5 BEST PRACTICES FOR ENSURING DATA PRIVACY WHEN USING AI IN EXCEL

When leveraging AI features (like Copilot, specialized add-ins, or natural language processing) in Excel, sensitive data is often temporarily processed by external services. Protecting this data is paramount.

5 Best Practices for Ensuring Data Privacy When Using AI in Excel

These five practices ensure you maintain privacy and compliance while benefiting from AI:

• ANONYMIZE OR PSEUDONYMIZE PII LOCALLY

  Best Practice: Before sending any data to an external AI tool for analysis or formula generation, remove or alter all Personally Identifiable Information (PII).

  Action: Use Excel functions or a separate secure sheet to:

  Pseudonymize: Replace identifying fields (names, email addresses) with unique codes (e.g., "Customer A101").

  Generalize: Group highly specific numerical data (e.g., replace exact ages with age brackets like "30-40"). Only the non-identifiable, analytical data should be provided to the AI.

  
  

• UTILIZE ENTERPRISE-LEVEL AI SERVICES ONLY

  Best Practice: Avoid pasting sensitive data into public, free AI chatbots (like the public versions of ChatGPT or Gemini), as their data usage policies may reserve the right to use your input to train their models.

  Action: Use enterprise-grade tools such as Microsoft 365 Copilot (when signed in with a work account). These services typically offer contractual guarantees that your data will not be used to train the underlying AI models and will remain within the organization's secure cloud boundary.

  
  

• APPLY SENSITIVITY LABELS AND ENCRYPTION

  Best Practice: Use file-level protection to control who can access the original, un-anonymized data, especially when sharing.

  Action: Leverage Microsoft Purview Sensitivity Labels (if available) to automatically classify the workbook (e.g., "Highly Confidential") and apply encryption and access restrictions. This ensures that even if an AI-generated link or path were compromised, unauthorized users could not open the source file.

  
  

• SEGREGATE DATA INTO DEDICATED WORKSHEETS

  Best Practice: Minimize the amount of sensitive data accessible to the AI during interaction.

  Action: Maintain a "Raw Data" worksheet that contains all PII and sensitive fields, and protect it with worksheet-level restrictions. Create a separate "AI Analysis" worksheet containing only the anonymized, aggregated, or necessary analytical data, and direct your AI queries exclusively to this safe sheet.

  
  

• AUDIT ACCESS AND REVIEW THIRD-PARTY ADD-IN POLICIES

  Best Practice: Treat any third-party AI add-in as a separate entity and understand how it handles your data transmission.

  Action: Before installing any new AI add-in, read the vendor's privacy policy to confirm if they transmit data to their own servers and if they use it for training. Furthermore, regularly audit file access permissions on OneDrive/SharePoint to ensure that only the personnel who need the data can interact with the files, thereby limiting potential internal data leakage.

The convenience of AI in Excel should never compromise data privacy. Utilizing enterprise-grade tools, encrypting data, and maintaining strict access controls will enable organizations to harness the power of AI while adhering to compliance and ethical standards.