Shadow AI: why it happens, and how to mitigate the risks
Artificial intelligence offers your employees the power to boost their productivity, automate tasks, and free up their time to work on more important, stimulating stuff.
Ultimately, the result is people having a better time at work, while making a greater positive impact on your bottom line.
What’s not to love? With these benefits comes a growing challenge: shadow AI.
Shadow AI occurs when employees use AI tools without their employer's knowledge or approval. This is especially common with generative AI tools, and many people have done it – maybe even you or your colleagues.
Can widely used tools like ChatGPT really pose such a threat?
According to Gartner, they can – and that’s why 48% of HR leaders are finalising guidelines for its use. Forrester warned businesses to prepare before the phenomenon grows out of control, into a ‘shadow pandemic’.
Understanding why shadow AI occurs and how to mitigate the risks is crucial for organisations to harness the power of AI safely and effectively.
Why does shadow AI occur?
In short, employees turn to shadow AI because it helps them do their jobs better.
Automating repetitive tasks, summarising, drafting, and even solving complex problems – all these functions make day-to-day work more efficient, and boost employee quality of life by allowing them to save time and focus on the things machines can’t do.
But what if you’re not putting the right tools in the hands of employees?
They’ll find their own. This can be motivated by factors like pressure to stay competitive, and slow AI adoption limiting productivity.
The risks of shadow AI
Shadow AI can lead to a host of issues, from security breaches to regulatory non-compliance. Here are key concerns to look out for:
- Data privacy and security: AI tools often process large volumes of data, which may include sensitive personal or organisational information. Using unauthorised AI platforms increases the risk of data leaks and breaches. This can lead to violations of privacy laws like GDPR, resulting in fines and reputational damage.
- Lack of visibility and accountability: With AI operating outside of formal governance frameworks, oversight of how insights are used and how decisions are made can be lacking, leading to poor accountability.
- Legal and compliance risks: Unapproved AI tools may not be compliant. As new AI regulations continue to be published globally, businesses will face increasing regulatory scrutiny. Shadow AI could lead to inadvertent legal violations.
- Misuse of AI-generated insights: Without training, employees may misinterpret and misuse AI-generated insights, leading to poor decisions. AI is only as good as the data that goes in. Without the right skills, employees can find themselves relying on flawed outputs.
How to mitigate shadow AI
To combat shadow AI, businesses must be proactive. The solution isn’t to restrict access to AI entirely but quite the opposite: ensure employees have the tools and training they need to use AI responsibly.
- Provide company-approved, effective AI tools: This way, employees don’t turn to unauthorised options, reducing the risk of data breaches and non-compliance.
- Establish clear AI policies: Outline which tools are permitted and how they should be used. Regularly update these in step with evolving technology, and engage your employees. Gartner found that the main obstacle to building AI policy and governance was skills gaps.
- Train employees on AI best practices: Education is the most effective way to reduce the risks of shadow AI. Employees need to understand both the advantages and potential dangers of using AI tools. By investing in training, businesses can empower their teams to use AI safely and ethically.
- Foster a culture of transparency: Encourage employees to be open about their AI needs and tool preferences. With effective dialogue, businesses can better support AI adoption and avoid the pitfalls of unauthorised use.
AI training to stay ahead
Shadow AI is a growing challenge, but it’s one that businesses can tackle. By offering the right tools, clear policies, and comprehensive training, companies can harness the power of AI without compromising security or compliance.
The key to success lies in upskilling your team.
Don’t let shadow AI put your business at risk. Empower your team with the training they need to use AI responsibly, ensuring you meet the latest regulations.