As artificial intelligence (AI) becomes more integrated with business operations, it's increasingly important to develop clear policies to manage AI-related risks, maintain compliance, and uphold ethical standards. A well-crafted AI policy helps define expectations, protect data, and guide employees on the responsible use of AI tools. Here's what you should consider when creating an AI policy for your organization.

Define the Scope

Before drafting a policy, assess how AI is being used within your organization. Here are some key questions to consider:

  • Are you developing AI tools in-house or relying on third-party services?
  • What types of AI tools are being used (e.g., LLMs, automation, analytics, customer interactions, etc.)?
  • How do these AI tools impact business operations, employees, and customers?
  • What regulatory requirements, industry frameworks, or internal governance standards apply to using AI within your organization?

Clearly defining the scope gives you the foundation you need to create a relevant and practical policy for your organization's needs.

For example, if you are not developing AI tools in-house, then your AI policy would look a lot different than if you were.

Establish AI Governance and Accountability

An effective AI policy should outline governance structures, roles, and responsibilities. Define who oversees AI initiatives and who is accountable for compliance, ethical considerations, and risk management.

Depending on the size and complexity of your business, you might want to establish a full-on AI governance committee with representation from various departments (e.g., IT, security, compliance, legal, etc.) - or - you might just want to make sure that your ISO and Network Administrator are in the loop. The key is finding out what makes the most sense for your organization.

Develop Vendor Management Guidelines

With a strong vendor management program and policy in place, you've already laid the groundwork for managing AI vendors. The same due diligence you apply to other vendors also applies here. There's no need to reinvent the wheel. But you do need to account for AI-specific risks that may not be covered in your standard vendor management policy.

To address these risks, consider adding the following guidelines to your AI policy:

  • Assess Vendor Criticality and Risk: Determine the vendor's level of risk based on whether their AI service is free or licensed, what type of data they process, and how their AI-driven decisions impact your business.
  • Review AI Data & Security Practices: Identify what data the AI system processes, how the vendor accesses, stores, and secures it, and how the AI model is trained, validated, and protected.
  • Establish AI-Specific Contract Requirements: Ensure agreements address transparency (e.g., AI decision logs, algorithm updates), bias and fairness controls (e.g., bias detection, fairness audits), model management (e.g., training, version tracking, drift detection), and liability for AI-driven decisions.

Implement Security and Data Protection Measures

Here's more good news! This is another area where you won't have to start from scratch. Just like managing AI vendors, securing AI systems builds on existing security practices. AI is simply another technology that requires applying foundational security measures already covered in policies such as Access Control, Acceptable Use of Technology, and IT Asset Management.

Your AI policy can reference existing policies that address key areas like:

  • Access Controls: Restricting access to AI systems based on user need.
  • Data Protection: Ensuring encryption, data masking, and secure data storage.
  • Monitoring and Logging: Tracking AI activity to detect anomalies or misuse.
  • Incident Response: Defining procedures for handling AI-related security breaches.

Acceptable Use Policy

It's important to incorporate AI into your Acceptable Use Policy (AUP). Think of it as an easy way to set some basic ground rules so employees know how to use AI tools responsibly.

Consider the following:

  • What's Allowed: List the AI tools employees can use and the right way to use them.
  • What's Off-Limits: Set clear boundaries, like not using AI to process sensitive data, make high-stakes decisions, or bypass security controls.
  • Data Safety Tips: Make sure employees know what kind of data they can share with AI and how to handle it securely.

Security Awareness Training

A policy is only useful if people actually understand it. That's why it's a good idea to incorporate AI security awareness training into your existing security awareness training program. The training doesn't need to be complex. It just needs to be practical and useful. Employees should learn how to:

  • Recognize risk associated with using AI tools.
  • Understand their role in using AI ethically and securely.
  • Know what to do if they spot something suspicious or think an AI tool is being used incorrectly.

When employees understand how to use AI tools responsibly, they become active contributors to AI governance and risk management rather than passive users. This makes AI adoption smoother, safer, and more effective across your organization.

Final Thoughts

Creating an AI policy doesn't have to be overwhelming. You'd be surprised how much you already have in place that contributes to AI governance and security.

Is AI risky? Sure. But managing it is absolutely doable.

Like any good policy, your AI guidelines should evolve—regular reviews and updates will help you stay ahead of new technologies, regulations, and business needs. A well-structured AI policy doesn't just protect your organization, it also builds trust and accountability in AI-driven processes.

Next Steps

If you are looking for a place to start with your AI policy, provide security awareness training, or manage your AI vendors, check out Tandem Policies and Tandem Vendor Management. Vendor Management allows you to assess and review your AI vendors, while Policies provides a pre-written template for outlining AI guidelines and conducting security awareness training.

With the right tools, managing AI risks becomes much easier. Learn more about how Tandem can help you at Tandem.App.