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Rapid advancements in generative AI are unlocking extraordinary opportunities for organizations to reimagine how they work. With Microsoft 365 Copilot, teams are collaborating faster, creating with greater impact, and scaling innovation like never before.

We know this kind of transformation brings real complexity. As leaders push forward, they’re also navigating an evolving regulatory landscape – one with high stakes for security, privacy, and compliance. While AI offers great opportunity, we are accountable to our companies, customers, and governing institutions to realize that promise responsibly.

At Microsoft, we recognize that compliance isn’t just about checking boxes; it’s about earning and keeping the trust of those we serve. We’ve built that trust over the years by embedding compliance into the heart of our cloud platforms. And we continue to apply the same rigor to Microsoft 365 Copilot and Copilot Chat, helping our customers embrace AI with confidence, clarity, and control.

In this blog, we’ll explore:

• What today’s evolving compliance landscape means for organizations adopting generative AI.


• How to build privacy, security, and governance into your AI initiatives from the start.


• Where to find expert guidance, support, and community as you navigate complex regulatory environments.

Regulatory Compliance and Framework Alignment 

Regulatory expectations are evolving fast, and many organizations are feeling the strain of maintaining compliance. Whether you’re sifting through GDPR, ISO 27001, or the emerging ISO 42001 standard for AI management systems, it can be difficult to keep pace. The reality is: you don’t have to start from scratch. Both Microsoft 365 Copilot and Copilot Chat successfully attained the ISO 42001 certification, confirming an independent third party has validated our application of the necessary framework and capabilities to effectively manage risks and opportunities associated with the continuous development, deployment, and operation of these AI solutions. This certification marks a key milestone in our commitment to responsible AI through our  Responsible AI (RAI) program and practices. Microsoft’s RAI program provides a comprehensive framework that guides the development and design of AI systems in accordance with RAI principles and policies. 

Leveraging the right tools, platforms, and certifications can help you align with regulatory frameworks by design, giving your teams the confidence to innovate without fear of falling out of step.

As you evaluate AI tools and platforms, there are three key considerations to keep top of mind:

1. Does the solution align with current and emerging regulatory standards?


2. Does it provide built-in safeguards to minimize risk without slowing down innovation?


3. Can it scale across geographies and regulatory environments without added complexity?

These questions become even more critical in regions like the European Union, where landmark regulations like the EU AI Act and Digital Operational Resilience Act are reshaping the compliance landscape.

Our compliance foundation is backed by one of the broadest certification portfolios in the industry.

To dive deep, explore our full suite of compliance offerings here: Compliance offerings for Microsoft 365, Azure, and other Microsoft services. | Microsoft Learn

Spotlight on the EU: A Proactive Approach to AI Compliance

Microsoft’s proactive approach to compliance is demonstrated by our alignment with the standards set by the European Union. With the introduction of the European Union’s AI Act, we worked together with the EU AI Office and Member State authorities to address AI risks to health, safety, and fundamental rights. Our cross-disciplinary team of governance, engineering, legal, and policy experts help customers interpret and implement  the Act’s obligations, from AI systems to general-purpose models.

Our commitment extends beyond AI. The Digital Operational Resilience Act (DORA), which went into effect in January 2025, introduces requirements for financial services institutions (FSIs) operating in or serving the EU. DORA mandates robust governance of information and communication technology (ICT) risk, resilience testing, third-party oversight, and incident response. Microsoft enables compliance with DORA through:

• Contractual readiness: A dedicated DORA Addendum and aligned terms in the Microsoft Data Protection Addendum and Financial Services Amendment.


• Built-in ICT risk management: Integrations across Microsoft Azure, Microsoft 365, and Defender provide visibility, detection, and rapid incident response.


• Operational resilience tooling: From continuity planning to exit strategies, we support FSIs in building resilience into their digital foundations.

Our EU Data Boundary initiative further enables data sovereignty by ensuring the processing and storage of customer data remains within the EU. The boundary allows public and private sector customers to store and process their customer data entirely within the EU across Microsoft 365, Azure, Power Platform, and Dynamics 365. By reducing the need for custom controls or data routing workarounds, it simplifies compliance efforts, supports audit readiness, and strengthens internal assurance.

Data Protection and Privacy

Solutions like Microsoft Purview, Entra, and Defender – not bolted on features – empower organizations to meet their data protection demands. Microsoft Purview, for example, provides comprehensive controls to mitigate and manage risks associated with AI use, safeguard sensitive information, enhance compliance, and drive privacy at scale.

