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As artificial intelligence becomes embedded in youth's digital lives, traditional digital literacy/cybersecurity education fails to address emerging threats in AI-driven cyberspace. This study employed contextual design methodology to collaboratively develop an AI safety education program with thirteen K12 teachers through four co-design sessions. Teachers identified three high-risk areas that need urgent education intervention: AI-generated misinformation, privacy risks in AI systems, and AI algorithmic addiction. The collaborative process resulted in interactive online modules that provide experiential learning for youth to understand and safely navigate AI-driven systems. Findings reveal significant gaps in teachers' AI knowledge and institutional support, highlighting urgent needs for professional development and comprehensive AI safety curricula that address the complex, dynamic nature of AI-mediated risks facing today's youth.