FSI Agent Governance Framework Beta

Comprehensive governance framework for Microsoft 365 AI agents in financial services organizations.

📋 Overview

This framework provides complete guidance for deploying, governing, and managing Microsoft 365 agents (Copilot Studio, Agent Builder, and related AI services) in regulated financial services environments.

Version: 1.0 Beta (December 2025) Target Audience: Financial Services Organizations (FSI) Regulatory Focus: FINRA, SEC, SOX, GLBA, OCC, Federal Reserve

Warning

This framework is provided for informational purposes only and does not constitute legal, regulatory, or compliance advice. See Disclaimer for full details.

---

📋 Scope & Assumptions

What This Framework Covers

This framework provides governance guidance for:

• Copilot Studio agents
• Agent Builder agents
• Power Platform environments hosting agents
• SharePoint as a knowledge source for agents

What This Framework Does NOT Cover

• Non-US regulations (EU AI Act, GDPR, DORA, MiFID II are out of scope)
• Non-Microsoft AI platforms (OpenAI direct, AWS Bedrock, Google Vertex AI, etc.)
• Custom ML model development, training, or validation
• Quantitative model risk management (requires dedicated MRM programs)
• State privacy laws (CCPA/CPRA require separate analysis; see Regulatory Mappings)
• Third-party AI integrations outside Microsoft 365 ecosystem

Note

This framework is designed for US financial institutions only. Institutions subject to non-US regulations should supplement this framework with jurisdiction-specific guidance.

Key Assumptions

Assumption	Rationale
Microsoft 365 E3/E5	Required for Copilot Studio, Purview, and advanced governance features
Microsoft Entra ID	Identity and access management foundation
Microsoft Purview	Compliance and data governance capabilities
Power Platform licensing	Required for environment management and DLP policies
Foundational IT controls	Network security, endpoint protection, backup/recovery assumed in place

Integration with Existing Governance

This framework is designed to complement, not replace existing enterprise governance programs:

• Integrate controls with your existing IT risk management framework
• Align with enterprise information security policies
• Coordinate with records retention and eDiscovery requirements
• Map to your organization's internal audit program

Note

Organizations should validate all controls against their specific regulatory obligations and existing policy frameworks.

---

🎯 Framework Structure

Four Governance Pillars

Pillar	Controls	Focus	Examples
1. Security	19	Protect data and systems	DLP, Audit, Encryption, MFA, eDiscovery
2. Management	15	Govern lifecycle and risk	Change Control, Testing, Model Risk, Environment Routing
3. Reporting	9	Monitor and track	Inventory, Usage, PPAC, Sentinel
4. SharePoint Mgmt	5	SharePoint-specific controls	Access, Retention, External Sharing

Total: 48 Comprehensive Controls

graph TB
    subgraph P4["Pillar 4: SharePoint (5)"]
        SP[Access · Retention · External]
    end
    subgraph P3["Pillar 3: Reporting (9)"]
        RP[Inventory · Usage · PPAC · Sentinel]
    end
    subgraph P2["Pillar 2: Management (15)"]
        MG[Lifecycle · Testing · Model Risk · Routing]
    end
    subgraph P1["Pillar 1: Security (19)"]
        SC[DLP · Audit · Encryption · MFA · eDiscovery]
    end

    P1 --> P2 --> P3 --> P4

    style P1 fill:#42A5F5,color:#fff
    style P2 fill:#66BB6A,color:#fff
    style P3 fill:#FFA726,color:#fff
    style P4 fill:#AB47BC,color:#fff

Three Governance Zones

Zone	Level	Risk	Data Access	Approval
Zone 1: Personal	Low	Individual development	M365 Graph only	Self-service
Zone 2: Team	Medium	Departmental agents	Internal data	Manager approval
Zone 3: Enterprise	High	Production/customer-facing	Regulated data	Governance committee

---

🔺 Governance Fundamentals

Effective agent governance operates through three interconnected layers that work together to ensure secure, compliant AI deployment.

graph TB
    subgraph Triangle["Governance Triangle"]
        direction TB
        Policy["🛡️ Policy<br/>Technical Controls & Guardrails"]
        Process["⚙️ Process<br/>Operational Workflows"]
        People["👥 People<br/>Roles & Responsibilities"]
    end

    Policy --> Process
    Process --> People
    People --> Policy

    style Policy fill:#42A5F5,color:#fff
    style Process fill:#66BB6A,color:#fff
    style People fill:#FFA726,color:#fff

Policy Layer (Technical Controls)

The policy layer establishes automated guardrails that enforce governance without manual intervention:

Component	Purpose	Implementation
Environment Groups	Consistent policy across environments	Environment groups
Group Rules	Connector, sharing, channel controls	Environment group rules
DLP Policies	Data boundary enforcement	Data policies
Environment Routing	Automatic maker placement	Environment routing

Process Layer (Operational Workflows)

The process layer defines how governance decisions are made and executed:

• Agent Lifecycle Management - Creation, testing, deployment, monitoring, retirement
• Approval Workflows - Zone-appropriate authorization paths
• Change Control - Controlled promotion between environments
• Incident Response - Detection, investigation, remediation procedures
• Compliance Reviews - Scheduled verification of control effectiveness

See Governance and security best practices for detailed process guidance.

People Layer (Organizational Structure)

The people layer assigns accountability and ensures human oversight:

Role	Governance Function	Zone Focus
AI Governance Lead	Framework ownership, policy decisions	All zones
Power Platform Admin	Technical implementation, environment management	Zones 2-3
Compliance Officer	Regulatory alignment, audit coordination	Zones 2-3
Business Owner	Agent sponsorship, use case validation	Per agent
Security / CISO	Threat monitoring, incident response	Zone 3

How the Layers Interact

1. Policy enables Process - Technical controls automate workflow enforcement
2. Process guides People - Defined procedures clarify responsibilities
3. People inform Policy - Human judgment shapes control configuration

FSI Note

In regulated environments, all three layers must be documented and auditable. Examiners expect evidence of policy configuration, process execution, and role assignment.

