Protecting Sensitive Data in Microsoft 365: Private AI Strategies and LPD Compliance for Swiss Businesses

Protecting sensitive data is now one of the main concerns for Swiss organizations. With the new LPD (Federal Data Protection Act) in force and the widespread use of Microsoft 365 in professional environments, managing confidential information must adapt to the age of artificial intelligence. houle, with its expertise in private AI and Microsoft 365 deployments, supports you to ensure security, compliance, and business efficiency.

Why does the concept of sensitive data evolve with private AI?

Traditionally, sensitive data refers to any personally identifiable information, from health to financial situation, including HR data. With AI deployed locally or via secure platforms, these same data points can become indirect identifiers (for example, analytical models highlighting habits or behaviors).

The circulation and automated analysis of documents via SharePoint, Outlook, Word, or Teams—coupled with private AI—thus multiply both business opportunities and risks of unintentional leaks. A careless prompt sent to an LLM (large language model), or a neglected add-in setting, and confidential information may leave your secure environment.

The goal is therefore no longer just to protect file access, but to make every interaction with AI and M365 tools compliant and secure by default.

Legal Overview – What the New LPD Expects from Swiss Companies Using Microsoft 365

The revised LPD (2023) imposes new obligations in terms of consent, transparency, alert systems, and access rights. This specifically includes:

• Obligation to promptly report any security breach.
• Systematic inventory of data processing activities.
• Control over cloud providers (cloud act, local hosting, contractual guarantees).
• Integration of Privacy by Design and by Default.
• Strengthened rights to erasure and data portability.

In the Microsoft 365 context, it is thus essential to ensure that deployed AI—especially for document automation, semantic analysis, or intelligent search—does not expose information to destinations outside Switzerland, or even outside Europe, without adequate guarantees.

Hybrid and Sovereign Architecture – Adopting Private AI in Microsoft 365

Adopting private AI in Microsoft 365 means choosing an architecture where:

• LLM models are hosted in Switzerland or on Azure Swiss Regions, in controlled environments.
• User prompts and data are encrypted, never stored in plain text nor used for external training.
• Outlook, Word, and SharePoint add-ins for automatic generation, semantic search, or document analysis are centrally administered (via the Microsoft 365 admin center), with full traceability of interactions.

houle offers a range of custom integrations: hosting personalized models on Foundry, Zero Trust extensions to enhance Word or Outlook, and granular policies to control access to AI add-ins based on user profiles.

Advanced Security: How to Orchestrate Sensitive Data Protection?

Multiple levels of intervention are needed to ensure security and compliance, particularly:

1. Governance and Automatic Content Classification

With private AI, it's possible to automate the detection of personal or strategic data:

• Continuous monitoring of SharePoint and OneDrive repositories to detect protected data.
• Dynamic classification levels: “Public,” “Internal,” “Confidential HR,” “Patient Data,” etc. Each level automatically triggers restrictions on access, sharing, and exporting.
• Report generation for the DPO team, exportable for LPD audits.

2. AI Add-ins and Prompt Security

AI add-ins integrated into Outlook or Word must apply contextual filtering logic:

• No sensitive data leaves the Swiss ecosystem without encryption or explicit consent.
• Prompts sent to LLMs are dynamically analyzed: detection of at-risk data (names, IBAN, social security numbers), automatic anonymization, or manual validation request.
• Detailed activity logs on all AI usage, compliant with LPD traceability requirements.

3. Swiss Azure OpenAI Integration

AI models can run directly on Azure Swiss Regions, avoiding any export outside the territory. All APIs and add-ins natively integrate with the company's Azure AD directory, ensuring that only authorized employees access these advanced tools.

houle supports companies at every stage: designing a tailored architecture, selecting the right LLM model, integrating into document workflows, and ongoing supervision through dashboards adapted to the Swiss context.

Adopting Private AI: Change Management, Training, Risk Handling

Technology alone is not enough. Success of private AI in Microsoft 365 requires rigorous change management:

• Targeted training for HR, IT, and business teams on AI risks and best practices (prompt engineering, file sharing, etc.).
• Creation of tailored usage charters: what can (or cannot) be done with AI in Microsoft 365, depending on data category.
• Incident simulations (shadow AI, accidental leaks, analysis of real impact on LPD compliance).

houle offers customized training modules and assists your teams in the continuous review of internal policies to align technology with regulatory requirements.

Concrete Cases — Examples of Successful Strategies in Swiss Companies

Case 1: Insurance Company – Automation of HR Document Management

Challenge: Automate the sorting and extraction of information from HR files, while preventing any personal data from leaving Switzerland. houle solution: deployment of a private AI Word add-in with localized processing, automatic classification, initial anonymization, and usage reporting allowing audit of every AI interaction.

Case 2: Medical Institution – Management of Patient Reports in SharePoint

Challenge: Numerous document flows between medical teams, need to maintain the confidentiality of diagnoses, access limited to treating physicians only. Solution: integration of a private AI semantic analysis engine on Azure Swiss Regions, configuration of restrictive policies via the Microsoft 365 admin center, continuous audit of exports and downloads.

Towards Mastered and Compliant Private AI: Key Tips for 2026

The acceleration of AI adoption in Microsoft 365, driven by digital transformation, should never come at the expense of security and compliance. Leaders should consider private AI not only as a competitive asset but as insurance against legal and reputational risks.

houle recommends initiating a complete audit of M365 usage, defining a clear policy for selecting add-ins, and engaging experts who master both AI potential and LPD requirements. The goal: transform innovation into a sustainable and responsible competitive advantage, within a fully sovereign framework.

To Learn More

• Consult Microsoft’s official documentation on governance and information protection in M365 to enhance your approach.
• Find direct texts and compliance guides on the official site of the FDPIC (Federal Data Protection and Information Commissioner).

Practical tips for Microsoft/Azure

• Keep examples concrete: show 1-2 configuration steps (Azure resource, ask prompt), and test with a small dataset first.
• Prefer RAG (retrieval-augmented generation) for grounding answers: index internal docs, add answer citations and logging.
• Deploy models in a Swiss region for data sovereignty and enable proper moderation + access controls (Azure AD, role-based).