It’s there, lurking in the dark spaces of your office, hidden in your employees’ laptops: shadow AI. While approved AI tools are excellent for automating repetitive tasks, shadow AI is their untrustworthy counterpart. When your employees input private company data into an AI model, they trust that the information will remain private. With the right, approved AI tools, it does. With shadow AI, you can never be sure.
If you don’t know which AI tools your employees are using, your company data is at risk. Any information fed into unapproved “shadow AI” tools can be compromised.
This post sheds light on shadow AI, so you know how it differs from shadow IT, why it matters more than you might think, and what you can do about it.
What Is Shadow AI?
Shadow AI occurs when employees use AI tools without the knowledge or approval of company leadership or IT teams. It usually starts innocently, with staff adopting AI on their own to work faster and be more productive.
The problem isn’t the desire to be efficient. It’s the lack of oversight with unknown AI models. With shadow AI, no one is checking where your data goes or how it’s protected—or if it’s protected at all. Without proper oversight, your company data could be fed back when another user prompts that same AI tool.
Not quite sure what this could look like in your office? Here are examples of shadow AI in use:
- Employees using ChatGPT, Gemini, Claude, or other AI tools to give a summary of work documents
- Uploading client information into an AI chatbot for a summary or report
- Using AI meeting note-takers without approval
- Connecting AI tools to email, calendars, cloud drives, or CRMs
- Employees installing browser extensions that have AI features
- Logging in and using personal AI accounts for company work
- Generating code, contracts, marketing copy, or reports without review
What’s the Difference Between Shadow AI and Shadow IT?
The two terms sound similar, but the risk is different.
Shadow IT means employees are using an app or service the company doesn’t know about. For example, if an employee uses their personal Dropbox account to share work files because it’s faster than the company’s approved file-sharing system. The danger comes down to the fact that the company has no visibility or control over how that data is stored or who can access it.
Shadow AI means employees are putting company information into an AI tool that the company doesn’t know about. To take from a few of the earlier examples, an employee using ChatGPT to summarize a report or reply to an email.
The distinction matters. With shadow AI, your data may be used to train models, stored on outside servers, or exposed in ways you can’t control. Once that data is out there, there really is no way to take it back.
Shadow AI: The Risk You Didn’t Realize You Were Taking
AI can seem like it’s on your side, like a personal assistant that’s always available. But shadow AI carries risks, just like any other technology. Here’s a look at the risks you or your team are open to:
- Sensitive data can leave your control. Once it’s pasted into a tool, you can’t take it back.
- AI tools may not follow your security standards. Many AI tools simply do not meet the security standards required to keep your business safe.
- Employees may trust AI answers too much. In a recent accuracy study, AI hallucination rates across 26 top models ranged from 22% to 94%.
- AI tools can create new cybersecurity risks. Extensions and integrations are another way for attackers to access your network.
- You may not know which tools are in use. You can’t protect against a threat you don’t know is there.
What Should Business Owners Do About Shadow AI?
It isn’t possible, or even practical, to ban AI. The goal is to bring shadow AI into the light so you can use AI tools safely.
If you suspect your team is using shadow AI, it’s time to take action. Follow these five steps to increase your staff’s security awareness and ensure they use AI tools safely.
- Visibility: The first step is to find out which AI tools your team is already using.
- Create a clear AI usage policy: Define what’s allowed and what isn’t. Make sure everyone on the team is aware of the policy.
- Determine what data is off limits: Client records and financial details should never go into unapproved tools.
- Evaluate the approved AI tools that are already in use: Are your current tools secure and compliant? If you aren’t 100% sure, it’s time to review.
- Train employees on safe AI usage: Help your team understand the risks and the rules. When employees understand the reasoning behind the rules, they are more willing to comply.
Frequently Asked Questions
Is shadow AI always bad?
Not necessarily. AI tools can increase your team’s productivity. However, they become an issue when they are used without oversight, which can expose data and bypass your security standards.
Is shadow AI a problem for small businesses, or just large companies?
It affects businesses of every size. In fact, small businesses are often more vulnerable because they have fewer staff watching for security gaps.
What should a business include in an AI usage policy?
Include: approved tools, what data is off limits, and review requirements for AI-generated work. It should also clearly explain the risks and consequences of breaking the rules.
What is an example of shadow AI?
A common example is an employee pasting confidential client information into a free AI chatbot to draft an email, often not realizing that this information is kept by the AI model.
Time to See the Light About Shadow AI
Commit to using AI with intention and oversight, and you’ll have a powerful, productive, and protected tool to boost your employees’ performance.
Unity IT helps Fresno businesses secure their data and stay ahead of risks. Contact Unity IT today to schedule a consultation.