Microsoft Purview Data Security Posture Management (DSPM) for AI from within the Microsoft Purview portal provides a central management location to help customers quickly secure data for AI apps and proactively monitor AI use. These apps include Microsoft 365 Copilot, agents, other copilots from Microsoft, and AI apps from third-party large language models.

As our customers adopt, experiment, and scale with generative AI, Purview enables them to

• Prevent oversharing and enforce access controls: Use restricted content discovery, site classification, and access management policies to limit data exposure. Apply encryption and sensitivity labels to restrict content based on user permissions.


• Mitigate data loss and insider risks: Monitor sensitive data referenced in AI interactions, detect and prevent prompt injection attempts, and audit AI usage with comprehensive logging of prompts, responses, and file activity.


• Automatically classify and protect content: Enforce sensitivity label inheritance and automated security policies so AI-generated outputs adhere to organizational data security requirements.


• Govern AI to meet regulations and internal policies: Apply policies for retention, deletion, and legal holds on AI-generated content and ensure alignment with standards such as the EU AI Act, NIST AI RMF, and ISO 42001.

And in line with our customer commitments for AI – your data is your data. With features like Customer Lockbox, Microsoft puts control in your hands. Customer Lockbox ensures that Microsoft engineers cannot access your content without explicit customer approval, reinforcing our commitment to privacy, control, and transparency.

Risk Management and Mitigation

 AI introduces new and amplified dimensions of risk, ranging from data exposure to model bias, hallucination, and evolving threats like prompt injection. How you manage and mitigate the risk defines your readiness. With Copilot, organizations are equipped with tools, frameworks, and shared processes to assess and mitigate risk confidently.

Our Copilot Risk Assessment Quickstart Guide offers customers a structured approach to evaluating AI risk and operational resilience across key domains:

• AI Risk Mitigation Framework: Understand how Microsoft addresses risks like hallucination, disinformation, bias, and prompt injection through engineered safeguards including metaprompts, grounding, and red teaming.


• Security Development Lifecycle (SDL): Learn how Copilot is built using SDL principles, from threat modeling to secure coding and continuous compliance testing.


• Shared Responsibility Model: Gain clarity into which AI risks the AI platform or application provider handle and which tasks you handle.


• Pre-Release Evaluations: Review Microsoft’s end-to-end testing process, including red-teaming, adversarial prompt testing, behavior monitoring, and risk acceptance thresholds before deployment.


• Sample Risk Assessment: Use ready-to-go questions and structured templates to evaluate your own readiness across privacy, security, explainability, and regulatory alignment.

Microsoft Compliance Assurance: Supporting Every Customer’s Compliance Journey

At Microsoft, we recognize that the path to compliance is increasingly complex—and no organization should have to navigate it alone. That’s why we’ve built a team of experts to help our customers navigate regulatory, compliance, and risk requirements when adopting and operating Microsoft cloud services.

Through this dedicated group of industry, engineering, and legal subject-matter experts, customers can:  

• Get direct access to Microsoft compliance professionals who support risk stakeholders with proactive guidance to accelerate assessments and approval cycles.


• Receive on-demand assistance via standard support channels from Microsoft experts to complete risk-assessment questionnaires and align internal requirements with Microsoft controls.


• Stay informed on the latest regulatory compliance developments through webcasts and summits featuring Microsoft experts, regulators, and industry peers.


• Receive proactive communication on external audit results, quarterly regulatory updates, and insights into emerging compliance frameworks.


• Get started with curated solutions and durable compliance documentation that address the regulatory, security, privacy, and compliance needs of highly regulated industries.

Your Partner in Compliance for the Road Ahead

As AI continues to transform how work gets done, we’re here to ensure it happens securely, ethically, and with confidence.

Explore the Service Trust Portal (STP)– your central hub for compliance-related documents, including Security and Organization Control (SOC) reports, Compliance Updates, AI Resources, and White Papers tailored to your regulatory needs.

Then, continue your journey with continuously updated guidance from the below resources to support your proactive compliance posture as you accelerate cloud and AI adoption:

• Data, Privacy, and Security for Microsoft 365 Copilot | Microsoft Learn


• Protecting the data of our commercial and public sector customers in the AI era – Microsoft On the Issues


• Customer Copyright Commitment Required Mitigations | Microsoft Learn


• Microsoft 365 Copilot blueprint for oversharing | Microsoft Learn


• Microsoft 365 Copilot Chat Privacy and Protections | Microsoft Learn


• Enterprise data protection in Microsoft 365 Copilot and Microsoft 365 Copilot Chat | Microsoft Learn