Artificial intelligence is transforming the way businesses work. Employees are using AI tools to write emails, summarise meetings, analyse data and create content faster than ever before.
The problem is that many businesses throughout Lancashire, is that they have no idea how much AI is actually being used within their business.
This growing trend is known as Shadow AI: the use of AI tools without formal approval, visibility or governance from the organisation.
While AI can achieve considerable productivity gains, uncontrolled adoption can introduce serious security, compliance and data protection risks.
What Is Shadow AI?
Shadow AI is similar to the concept of Shadow IT.
It occurs when employees use AI tools such as ChatGPT, Claude, Gemini or other generative AI platforms without the organisation’s knowledge or oversight.
Often, staff aren’t trying to break the rules. They’re simply looking for a quicker way to complete tasks.
They might paste meeting notes into an AI tool to generate actions, upload spreadsheets to analyse data, or ask an AI assistant to improve a customer proposal.
The intention is productivity.
The risk is the information being shared.
The Sensitive Data Problem
Most businesses hold valuable information, including:
- Customer records
- Financial data
- Contracts and legal documents
- Employee information
- Commercially sensitive plans and strategies
- Intellectual property
When employees use unapproved AI tools, this information can potentially leave the controlled business environment.
Without well-defined policies, users may not fully understand where their data is being stored, how long it is retained, or who can potentially access it.
In some cases, employees may not even realise they’re sharing sensitive information in the first place.
A Recent Example: Claude Shared Conversations
Recent reports involving Anthropic’s Claude platform highlight why AI governance matters.
Publicly shared Claude conversations were reportedly indexed by search engines, making some conversations discoverable online. Reports suggested that shared chats contained a range of information, including internal business data, employee reviews, credentials and other sensitive content. The issue wasn’t caused by a cyber attack, but by conversations that had been shared publicly and subsequently became searchable.
For businesses, this serves as an important reminder. The greatest risk is not always the technology itself. Sometimes the risk comes from users not fully understanding how the technology works.
Why Businesses Should Be Concerned
Shadow AI creates a number of challenges.
First, it introduces data security risks. Information may be uploaded to tools that fall outside the organisation’s security controls.
Second, it creates compliance concerns. Businesses operating within regulated sectors need to understand where data is being processed and stored.
Third, it increases the risk of incorrect or unverified information being used in business decisions. A human should always review AI-produced content before being relied upon.
Finally, Shadow AI creates a visibility problem. You cannot manage or secure something you don’t know exists.
The Safer Alternative
This doesn’t mean businesses should avoid AI.
In fact, businesses which embrace AI effectively are likely to gain significant competitive advantages.
The key is adopting AI within a controlled framework.
Enterprise platforms such as Microsoft Copilot for Business are built to operate within existing security, compliance and permission structures. They provide businesses with greater visibility and governance than many consumer-grade AI platforms.
However, technology alone isn’t enough.
Businesses also need well-defined policies, employee training and ongoing observation to ensure AI is being applied responsibly.
AI Readiness checklist blog: Is your business ready for AI?
How to Reduce Shadow AI Risk
Before rolling out AI across the business, businesses should:
- Define which AI tools are approved for use
- Create clear AI usage policies
- Educate employees on handling sensitive data
- Review access permissions and data governance
- Monitor for unauthorised AI applications
- Frequently assess emerging AI risks
AI Needs Governance, Not Fear
Shadow AI is becoming one of the biggest security challenges facing modern businesses, not because employees are acting maliciously, but because many are trying to work smarter.
The businesses that will benefit most from AI won’t be those that ban it.
They’ll be the businesses that embrace it with the right controls in place.
At Seriun, we help businesses securely adopt AI through governance, user education, Microsoft Copilot readiness and cyber security best practices. Because when it comes to AI, productivity and protection need to go hand in hand.