Managing Shadow AI in the Workplace

Artificial intelligence is rapidly becoming part of everyday business operations. From drafting emails to analysing data, employees are increasingly turning to tools like ChatGPT, Claude or other public AI platforms to work faster. But when these tools are used without approval this creates what is known as Shadow AI.

Using AI itself isn’t the problem, when used correctly AI can make work easier, improve productivity and help teams focus on more important tasks. It enables employees to move faster, make better decisions and reduce time spent on repetitive work.

The challenge comes when these tools are used without clear guidance and oversight. Well intentioned use of AI can quickly introduce risks around data security and compliance, turning a quick productivity boost into a potential business vulnerability.

What is Shadow AI?

Shadow AI refers to employees using unapproved AI tools without the knowledge of IT or security teams and it is far more common than many organisations realise. While the intention is often harmless (saving time or improving productivity) the risks can be significant to a business.

The Hidden Risks of Shadow AI

Data Exposure

One of the biggest concerns is data exposure as many public AI tools process and store information externally. If an employee uploads sensitive company data, that information may leave your organisation’s control.

Consider this simple example: someone in the Accounts Team uploads meeting notes into a public AI tool to summarise key actions. Those notes may include financial figures, supplier details or internal strategy/planning. Without realising it, they’ve potentially shared confidential business data outside the organisation.

Compliance Issues

Another scenario could involve HR using AI to rewrite employee feedback or generate reports. If personal or sensitive employee information is included, this could lead to compliance breaches, especially under regulations like GDPR.

Accuracy and Reputation Risks

There are also quality and reputational risks as AI-generated outputs can be inaccurate or misleading and if used without review, could damage customer trust or lead to poor business decisions.

How to Find and Control Shadow AI

Gain Visibility

The first step is visibility as you cannot control what you cannot see and Shadow AI often exists in browsers, apps and personal accounts, completely outside traditional IT monitoring. Many organisations are surprised to discover just how many tools are being used without approval.

Gaining insight into this activity allows you to understand where data may be flowing and which tools are being accessed. Once you have that visibility, you can begin to take control by blocking high risk platforms or limiting access where appropriate.

Implement Governance

Alongside visibility, strong governance is essential. This means defining which AI tools are approved, what type of data can be shared and how these tools should be used within the business so that employees have clear, practical guidance that they can follow.

Educate Your Team

Education plays a key role in reducing Shadow AI. Many employees simply do not realise the impact of uploading sensitive information into public tools.

By providing regular awareness training and simple, real-world examples, businesses can help users make better decisions. When employees understand both the benefits and the risks of AI, they are far more likely to use it responsibly.

Taking Control of Shadow AI

At DNS, we help organisations uncover and manage Shadow AI. We can search for “shadow AI” within your environment, identify unauthorised tools and help you block or limit access where needed.

The reality is simple: the more people use AI within your business, the more this risk will grow. Having control over what users can and can’t access is no longer optional, it’s essential.

If you want to strengthen your cyber security and take control of Shadow AI, contact DNS today.