AI Glossary
Shadow AI
What is Shadow AI?
The use of AI tools by employees without official company approval, IT knowledge, or security review. Shadow AI is the AI equivalent of shadow IT — it typically arises when approved tools are absent or slow to procure, but carries significant compliance, data privacy, and liability risks when employees input confidential information into unapproved systems.
Example in practice
A compliance officer who discovers that three members of a finance team have been uploading client financial statements to a free AI summarisation tool — without IT approval or a data processing agreement — has identified a shadow AI risk.
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