train team members faster and spot effective strategies you might repeat or scale.

Incident Basics & Roll-Back Plan

What Counts as an “Incident” in AI Use

A customer receives incorrect information
Employee shares confidential data through an AI prompt
The AI outputs something biased or inappropriate

What to Include in a Simple Rollback Plan

A clear summary of what happened
Who needs to be notified or involved
Which actions need to be undone or corrected
A note on what’s changing to prevent it from happening again

Keep It Short, Write It Down

You don’t need a 50-page policy. A simple one-pager, reviewed every quarter or so, can keep your team aligned while giving you peace of mind.

Employee Training: The Do’s & Don’ts of AI at Work

Set Usage Norms

Help employees know what’s okay and what’s off-limits when using AI tools:

✅ Use approved platforms only
✅ Double-check AI-generated answers
❌ Don’t enter private customer or company data
❌ Don’t rely on AI for legal, HR, or financial decisions

Encourage Questions and Test Runs

Create a safe space to explore. Let team members try AI tools with approval—and ask questions as they go. Confidence starts with low-stakes learning.

Reinforce with Examples

Show what great AI usage looks like—and where things can go off the rails. Visual examples or real stories help people internalize better practices.

Templates & Next Steps

Quick Governance Starter Kit

Use these conceptual templates to build your own AI guardrails:

AI Usage Policy (1-pager): Who can use what, and how
Approved Tools List: What tools your team can use
Vendor Questionnaire: Key data/privacy questions to ask
Prompt Log Format: A simple way to track inputs and outputs
Incident Log Template: Track and review what went wrong

Encourage Iteration, Not Perfection

AI governance isn’t about getting it all right out of the gate. Start small. Improve as you go. Your risks (and rewards) will guide your changes.

Consider Coaching or Strategy Support

Thinking through policies, training your team, or vetting vendors doesn’t have to be hard. We can help you get it done faster and smarter. One-on-one support to make AI easier for your business

Conclusion

Recap Key Takeaways

Governance isn’t just for IT teams—it’s for anyone using AI
Simple habits protect your business from data leaks, mistakes, or bias
Setting expectations with vendors and employees goes a long way
You don’t need perfect tools—just good judgment and a little planning

Final Thought

AI can help your team move faster—but only if you stay in control. Start small, get smarter, and grow your confidence over time.

Want guidance on making AI safer and more effective in your business? We can help.