AI Policy Handbook: How to Create One for Your Company

Artificial intelligence is becoming an operational constant across industries, increasingly integrated in critical business functions and decision-making processes. Even if the company does not "officially" use or develop AI tools, some form of AI is likely already integrated into its daily operations through ChatGPT, automated decision-making systems, data forecasting tools, or similar technologies.

But, as AI becomes more embedded in enterprise workflows, the range and complexity of associated risks increase, particularly in areas such as data privacy, algorithmic bias, and regulatory compliance.

Without a clear AI governance framework, companies face growing exposure that can undermine trust, create legal vulnerabilities, and disrupt core operations. Preparing an AI Policy is a critical step toward mitigating these risks, laying the foundation for responsible AI use, ensuring organizational accountability, and positioning the company as a forward-thinking leader.

If you're tasked with drafting an AI Policy for your organization and aren't sure where to start, this guide provides a practical, business-oriented starting point — or try our AI Policy Generator to create one instantly.

Understanding the Concept of an AI Policy

What is AI Policy?

A policy in artificial intelligence can have different meanings depending on the context, most commonly referring to an AI Ethics Policy, an AI Governance Policy, an AI Decision-Making Policy, or an AI Internal/Organizational Policy. In this blog, the focus is specifically on the AI Organizational Policy (hereinafter referred to as: "AI Policy"), which outlines how AI systems should be managed within the company.

AI Policy serves as a roadmap for how a company develops, uses, and monitors AI systems, ensuring that AI practices align with applicable laws and ethical standards and that employees' actions align with the company's core values and strategies.

As a high-level document, the AI policy sets the "rules of the house" within the company by establishing a standard of responsibility through clearly defined objectives, principles, and safeguards for the development and use of AI systems. For this reason, the AI Policy is generally recommended as the first step in building a solid AI governance framework.

Strategic Benefits of Implementing and Risks of Lacking an AI Policy

The key reasons a company should consider adopting an AI Policy include:

• **Ensuring regulatory compliance** -- an AI Policy helps ensure that the company's AI practices stay within legal boundaries
• Data & privacy protection -- AI technologies operate by processing large volumes of data. An effective AI Policy sets clear protocols for data collection, storage, sharing, and processing
• Bias detection & mitigation -- a well-crafted AI Policy mandates periodic evaluations and bias reviews of AI outputs
• Ethical and responsible AI use -- an AI Policy establishes a clear framework for ethical AI use

The key risks a company may face without an AI policy include:

• Unreliable and unverified AI outputs -- without an AI Policy, there are no established checks in place to identify issues early and minimize damage
• Unintentional security and data breach -- without clear guidance, employees may unknowingly expose sensitive information
• **Risk of non-compliance** -- without an AI policy, it becomes significantly harder to keep up with evolving laws and regulations

Key Questions a Company Must Address Before Drafting an AI Policy

a. Has the company aligned on what qualifies as AI within its operations?

The company must first align on how it defines AI, determine which systems and tools fall within that definition, and identify where they are already integrated into its operations.

b. Has the company established a working group and educated the board on AI?

A working group should be established to lead the drafting of the AI Policy, bringing together the necessary expertise and representation from relevant departments and stakeholders.

c. Has the company clarified why it needs an AI Policy and what it aims to achieve?

Before drafting an AI Policy, the company must define its primary objectives.

d. Has the company identified the key drivers behind its AI governance efforts?

A well-designed AI Policy should be based on tangible motivations.

e. Has the company defined its ethical principles and evaluated the legal and regulatory landscape?

Before establishing rules for AI use, the company must first define the ethical principles and values.

f. Has the company identified AI use cases and assessed potential risks?

The company must first gain a clear understanding of how AI will be integrated across its operations.

g. Has the company clearly defined roles, responsibilities, and governance for AI?

The company must determine and communicate who is responsible for what.

h. Has the company planned continuous monitoring and evaluation of AI systems?

The company must consider how it will ensure the AI Policy remains effective over time.

i. Has the company planned how it will communicate its AI Policy?

The AI Policy should be written in understandable language, provide actionable guidance, and be shared through internal channels.

Core Elements of an AI Policy

1) Purpose & Scope

An AI Policy typically begins with an introductory section outlining the company's commitment to the establishment of guidelines and best practices for responsible and ethical use of AI.

2) Organization's Core Ethical Principles

The essential rules and guiding principles that define how AI is expected to be used within the company shall be defined.

3) AI Governance Bodies & Roles

Establishment of dedicated AI governance structures, including the definition of executive roles and the assignment of clear responsibilities.

4) AI System Classification and Risk Management

All AI systems should be defined according to their intended use and risk classification.

5) Acceptable and Prohibited use of AI

Specification of acceptable AI use cases and prohibited AI usage.

6) Continuous Monitoring and Auditing

Establishment of regular audits and monitoring processes.

7) Training and Awareness

Identification of training requirements to ensure users understand risks, responsibilities, and ethical considerations.

8) Incident Reporting

A reporting process for violations or potential concerns related to AI use.

9) Violation of AI Policy

Definition of the consequences for violations of the AI Policy.

10) AI Policy Review

Definition of a regular schedule for reviewing and updating the AI Policy.

AI Policy Implementation

Step 1: AI Policy Development with Cross-Functional Input

Step 2: Organization-Wide Dissemination and Attestation

Step 3: Operational Integration and Procedural Alignment

Step 4: Continuous Evaluation and Iteration

AI Policy is a Living Framework, not a One-Off Document

AI is a relatively new phenomenon that is evolving at a rapid pace. Companies should take proactive steps today:

• Determination of where AI can bring the most value to the business
• Assessment of the potential risks AI may introduce
• Development of a comprehensive AI Policy
• Establishment of a designated AI governance authority.

AI Policy should not be seen as a one-off document, but rather as part of a broader legal and organizational ecosystem that evolves alongside the technology.

Generate, maintain, and audit your AI policies automatically with Whisperly's AI governance platform.

An effective AI policy should also reference your organisation's GDPR data breach notification procedures, particularly for AI systems processing personal data.

AI Policy Handbook: Create One for Your Company

Responsible AI: Ethics & Trust Guide

Personal Data in AI Development & Deployment