---

📁 What's Included

Control Files (48 Total)

• Pillar 1: 19 Security Controls (1.1-1.19)
• Pillar 2: 15 Management Controls (2.1-2.15)
• Pillar 3: 9 Reporting Controls (3.1-3.9)
• Pillar 4: 5 SharePoint Controls (4.1-4.5)

Each control includes:

• Overview and regulatory reference
• 3 governance levels (Baseline, Recommended, Regulated)
• Verification and testing procedures
• Implementation guidance

Documentation Files

• Overview - This page (framework introduction)
• Quick Start - How to start using the framework
• Zones Guide - Zone 1/2/3 classification and requirements
• Lifecycle Governance - Governance lifecycle and review cadence
• Implementation Checklist - Practical rollout checklist
• Glossary - Key terms and definitions
• RACI Matrix - Roles and responsibilities
• Regulatory Mappings - Regulation-to-control mapping
• FAQ - Frequently asked questions

Supporting Files

• CONTROL-INDEX.md - Master index of all controls
• Administrator Excel Templates - Role-specific checklists and dashboards (see Downloads)
• Microsoft Learn URLs - Master list of official documentation links used in this framework

---

🚀 Quick Start

For First-Time Users

1. Read Quick Start (10 minutes)
2. Review Zones Guide to classify your agents (15 minutes)
3. Check Regulatory Mappings for your relevant regulations (10 minutes)

For Implementation

1. Use the Implementation Checklist for step-by-step guidance
2. Reference individual control files for detailed procedures
3. Document evidence in your compliance system
4. Schedule quarterly reviews

For Governance

1. Use the RACI Matrix to assign roles and responsibilities
2. Establish governance committee per the Zones Guide
3. Schedule recurring compliance reviews
4. Track incidents and remediation

---

Regulatory Coverage

Regulatory mappings and coverage are maintained in a single canonical table.

• See Regulatory Mappings

Note

Coverage indicates which framework controls address aspects of each regulation. Actual compliance requires implementation, validation, and ongoing maintenance. Consult legal counsel for regulatory interpretation.

---

💡 Key Concepts

Governance Maturity Levels

Each control is documented with 4 maturity levels:

• Level 0: Not implemented
• Level 1: Baseline (minimal compliance)
• Level 2-3: Recommended (best practices)
• Level 4: Regulated/High-Risk (comprehensive)

graph LR
    L0[Level 0<br/>Not Implemented]
    L1[Level 1<br/>Baseline]
    L23[Level 2-3<br/>Recommended]
    L4[Level 4<br/>Regulated]

    L0 --> L1 --> L23 --> L4

    style L0 fill:#EF5350,color:#fff
    style L1 fill:#FFA726,color:#fff
    style L23 fill:#42A5F5,color:#fff
    style L4 fill:#66BB6A,color:#fff

Control Implementation Approach

1. Assess - Current state vs. required level
2. Implement - Follow control guidance
3. Verify - Use verification procedures
4. Document - Record evidence for audit
5. Review - Schedule recurring reviews (quarterly)

---

📋 Governance Roles

Key roles from the RACI Matrix:

Role	Responsibility
AI Governance Lead	Framework oversight, policy decisions
Compliance Officer	Regulatory alignment, audit coordination
CISO	Security policy, threat response
Power Platform Admin	Technical implementation, environments
Internal Audit	Independent control testing

---

🔧 Implementation Timeline

Typical 8-week rollout:

• Phase 1 (Weeks 1-2): Regulatory Compliance Baseline (11 tasks)
• Phase 2 (Weeks 3-4): Security Enhancements (10 tasks)
• Phase 3 (Weeks 5-6): Advanced Governance (8 tasks)
• Phase 4 (Weeks 7-8): Finalization & Operationalization (9 tasks)

See the Implementation Checklist for detailed tasks.

---

❓ Support & Questions

For Different Questions:

• "How do I get started?" → Read Quick Start
• "What's my governance zone?" → See Zones Guide
• "Which controls apply to my regulation?" → Check Regulatory Mappings
• "Who does what?" → Review RACI Matrix
• "What does this term mean?" → Look up Glossary.md
• "How do I implement this?" → Use the Implementation Checklist
• "Common questions?" → See FAQ.md

For Technical Implementation:

• Reference individual control files (1.1-4.5)
• Each control includes step-by-step verification procedures
• Contact your Power Platform Admin for platform-specific setup

For Regulatory Questions:

• Review Regulatory Mappings for regulation-to-control alignment
• Contact your Compliance Officer for regulatory interpretation
• Escalate to General Counsel for legal questions

---

📈 Continuous Improvement

This framework is designed for continuous evolution:

• Quarterly Reviews: Assess control effectiveness
• Annual Updates: Incorporate regulatory changes and Microsoft updates
• Version History: Track changes and improvements
• Feedback Loop: Gather input from governance team

---

📝 License

This framework is provided for use by financial services organizations. Modify as needed for your organization's specific requirements.

---

🎯 Next Steps

1. Review Quick Start
2. Assess your current state against the framework
3. Implement using the step-by-step guidance
4. Document evidence for audit compliance
5. Review quarterly and update as regulations change

---

FSI Agent Governance Framework Beta - December 2025
Comprehensive governance for Microsoft 365 agents in financial services