AI Policy Checklist for Canadian Businesses

If your employees are using AI tools — and they almost certainly are, whether you know it or not — your business needs an AI use policy. Not because AI is inherently dangerous, but because using AI tools without guidelines creates real risks: privacy breaches, inconsistent outputs, liability exposure, and reputational harm.

This checklist is designed for Canadian small and medium businesses that want to create a practical AI policy without hiring a team of lawyers. It's a starting point, not a legal document — for advice specific to your situation, consult a privacy lawyer.

Why Your Business Needs an AI Policy

Here's what can go wrong without an AI policy:

• An employee pastes customer personal information into a public AI tool, creating a privacy breach
• AI-generated content is published without review, containing errors or inappropriate material
• Different employees use different AI tools for the same task, creating inconsistent outputs
• Your business uses an AI tool that processes data on US servers, creating data sovereignty issues
• An AI-assisted decision affects a customer in a discriminatory way, creating legal liability

An AI policy doesn't prevent all of these risks, but it establishes clear expectations and accountability — which is the foundation of responsible AI use.

Checklist: Approved Tools and Platforms

• Maintain a list of approved AI tools and platforms
• Specify which tools are approved for which purposes
• Establish a process for employees to request approval of new AI tools
• Prohibit the use of unapproved AI tools for business purposes
• Review and update the approved tools list at least annually
• Document the data processing terms for each approved tool
• Confirm that approved tools have appropriate data processing agreements

Checklist: Data Handling and Privacy

• Prohibit entering personal information into public AI tools without explicit approval
• Define what constitutes "personal information" in the context of AI use
• Specify which categories of data may never be entered into AI tools (e.g., health information, financial data, SINs)
• Require anonymization or pseudonymization of data before AI processing where possible
• Document where AI-processed data is stored and for how long
• Confirm that AI tool data retention and deletion practices align with your privacy obligations
• Address data residency — confirm whether data is processed in Canada or abroad

Checklist: Acceptable Use Guidelines

• Specify approved use cases for AI tools (e.g., drafting, summarizing, research)
• Require human review of all AI-generated content before publication or use
• Prohibit using AI to make final decisions about individuals without human oversight
• Require disclosure when AI is used in customer-facing communications (where appropriate)
• Prohibit using AI to generate misleading, deceptive, or discriminatory content
• Address intellectual property — who owns AI-generated content?
• Specify how AI outputs should be verified before use

Checklist: Governance and Accountability

• Designate someone responsible for AI policy oversight
• Establish a process for reporting AI-related incidents or concerns
• Require training for employees who use AI tools
• Document AI use cases and outcomes for review
• Schedule annual policy review
• Include AI policy in employee onboarding
• Establish consequences for policy violations

Checklist: Canadian Regulatory Considerations

• Review PIPEDA obligations as they apply to AI use in your organization
• If operating in Quebec, review Law 25 requirements for automated decision-making
• Monitor developments in Canada's proposed Artificial Intelligence and Data Act (AIDA)
• Confirm that AI vendors have appropriate data processing agreements under Canadian law
• Address cross-border data transfer implications for US-based AI services
• Consider bilingual requirements for AI tools used in customer-facing contexts
• Consult a privacy lawyer for advice specific to your industry and province

Getting Started: A Simple First Policy

If you don't have an AI policy at all, start with something simple. A one-page document that covers the basics is far better than nothing. Here's a minimal starting framework:

1. Purpose: Why the policy exists and who it applies to
2. Approved tools: A list of AI tools employees may use for business purposes
3. Data rules: What data may and may not be entered into AI tools
4. Review requirement: All AI-generated content must be reviewed by a human before use
5. Reporting: How to report concerns or incidents
6. Review date: When the policy will be reviewed and updated

Our AI Readiness service includes policy development support as part of our assessment and strategy engagements.

Frequently Asked Questions