Quick answer
An AI governance policy is a written set of rules for how a business selects, uses and monitors AI tools. It covers approved tools, what data may be entered, who reviews outputs, how risks are handled and who is accountable, so staff can use AI confidently and safely.
Key takeaways
- Many staff already use AI tools without guidance.
- Define which tools and data are allowed.
- Require human review of important outputs.
- Assign an owner and review the policy regularly.
What should an AI governance policy cover?
| Section | What it says |
|---|---|
| Purpose and scope | Who and what the policy applies to |
| Approved tools | Which AI tools staff may use |
| Data rules | What can and cannot be entered |
| Human review | Which outputs need checking |
| Transparency | When to tell customers AI is used |
| Incidents | How to report problems |
| Ownership | Who maintains the policy |
What data rules work best?
- Never enter customer personal information into unapproved tools.
- Keep confidential, financial and health information out of public AI tools.
- Check whether a tool stores or trains on your inputs.
- Use business accounts with admin controls where available.
When must a person check the output?
Anything that goes to a customer, affects someone's job, or involves legal, financial or safety decisions needs human review.
The more serious the impact, the closer the checking should be.
How do you roll it out?
- Draft a one or two page policy.
- Ask staff which tools they already use.
- Approve, restrict or replace those tools.
- Run a short training session.
- Review the policy every six months.
Link it to existing rules
Your AI governance policy should sit alongside privacy, security and acceptable use policies. In Australia, the Privacy Act and the Government's voluntary AI guidance are useful reference points.
A short example clause
"Staff may use approved AI tools to draft internal documents. They must not enter customer personal information, and a team member must review any content before it is shared outside the business."
Plain wording like this is easier to follow than pages of legal language.
Bottom line
Keep the policy short, specific and practical. Name the approved tools, protect your data and make one person accountable for keeping it current.
Sources and further reading
- Australian Government: Voluntary AI Safety Standard
- Office of the Australian Information Commissioner: Privacy
- NIST AI Risk Management Framework
Checked against the sources above and our own project experience. Last reviewed 7 October 2026.
