Microsoft Copilot, an AI-powered assistant integrated into Microsoft 365 applications, has revolutionized workplace productivity by automating tasks such as document drafting, data analysis, and meeting summaries.
However, its deep integration with enterprise data raises significant security concerns, including unauthorized data access, prompt injection attacks, and compliance risks.
This article explores the key vulnerabilities associated with Microsoft Copilot and provides actionable safety measures for enterprises to mitigate these risks.
Table of Contents
Copilot Key Security Vulnerabilities and Privacy Concerns
Over-Permissioning and Data Exposure
Microsoft Copilot inherits user permissions from Microsoft 365, meaning it can access all data that an authorized user can view. However, many organizations suffer from over-permissioning, where employees have access to sensitive data beyond their role requirements.
Copilot may inadvertently expose confidential financial records, HR documents, or intellectual property if users generate summaries or reports containing sensitive data.
A financial analyst using Copilot to generate a report might unintentionally include unreleased earnings data in an externally shared document.
Studies show that 16% of business-critical data is overshared in organizations, and Copilot could amplify this risk of data protection.
Retention and Auditing Challenges
The copilot stores prompts and responses as activity history, which may include sensitive data. While admins can manage this via Microsoft Purview, misconfigured retention policies could lead to overretention or improper deletion.
Prompt Injection Attacks
Copilot is vulnerable to prompt injection, where malicious actors embed hidden instructions in emails or documents to manipulate its behavior.
Attackers can trick Copilot into exfiltrating sensitive data via hidden Unicode characters in links and automatically retrieving unauthorized documents without user knowledge.
Researcher Michael Bargury demonstrated a tool called LOLCopilot, which alters Copilot’s behavior undetected, similar to remote code execution.
LOLCopilot leverages Microsoft Copilot’s integration with Microsoft 365 applications to automate spear-phishing attacks. Once an attacker gains access to a user’s work email, the tool can:
Merit Solutions.
- Identify frequent contacts by analyzing email interactions.
- Mimic the user’s writing style, including tone and emoji usage.
- Craft and send personalized phishing emails to the user’s contacts, embedding malicious links or attachments.
This approach enables attackers to send hundreds of convincing phishing emails rapidly, increasing the likelihood of successful breaches.
The tool was first introduced during a presentation at the Black Hat security conference in 2024.
Data Leakage via Plugins and Third-Party Integrations
Copilot supports plugins that connect to external services, increasing the risk of data exfiltration if these plugins mishandle information.
CVE-2024-38206 is a critical security vulnerability identified in Microsoft Copilot Studio, a platform that enables users to build custom AI-powered chatbots. This flaw was discovered by researchers at Tenable and reported in August 2024.
An authenticated attacker could exploit Server-Side Request Forgery (SSRF) vulnerability to bypass existing protections and make unauthorized server-side HTTP requests. This could lead to the exposure of sensitive internal resources and data.
The vulnerability allowed attackers to:
- Access Microsoft’s internal infrastructure, including the Instance Metadata Service (IMDS) and internal Cosmos DB instances.
- Retrieve instance metadata and obtain managed identity access tokens.
- Use these tokens to access other internal resources, potentially gaining read/write access to Cosmos DB instances.
While no cross-tenant information was immediately accessible, the shared infrastructure among tenants meant that exploitation could potentially impact multiple customers.
Sensitive data processed by third-party plugins may not adhere to enterprise security policies.
Bias or Faulty Outputs
Copilot can propagate biases present in training data or organizational documents, leading to unfair or non-compliant outcomes (e.g., biased hiring recommendations).
Poor-quality or outdated data may result in inaccurate or risky outputs.
Lack of Automatic Sensitivity Label Inheritance
Copilot-generated content does not automatically inherit security labels from source files, increasing the risk of improper data sharing.
A report generated from classified documents may remain unlabeled, making it easier to share beyond authorized personnel.
Compliance and Regulatory Risks
Copilot’s data handling must comply with GDPR, HIPAA, and CCPA, but misconfigurations can lead to security risks.
If a Copilot processes Protected Health Information (PHI) without proper access controls, healthcare organizations may face HIPAA penalties.
While Microsoft ensures EU data stays within the region, web queries may still route outside the boundary.
Safety Measures for Enterprises
To mitigate these risks, organizations should adopt a multi-layered security approach:
Enforce Strong Identity and Access Management (IAM)
Enable MFA (Multi-Factor Authentication) for all users with access to Copilot.
Use Conditional Access Policies to restrict Copilot access based on device health, location, or risk score.
Apply role-based access controls (RBAC) to limit Copilot’s reach to only necessary resources.
Restrict Copilot’s data access by enforcing role-based permissions for teams in SharePoint, OneDrive by using access permissions and sensitivity labels.
Implement The Least Privilege Access
Use Microsoft Purview Information Protection to classify, label, and protect sensitive data (e.g., financials, HR data).
Set DLP (Data Loss Prevention) policies to block or warn against generating or sharing sensitive data via Copilot.
Strengthen Data Classification & Sensitivity Labeling
Classify sensitive data (e.g., PII, financial records, IP) and enforce automated labeling in Microsoft Purview.
Manually review AI-generated content to ensure proper classification before sharing.
Monitor and Block Prompt Injection Attacks
Deploy Microsoft’s Prompt Shields to detect and block malicious prompts.
Train users to recognize and report unusual Copilot behaviors or outputs (e.g., unexpected actions, redirection links).
Sanitize and limit the input data Copilot uses — especially for apps like Copilot Studio where user prompts may come from external sources.
Disable automatic actions or outputs from Copilot where human oversight is critical (e.g., code execution, automated emails).
Secure Third-Party Plugins & API Integrations
Disable unnecessary plugins and only allow vetted integrations. In Microsoft 365 Admin Center, restrict plugin installations to IT-approved integrations only to prevent data leaks.
Monitor Copilot API calls via Microsoft Defender for Cloud Apps. Enforce OAuth app consent policies to prevent malicious API access.
Use Microsoft Secure Score to assess and improve plugin security configurations.
Implement Endpoint and Network Protections
Ensure devices running Copilot apps are compliant with corporate security standards via Microsoft Intune.
Use Endpoint Detection and Response (EDR) tools like Microsoft Defender for Endpoint to monitor for signs of compromise.
Limit Copilot plugin usage and third-party integrations to pre-approved, vetted apps only.
Enhance Email and Document Security
Use Data Loss Prevention (DLP) tools (e.g., Microsoft Purview) to block unauthorized sharing of sensitive data.
Encrypt sensitive emails and files to prevent Copilot from processing unprotected data.
Use Azure Information Protection (AIP) to restrict document copying/printing and enable Conditional Access (CA) policies to restrict Copilot access from unmanaged devices.
Conduct Regular Security Training
Educate employees on safe Copilot usage, including:
- Avoiding inputting confidential data in prompts.
- Verifying AI-generated outputs before sharing.
- Simulate phishing and prompt injection attacks to improve threat awareness.
Enable Auditing and Incident Response
Enable Microsoft Purview Audit Logs for full visibility into Copilot usage (queries, generated content, data accessed).
Regularly audit permissions to ensure employees only access necessary data.
Use Microsoft Defender for Cloud Apps to monitor risky behaviors and access patterns involving Copilot.
Set up alerts for unusual data access patterns (e.g., bulk document retrieval).
Conclusion
Microsoft Copilot offers immense productivity benefits but introduces critical security risks if not properly managed. Enterprises must adopt proactive data governance, strict access controls, and employee training to prevent data breaches and compliance violations.
By implementing these measures, organizations can safely leverage AI-driven productivity while maintaining robust security.
