the FOCUS

Your Biggest AI Threat Isn’t Hackers—It’s Your Team

5 Steps to Prevent AI Data Leaks and Protect Client Trust

Picture this, Reader: You’re McDonald’s. You’ve got a shiny AI chatbot named Olivia handling millions of job applications. Smart, right? Saves time, cuts costs, scales beautifully.

Then two security researchers decide to poke around. Their hacking tool of choice? The password “123456.”

I’m not kidding. Username: 123456. Password: 123456.

Within 30 minutes, they’re staring at 64 million records—names, emails, phone numbers, entire conversations between hopeful job seekers and your AI assistant. All because someone couldn’t be bothered to change a default password. [1]

Now imagine that’s your business. Your client conversations. Your proposals. Your competitive intelligence. All hanging out there like laundry on a clothesline because you thought AI security was somebody else’s problem.

Here’s what should really keep you up at night:

• 84% of AI tools have already been breached. Over half have had corporate credentials stolen. Yet only 14% of workplaces have bothered to create AI policies. [2]
• 99% of organizations have exposed sensitive data that can easily be surfaced by AI. Not tomorrow. Today. [3]
• 98% of companies have “shadow AI”—unsanctioned tools employees are using without anyone’s knowledge or approval. [4]

Still think this is somebody else’s problem?

Time for Real Talk

Look, I get it. AI is like having a Ferrari engine for your business—it’s fast, powerful, and makes you feel like you’re finally keeping up with the competition. But driving a Ferrari without knowing where the brakes are? That’s a recipe for disaster.

You don’t need to become a cybersecurity expert. You don’t need to understand machine learning algorithms. You just need a practical playbook that keeps you safe while you harness AI’s power.

Think of it like this: You wouldn’t leave your house unlocked just because locks are complicated. You learn to use them because the alternative is unthinkable.

So here's your five-step playbook. It's what smart business owners are quietly implementing while everyone else crosses their fingers.

Step 1: Understand the Problem

Most people think AI tools are like digital filing cabinets—storing everything you feed them. Wrong. They’re more like brilliant but absent-minded professors who remember patterns, not specifics.

Here’s the thing: The AI itself might not remember your data, but the platform hosting it probably does. It’s like the difference between your doctor’s brain and their filing system. One forgets details; the other keeps meticulous records.

Questions you need answers to:

• Does this tool train on my data?
• How long does it store my inputs?
• Can I delete my data completely?
• Who else can see what I’m sharing?

If you can’t find these answers in five minutes on their website, that’s your first red flag. Move on.

ChatGPT does a good job of this. Go to Settings > Help > Terms & policies.

In Claude, you would go to Settings > Data & Privacy > Privacy Center.

Step 2: Configure Your Settings

Remember the McDonald’s fiasco? That wasn’t a sophisticated hack. It was the digital equivalent of leaving your keys in the ignition with a sign saying “Free car!”

Here’s your non-negotiable configuration checklist:

The Core Four:

• Turn on two-factor authentication. Always. No exceptions.
• Use a password manager. (If you’re still using “CompanyName123!” you’re asking for trouble. I recommend 1Password for complicated, nearly unbreakable passwords that can be shared securely across your company.)
• Check the data controls and opt-out of using your data to train AI. Again, ChatGPT makes this easy. Go to Settings > Data controls > Improve the model for everyone. Make sure this is set to “Off.”
• If you can, enable encryption for sensitive data. Think of it as a safe within a safe.

The Often Forgotten:

• Create separate accounts for testing versus real client work.
• Set up automatic data deletion schedules.
• Review who has access quarterly (people leave, roles change, but permissions often don’t).

This isn’t paranoia. It’s professionalism. The Varonis study found that 90% of sensitive cloud data is accessible to AI systems simply because nobody bothered to lock the door. [5]

Step 3: Document Your Policies

You know what’s worse than no plan? A plan that only exists in your head.

Create a simple, one-page AI policy that answers:

• What types of data can we share with AI?
• Which AI tools are approved for use?
• How do we anonymize sensitive information?
• Who’s responsible for keeping this updated?

Make it so simple a smart eighth-grader could follow it. Complexity is the enemy of compliance.

I’ve seen companies with 50-page AI policies that nobody reads. Meanwhile, their sales team is uploading entire client databases to ChatGPT to “save time on proposals.”

Pro tip: Create template prompts for common tasks. Instead of letting everyone freestyle with client data, give them fill-in-the-blank formats that keep sensitive information out of AI tools.

⚙️ Insider+ Preview Template AI Company Policy Ready to streamline your AI policies? I've developed an AI Company Policy template to make it incredibly easy. This valuable resource, along with future templates, custom GPTs, and SOPs, will soon be reserved for Insider+ (paid) subscribers. However, as a special introductory benefit, you can access it for free now. Simply click here to begin. Add your company details and you're done!

