Shadow IT: turning risk into reward

Pravesh Kara at Advania UK argues that Shadow AI can’t be banned – but it must be managed

 

Right now, workplaces are filled with AI. From large language models to embedded assistants, these tools are everywhere. While headlines spotlight official rollouts like Microsoft Copilot at the organisational level, another shift is quietly happening in the background: employees using AI on their own, without approval or oversight.

 

It’s called Shadow AI, and many organisations don’t realise they’re already in deep. Shadow AI isn’t malicious, but it is risky

 

This isn’t about rogue behaviour from individuals (although that can obviously happen). It’s about the entirely natural action of employees trying to be more efficient. A marketing exec uses a generative AI tool to shape a presentation. An HR officer screens CVs with a chatbot. A finance analyst pastes confidential numbers into an AI prompt to polish a report. None of it is malicious, but all of it carries risk.

 

As businesses accelerate AI adoption, tech and compliance professionals warn that this trend is gaining ground fast. The tools themselves aren’t necessarily the issue – it’s the lack of governance surrounding them. 

 

What makes Shadow AI so tricky is that many tools aren’t obviously AI at all. They’re baked into the platforms people use every day – Notion, Adobe, Slack – often without clear labels or warnings. If your teams are using features you didn’t even know existed, how can you track what data is being shared or where it’s going?

 

Speed is another factor. AI tools offer instant results, while official sign-off processes can take weeks, sometimes months. Employees don’t want to break rules – but when the tool they need to fix an immediate problem is just a click away, waiting feels like a luxury they can’t afford.

 

 

What are the stakes?

We’ve seen this before. Think back to the rise of BYOD (Bring Your Own Device), or when staff quietly signed up for free cloud services to get work done. Shadow AI is the latest evolution – only this time, the stakes feel a lot higher. These tools do a lot more than store information; they analyse it, learn from it, and help make decisions.

 

That opens the door to serious consequences, including but not limited to data privacy violations, regulatory breaches, biased hiring outcomes, and reputational fallout. All it takes is one department, using one tool the wrong way, and a compliance Pandora’s box is opened. 

 

IT-managed, “contained” AI tools are relatively easy to govern. But Shadow AI slips through the cracks, largely because it feels harmless. That’s what makes it dangerous. One well-meaning mistake can trigger significant fallout.

 

So what’s the answer? It’s not banning AI. That approach rarely works; employees just go further underground. You can’t uninvent these tools, and you can’t unsee the possibilities. 

 

Instead, the solution lies in acceptance and structure. Leading organisations aren’t ignoring Shadow AI, they’re just managing it with smart frameworks and clear, actionable guidance.

 

These actions include: 

• Defining and communicating to employees which AI tools are approved – and which aren’t
• Setting simple rules for what types of data can be used with AI, and what must stay out of prompts
• Tailoring training to different teams, recognising that what’s risky in HR may be fine in marketing
• Reworking procurement and sign-off processes to allow faster, safer adoption of low-cost tools
• Leveraging cloud application security and data loss prevention technologies to detect and prevent the movement of sensitive data

 

A new leadership challenge

Forward-thinking businesses are building these controls while navigating evolving regulations. And the consistent message they’re hearing? People want to use AI. They just need the support to do it safely. 

 

Ultimately, Shadow AI isn’t a tech issue – it’s a leadership challenge. The organisations that face it head-on will gain a competitive edge: greater efficiency, reduced compliance risk, and a workforce that feels empowered, not restricted. Those that don’t? They may be caught off guard by a regulator, a breach, or an employee who just didn’t understand the organisational implications of a personally expedient decision. 

 

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Pravesh Kara is Product Director - Security & Compliance at Advania UK

 

Main image courtesy of iStockPhoto.com and skynesher