How to Align Microsoft 365 Copilot with Essential Eight Controls in Australia

Aligning Microsoft 365 Copilot with the ACSC Essential Eight requires deliberate configuration work across all eight mitigation strategies — Copilot does not arrive pre-configured to meet Australian government security standards. This guide walks through exactly what you need to do, control by control, to achieve demonstrable alignment.

Why Copilot Creates Essential Eight Scope

Before diving into the how-to steps, it is worth being direct about why Copilot changes your Essential Eight compliance picture rather than leaving it unchanged.

Microsoft 365 Copilot is a generative AI system that queries your Microsoft 365 data estate — emails, documents, Teams conversations, calendar entries — and synthesises responses using large language model technology. That capability introduces three new attack surfaces that map directly to Essential Eight controls:

• Identity compromise has higher value. A compromised account with Copilot access can exfiltrate aggregated intelligence that would otherwise require reviewing hundreds of documents individually. This increases the priority of MFA and privileged access controls.
• Plugin execution extends the application control boundary. Copilot plugins execute code within your Microsoft 365 environment. Without a formal plugin approval process, you have an application control gap.
• AI-generated responses can traverse data classification boundaries. Without sensitivity label controls, Copilot can surface protected information in contexts that breach your data handling obligations.

Take the free Copilot Essential Eight Alignment Assessment to establish your current baseline before working through the steps below. For the full mapping rationale, see the pillar guide on mapping Copilot to Essential Eight Maturity Level 2.

Control 1: Application Control

What the control requires: Only approved applications can execute in your environment. At Maturity Level 2, this includes executables, scripts, and libraries — and by extension, Copilot plugins and extensions.

How to align Copilot:

1. Navigate to the Microsoft 365 admin centre and select Settings > Integrated apps.
2. Set the default state for user-deployed apps to Blocked — this prevents users from enabling Copilot plugins without IT approval.
3. Create a formal plugin assessment process. For each requested plugin, assess: the publisher's security posture, data access scope (what Microsoft Graph permissions does the plugin request?), and whether the vendor is covered by your existing supplier agreements.
4. Approved plugins are deployed centrally via the Integrated Apps catalogue — users cannot self-install.
5. Document the approved plugin list and review it quarterly. Treat any unapproved plugin discovered through Microsoft Purview audit logs as an application control incident.

Common gap: Most organisations deploy Copilot with user-controlled plugin settings left at the default permissive state. This is an immediate ML2 application control failure.

Control 2: Patch Management

What the control requires: At ML2, internet-facing services must be patched within 48 hours of a critical vulnerability being identified. Microsoft 365 is a SaaS platform, and patching is primarily Microsoft's responsibility — but your obligation is to track security advisories and assess impact.

How to align Copilot:

1. Subscribe to the Microsoft 365 Message Centre in your admin centre and configure email digest notifications to your security team.
2. Subscribe to Microsoft Security Response Centre (MSRC) advisories filtered to the Microsoft 365 and Copilot product families.
3. Establish a documented process: when a Copilot-related security advisory is published, the security team has 24 hours to assess impact and 48 hours to implement any required configuration change (such as disabling a vulnerable feature or applying an admin-centre setting change).
4. For Copilot plugins from third-party vendors, apply the same 48-hour patch timeline. If a plugin vendor issues a security advisory and you cannot patch within 48 hours, disable the plugin until patching is complete.
5. Log all advisory reviews and responses in your change management system as evidence for auditors.

Common gap: Treating Microsoft 365 as a "patched automatically" platform and failing to track the advisory response timeline is a common audit finding.

Control 3: Configure Microsoft Office Macro Settings

What the control requires: Office macros from the internet are blocked; only macros from trusted locations or digitally signed macros can execute.

How to align Copilot:

1. This control does not change because of Copilot, but Copilot can be used to generate macro code — making macro control more important, not less.
2. Verify your Microsoft 365 Apps for Business/Enterprise Group Policy or Intune configuration blocks VBA macros from internet-sourced files.
3. Add a specific Copilot acceptable use provision: users must not ask Copilot to generate macro scripts that will be used outside of the approved macro signing and deployment process.
4. Monitor Microsoft Purview audit logs for Copilot interactions that reference macros or scripts — these warrant additional review.

Control 4: User Application Hardening

What the control requires: Web browsers and other user applications are hardened to reduce the attack surface — for example, disabling Flash, Java plugins in browsers, and blocking unnecessary application features.

How to align Copilot:

1. Ensure Microsoft Edge is deployed as the primary browser via Intune, with the Microsoft Copilot browser extension controlled through Edge management policies.
2. Configure the Microsoft Edge Copilot extension policy: in Microsoft Entra admin centre, restrict the Copilot web companion to approved domains only, preventing it from accessing unapproved external sites.
3. Block the installation of alternative AI browser extensions (ChatGPT, Gemini, etc.) via Edge extension management — these represent out-of-scope AI data flows that undermine your Copilot governance controls.
4. Apply Microsoft 365 Apps update policies via Intune to ensure Copilot feature updates are deployed within your approved change window.

