Microsoft Copilot Security Risks: The Oversharing Problem Nobody Warned You About

Here's a scenario that's already happened at real companies:

A junior employee asks Copilot to help draft a project summary. Copilot, being helpful, pulls context from across the M365 environment — SharePoint, OneDrive, Teams chats, emails. In its response, it references information from a confidential M&A document, an HR investigation file, and executive compensation data.

The employee didn't go looking for this information. They didn't hack anything. They didn't even know these files existed. Copilot surfaced them because, technically, their permissions allowed access.

This is the oversharing problem. And it's not a bug — it's a feature interacting with years of sloppy permission management.

How Copilot Exposes Your Permission Debt

Every enterprise has permission debt. It accumulates slowly:

Someone creates a SharePoint site and sets it to "Everyone in the organization" because it's easier
A Teams channel gets shared with a broad group for a temporary project and never gets locked down
An employee changes roles but retains access to their old team's files
A contractor gets added to a group with far more access than they need
"Company-wide" shared drives accumulate sensitive documents nobody thought to restrict

In the pre-Copilot world, this was a latent risk. Someone could navigate to that SharePoint site and find the sensitive file, but they'd have to know it existed and go looking for it. The obscurity of enterprise file structures was, functionally, a security layer.

Copilot removes that layer entirely.

When a user asks Copilot a question, it searches across every file, email, chat, and document that user has access to. It's essentially running a semantic search across your entire permission surface area. And it's surfacing results that users would never have found on their own.

The Numbers Are Alarming

15%+ of business-critical files are at oversharing risk in a typical enterprise environment
57% of organizations that deployed Copilot limited it to trusted users only — essentially admitting they can't control what it accesses
40% delayed deployment by 3+ months specifically because of security and data governance concerns
The US House of Representatives banned Microsoft Copilot from all congressional devices, citing the risk of data leaking to non-approved cloud services

These aren't theoretical concerns. These are organizations looking at Copilot's permission model and deciding the risk is too high.

What Oversharing Actually Looks Like in Practice

Scenario 1: The HR Time Bomb

Your HR team stores investigation files, disciplinary records, and compensation data in SharePoint. The site permissions were set up by an IT admin who gave broad access to "HR and Leadership" — a group that, over three years of org changes, now includes 200 people who definitely should not see individual disciplinary files.

A department manager asks Copilot to summarize recent HR communications. Copilot helpfully includes details from an active harassment investigation — one involving someone on that manager's team.

Scenario 2: The M&A Leak

Your executive team is working on an acquisition. Documents live in a SharePoint site restricted to the deal team. But someone shared a single document from that site to a broader group for a related (non-confidential) discussion. That shared document created a permission pathway that Copilot follows.

A financial analyst asks Copilot to help with quarterly projections. Copilot references the acquisition target's financials because, through that one shared document, the analyst technically has access to the deal room's content.

Scenario 3: The Departing Employee

An employee in their two-week notice period still has full Copilot access. They ask seemingly innocent questions — "What's our strategy for Q3?" or "Summarize recent leadership discussions about the product roadmap." Copilot surfaces strategic planning documents, budget allocations, and competitive analysis that the employee has permission to access but would never have found manually.

They walk out the door with a comprehensive intelligence briefing, courtesy of your AI assistant.

Why Microsoft's Security Model Doesn't Save You

Microsoft's defense is technically correct: Copilot respects existing permissions. It only shows users content they already have access to.

This is like saying "the vault door was unlocked, but we didn't tell anyone the combination was 1234." Copilot is the person who just shouts the combination to anyone walking by.

The permission model works fine when access is actively managed and regularly audited. In the real world — where enterprises have thousands of SharePoint sites, millions of files, and permission structures that have grown organically over years — "respecting existing permissions" means "surfacing every permission mistake you've ever made."

Microsoft offers tools to manage this: sensitivity labels, Data Loss Prevention (DLP) policies, Purview for information protection. But these tools require configuration, maintenance, and governance processes that most organizations haven't implemented.

How to Fix It: A Permission Audit Framework

Before deploying Copilot (or if you've already deployed it and are sweating), you need a systematic permission audit.

Phase 1: Discovery (Week 1-2)

Map all sharing. Use Microsoft's sharing reports and third-party tools to identify every file, site, and folder shared beyond its intended audience.
Identify high-risk content. Where are your HR files? Financial data? Legal documents? Strategic plans? Customer data?
Audit group memberships. Which security groups and M365 groups have grown beyond their original purpose? Who's in the "Everyone" and "All Company" groups?

Phase 2: Remediation (Week 2-4)

Apply sensitivity labels. Start with your highest-risk content: executive communications, HR data, financial records, legal documents.
Fix oversharing. Remove unnecessary "everyone" permissions. Convert broad groups to targeted ones. Lock down sensitive SharePoint sites.
Implement DLP policies. Configure Data Loss Prevention to prevent sensitive information from being surfaced by Copilot in inappropriate contexts.
Review external sharing. Identify and revoke external sharing links that are no longer needed.

Phase 3: Governance (Ongoing)

Establish permission review cadence. Monthly for high-risk content, quarterly for everything else.
Automate permission monitoring. Set up alerts for new "everyone" sharing events, external sharing, and permission changes on sensitive sites.
Train content owners. The people creating and sharing content need to understand that Copilot changes the risk calculus of every sharing decision.

Phase 4: Controlled Deployment

Start with clean groups. Deploy Copilot only to users whose permission scope has been audited and cleaned.
Monitor Copilot interactions. Use audit logs to track what content Copilot is surfacing and to whom.
Iterate and expand. As you clean up more of your environment, expand Copilot access to additional groups.

The Real Cost of Not Fixing This

The financial risk of a data breach caused by Copilot oversharing isn't hypothetical. Consider:

Regulatory exposure: If Copilot surfaces personal data (GDPR, CCPA), you're liable regardless of intent.
Insider threat amplification: Every Copilot license is now a supercharged search engine for anyone with malicious intent.
Legal discovery: In litigation, Copilot's ability to surface and summarize documents creates new discovery obligations and risks.
Competitive intelligence leaks: Former employees, consultants, and contractors with lingering permissions now have an AI research assistant.

The US House of Representatives didn't ban Copilot because they're technophobes. They banned it because their security team looked at the permission model and concluded the risk was unacceptable for sensitive government work.

If your data is sensitive enough to protect with access controls, it's sensitive enough to audit before letting an AI index all of it.

The Bottom Line

Copilot doesn't create security problems. It amplifies the ones you've been ignoring. And the longer you wait to address them, the more data gets surfaced to people who shouldn't see it.

This isn't a technology problem. It's a governance problem. And it needs to be fixed at the governance level — not with more technology layered on top.

Need help auditing your M365 permissions before (or after) Copilot deployment? Reach out. We've seen what oversharing looks like at scale, and we know how to fix it.