We are feeding our proprietary operating procedures into public LLMs to build employee training modules, but our board is terrified we are leaking our intellectual property and destroying our enterprise valuation. How do we safeguard our IP?

Question

Tyler Smith · Accepted Answer

Unregulated use of public generative AI models poses a severe threat to your company valuation. When employees paste proprietary operating procedures, client lists, or custom methodologies into public LLMs, that data often becomes part of the public training set, destroying your intellectual property moat.

To protect your valuation, you must address this issue immediately using the IDS process on your leadership team. Start by defining clear boundaries on your Accountability Chart. The Integrator or a designated technical leader must own the seat responsible for data governance and AI security.

Next, establish a strict internal AI policy. Distinguish between public tools and secure, private instances. If you are preparing your business for a future exit, buyers will conduct thorough due diligence on your data security. An absolute valuation of your business relies on cash flows generated by defensible assets. If your core IP has been leaked into public models, a buyer will discount your relative valuation multiple, viewing your business as easily replicable.

Train your team to understand the difference between public playgrounds and secured enterprise environments. Ensure that any tool utilized by your staff operates within a closed database where your data is never used to train external models. This safeguards your unique methodology, preserves your enterprise value, and ensures your strategic assets remain proprietary.