Control 5: Restrict Administrative Privileges

What the control requires: Administrative privileges are minimised and only used for tasks requiring those privileges.

How to align Copilot:

1. Copilot access should not be granted to break-glass or emergency access admin accounts — these accounts have overprivileged access by design, and Copilot's data aggregation capability would expose sensitive information at scale.
2. Configure Copilot exclusions for Global Administrator accounts in the Microsoft 365 admin centre under Copilot > User management.
3. Implement Privileged Identity Management (PIM) for all admin roles before expanding Copilot access — Copilot's graph-level access to your data estate makes admin account protection critical.
4. Review the Microsoft 365 Copilot admin activity in Purview audit logs separately from standard user activity — admin Copilot queries have elevated risk and warrant closer monitoring.

Control 6: Patch Operating Systems

What the control requires: Operating systems are patched within defined timeframes based on criticality.

How to align Copilot:

1. Copilot works across Windows, macOS, iOS, and Android. Ensure all devices accessing Copilot are enrolled in Intune and report compliance with your OS patching policy.
2. Create a Conditional Access policy in Entra ID that requires device compliance (including OS patch status) as a condition for Copilot access. This enforces the link between OS patch status and Copilot access rights.
3. Devices that fall out of patch compliance should automatically lose Copilot access through the Conditional Access enforcement — this is the most practical way to operationalise the control without manual oversight.

Control 7: Multi-Factor Authentication

What the control requires: MFA is enforced for all users accessing systems that hold sensitive data. At ML2, MFA is required for all internet-facing services and for all privileged access.

How to align Copilot:

1. Create a dedicated Conditional Access policy for Copilot access that enforces phishing-resistant MFA — specifically FIDO2 security keys or Windows Hello for Business, not SMS or voice OTP.
2. In the Entra ID Conditional Access policy, scope the policy to the Microsoft Copilot cloud application (app ID: 0000003-0000-0ff1-ce00-000000000000 for Microsoft 365 core services; identify the specific Copilot app entries in your tenant).
3. Enable Entra ID sign-in risk-based Conditional Access: if a sign-in is assessed as medium or high risk, block Copilot access regardless of MFA status until the risk is resolved.
4. Review MFA registration reports monthly. Users who have not registered phishing-resistant MFA should not have Copilot licences activated — the value of Copilot to an attacker with a compromised credential is too high to accept weaker MFA methods.

Control 8: Regular Backups

What the control requires: Data is backed up, backups are tested, and backups are protected from ransomware.

How to align Copilot:

1. Copilot does not independently store data — it queries your Microsoft 365 estate. The backup obligation applies to the underlying data stores: Exchange Online, SharePoint, OneDrive, and Teams.
2. Ensure your Microsoft 365 backup solution covers all data sources that Copilot queries. If Copilot can access data, that data must be within your backup scope.
3. Copilot activity creates audit log entries. Ensure Microsoft Purview audit log retention is configured for at least 12 months (ML2 requirement) — audit logs are evidence artefacts and must be protected from tampering.
4. Test backup and restore procedures annually, including a restoration test for SharePoint document libraries that contain data your Copilot deployment queries most frequently.

Building Your Evidence Pack

Once you have implemented the controls above, you need to document them for audit purposes. An Essential Eight evidence pack for Copilot should include:

• Application control: Screenshots of the Integrated Apps admin settings showing approved plugin list and block-by-default configuration.
• Patch management: Advisory subscription confirmation and a log of the last four Copilot-related MSRC advisories reviewed, with assessment dates and responses.
• MFA: Conditional Access policy export showing Copilot-scoped MFA requirement and phishing-resistant method enforcement.
• Privileged access: PIM configuration evidence and Copilot exclusion settings for admin accounts.
• Audit logging: Purview audit retention configuration showing 12-month or greater retention for Copilot activity logs.

The free Copilot Essential Eight Alignment Assessment generates a structured gap report that maps to these evidence categories — use it to prioritise your remediation work before building your evidence pack.

Next Steps

Working through all eight controls simultaneously is not realistic for most Australian organisations. Prioritise in this order based on risk impact:

1. MFA (highest risk reduction, fastest to implement with Conditional Access)
2. Application control (plugin governance closes an immediate gap in most deployments)
3. Privileged access restrictions for Copilot
4. Patch management process documentation
5. Remaining controls in order of your current maturity gaps

For detailed guidance on Maturity Level 2 specifics for application control and patch management in the context of Copilot, the next article in this series covers Copilot, Application Control and Patch Management: Satisfying Essential Eight ML2 in Australia with step-by-step PowerShell and admin centre configurations.