What is AI governance?
By the InTheory team · Updated November 2026
AI governance is the set of rules, roles and checks that decide how a business uses AI: which tools are approved, what data can go into them, who reviews output before it is used, and how problems are reported and fixed. For a small business it can be a one-page policy, a named owner and a quarterly review.
What it covers in a small business
An inventory of AI tools in use, including features built into existing software. A short policy on approved uses and prohibited data. Human review requirements for client-facing content, prices and anything with legal or financial weight. Vendor checks on data retention and training terms. A log of incidents and changes. A training plan so staff understand the rules.
Why it is worth doing now
Clients increasingly ask how their information is handled, insurers ask about AI use, and laws are arriving. In Colorado, SB 26-189 sets duties for businesses that use automated decision-making technology in consequential decisions such as hiring, starting January 1, 2027. This is general information, not legal advice.
Good governance also makes adoption easier. When staff know what is allowed, they use approved tools with confidence instead of guessing. InTheory treats a usage policy and review rhythm as part of every AI rollout.