Artificial intelligence has exploded into the workplace. Tools like ChatGPT, Google Gemini, Midjourney, and countless browser extensions are now part of people’s daily workflows. The problem? Most businesses don’t know it’s happening.
This is Shadow AI: the silent risk that’s growing inside organisations of every size.
In this blog, we’ll break down what Shadow AI is, why it’s spreading so quickly, and the risks businesses need to understand before it becomes costly, damaging, or unmanageable.
What Is Shadow AI?
Shadow AI refers to any use of AI tools, platforms, or automations that happen:
- Without approval
- Without monitoring
- Without governance
- Without security controls
In simple terms:
Shadow AI is when your employees use AI without your organisation knowing about it.
Examples of Shadow AI
Shadow AI includes things like:
- Putting customer data into ChatGPT to speed up emails
- Uploading internal documents into free AI tools
- Using unapproved browser extensions that scrape and analyse content
- Relaying private Teams messages into external AI tools for “summaries”
- Generating content (policies, reports, marketing copy) from unknown sources
As we can see from these examples, none of these actions bear ill intent; they are borne from employees trying to get their job done faster and efficiently.
Why Is Shadow AI Growing So Quickly?
Shadow AI is seeing huge growth because AI and GPTs are incredibly helpful and easy to access.
Employees aren’t waiting for businesses, managers or procurement to “approve” it. They’re turning to AI because:
- It makes admin faster
- It helps with writing tasks
- It saves time preparing reports and emails
- It gives quick insights
- It’s exciting and accessible
The challenge is that uncontrolled AI use bypasses every cyber defence your business has spent years building.
The Real Risks of Shadow AI
1. Data Leakage
Uploading customer or company data into free tools means losing control of it.
Even if tools claim privacy, you don’t control how the data is processed, stored, or used.
2. GDPR & Compliance Exposure
Most external AI tools are not GDPR-compliant for business use.
This exposes you to fines, breaches, and reputational damage.
3. Inaccurate or Harmful Information
AI can produce false or misleading information (“hallucinations”).
Without oversight, staff may report or act on incorrect outputs.
4. No Visibility or Accountability
If leaders don’t know who is using AI — or how — they can’t protect the business.
5. Loss of Confidentiality
Without governance, sensitive information can flow outside the organisation instantly.
How to Combat Shadow AI
Forward-thinking companies are not trying to ban AI. They’re working to replace Shadow AI with secure, approved AI tools that:
- Protects data
- Provides traceability
- Connects to existing systems
- Meets compliance standards
- Gives employees powerful, safe tools
This is where tools such as Microsoft Copilot comes in, and where IT Service Providers such as IT365 support clients in making AI work safely and strategically.
How IT Support Services Helps You Take Control of AI
Outsourced IT Support such as IT365 help organisations:
- Assess current AI usage
- Build governance and controls
- Deploy secure AI tools like Microsoft Copilot
- Create policies, training, and safe workflows
- Develop AI use cases that drive real value
The goal isn’t to restrict innovation, it’s to remove risk, increase productivity, and put your business back in control.
If you’d like help understanding where Shadow AI is happening in your organisation, IT365 can run an AI Readiness Assessment to give you clarity and actionable next steps.