Step 4: Comply With the Law

I know, I know. Compliance is about as exciting as watching paint dry. But fines are very exciting—in all the wrong ways.

The landscape is shifting fast:

• GDPR fines can reach 4% of global revenue
• The EU AI Act is already in force
• California’s CCPA includes AI data handling
• New U.S. federal AI regulations are coming

But here’s the secret: If you’re already following Steps 1-3, you’re 80% compliant with most regulations. It’s not about perfection; it’s about showing you gave a damn.

Here's a smart move: Use AI to research what applies to you. Seriously—use the tool to protect yourself from the tool. It’s like asking a burglar to install your security system. Except it actually works.

Try this prompt with ChatGPT or Claude:

AI PROMPT Legal Compliance and Regulation Replace the text in the square brackets with your specific information. Then copy and paste the prompt below into your favorite LLM:

I run a [your industry] business in [your state/country] that serves [client type]. We use AI tools for [list main uses: content creation, data analysis, customer service, etc.]. What are the specific data privacy laws and AI regulations I need to comply with? Give me: - The exact laws that apply to my situation - The biggest compliance risks for businesses like mine - Three immediate actions I should take to avoid penalties. Keep it practical, not legal theory.

This ten-minute exercise beats a $10,000 legal consultation that tells you “it depends.”

The IBM Cost of a Data Breach Report 2025 found that 97% of AI-related breaches happened because of poor access controls. [6] That’s not sophisticated hacking—that’s leaving the door wide open.

Step 5: Educate Your Team

Your biggest security risk isn’t technology. It’s Todd from accounting who thinks he’s being efficient by uploading the entire customer database to analyze trends.

Make training stick with these approaches:

• The Story Method: Share real breach stories (like our McDonald’s friend). Fear is a powerful teacher.
• The Game Method: Run “What would you do?” scenarios. Make it fun, not preachy. (Use AI to help you come up with these.)
• The Champion Method: Designate an AI safety champion in each department. Peer pressure works.
• The Template Method: Give people pre-approved prompts and workflows. Make the right way the easy way.

Remember: You’re not trying to turn everyone into security experts. You’re trying to create habits that protect the business without slowing it down.

The Bottom Line

Stop waiting for perfect clarity. Start with imperfect action:

1. Today: Check if your current AI tools have two-factor authentication enabled and data sharing turned off.
2. This week: Draft a 1-3 page AI use policy. (Use the Insider+ free preview template above.)
3. This month: Run a team training session using a real breach story
4. This quarter: Audit which tools your team is actually using

The question isn’t whether AI will transform your business—it will. The question is whether you’ll be ready when everyone else realizes what you now know: Privacy isn’t optional. It’s your competitive advantage.

What would it mean for your business if clients chose you because you take AI privacy seriously, not in spite of it?

That’s not just protection. That’s positioning.

And in a world where everyone’s racing to adopt AI, the businesses that race smart will beat the ones that just race fast.

Every time.

Comments Got a question or story about AI, Reader? Hit reply. I read every email. Seriously. Your experiences help me write better content, and sometimes the best insights come from readers like you. Transforming AI from noise to know-how, Michael Hyatt P.S. Consider the AI Business Lab Mastermind: Running a $3-10M business? You’re past the startup chaos but not quite at autopilot. That’s exactly where AI changes everything. The AI Business Lab Mastermind isn’t another networking group—it’s a brain trust of leaders who are already implementing, not just ideating. We’re talking real numbers, real strategies, real results. If you’re tired of being the smartest person in the room, this is your new room. 👉🏼 Learn more and apply here. ​ ReferencE Andy Greenberg, “How a Default Password Unlocked McDonald’s AI Hiring Chatbot—and 64 Million Job Applications,” WIRED, July 9, 2025, https://www.wired.com/story/mcdonalds-ai-hiring-chat-bot-paradoxai/. Cybernews. “Analysis of AI Tools: 84% Breached, 51% Facing Credential Theft.” GlobeNewswire, May 19, 2025. https://www.globenewswire.com/news-release/2025/05/19/3084053/0/en/Analysis-of-AI-tools-84-breached-51-facing-credential-theft.html. Varonis. “Data Security Report Reveals 99% of Orgs Have Sensitive Information Exposed to AI.” Varonis Blog, June 20, 2025. https://www.varonis.com/blog/state-of-data-security-report. Ibid. Ibid. IBM. “Cost of a Data Breach Report 2025.” IBM Security, July 30, 2025. https://www.ibm.com/downloads/documents/us-en/131cf87b20b31c91.

© 2025, AI Business Lab. All rights reserved.