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AI Vocabulary · 07 When It Goes Wrong

What is Shadow AI?

AI tools employees use for work without the company knowing or approving them.

Basic

Shadow AI is the AI version of shadow IT: people use chat assistants, browser extensions, transcription bots or AI features in other apps on their own initiative, often with personal accounts. Usually they mean well; they just want to get work done faster.

The risk is that nobody knows which company or customer data goes where, under which terms, and whether it is used for training. It is one of the most common routes to data leakage.

Why it matters for you

If your company has no approved AI tools, your team almost certainly uses unapproved ones. Banning AI rarely stops it; it only makes it invisible.

Own it

Bring it into the light: ask openly which tools people use and for what, provide good approved alternatives, and write a short AI policy. Pair it with training, so people understand why the rules exist.

Where it comes from

Shadow AI is a newer twist on shadow IT, the long-standing term for software and devices people use at work without the IT department's approval. When chat assistants became freely available in late 2022, the pattern repeated with AI, and security and IT vendors began using "shadow AI" for it. There is no single documented coiner; the term grew out of practice.

Related

Data LeakageAI PolicyTraining on Your DataAI LiteracyData Processing Agreement (DPA)

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