What is AI governance?
AI governance is the set of policies, roles, approvals and records a business uses to decide which AI tools may be used, for what purposes, with what data, and how their outputs are checked and owned by a named person.
In a large enterprise, governance can mean committees and frameworks. In a 30-person firm, it can fit on a few pages: an approved tools list, rules about client data, who signs off on new uses, where AI is disclosed to clients, and how mistakes are reported. The point is that decisions about AI are made on purpose, not by whoever signs up first.
Regulation is moving in this direction. Colorado's SB 26-189, effective January 1, 2027, sets duties for businesses using AI in certain high-stakes decisions about people, and professional bodies have issued guidance, such as ABA Formal Opinion 512 for lawyers. This is not legal advice, so ask your counsel how these apply. Good governance makes that conversation easier because you already know what you use.
Start with an inventory. Ask every team which AI tools they use, including free ones on personal accounts, and what data goes into them. Then sort uses by risk, put human review on the high-risk ones, and write a short acceptable use policy. Review the inventory each quarter, since new AI features appear inside existing software constantly.
Example
For example, a 40-person accounting firm might discover during an inventory that staff use four different AI tools, two on personal accounts. The firm picks one business-tier tool, bans client data in the others, assigns a partner as owner, and adds AI to the written information security plan it keeps under the FTC Safeguards Rule.