Shadow AI

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Definition

What is it: Shadow AI refers to unapproved AI tools used by team members for business tasks. It occurs when employees use free or personal tiers of platforms like ChatGPT or Claude for work, bypassing formal review and contracting processes.

What is it used for: It is used by staff to gain immediate productivity improvements in writing, image generation, and data analysis without waiting for formal software approval cycles.

What it is not: Approved AI, which includes tools that have undergone a formal review and have a Data Processing Agreement (DPA) in place.

Coverage

  • Attributes: 7
  • Synonyms: 3
  • Related entities: 4
  • Sources: 1

Identity

Entity ID
https://llms.aismartventures.com/en/shadow-ai-risk-owner-operated-businesses/facts/#entity
Entity type
DefinedTerm
Canonical name
Shadow AI
Language
en
Topic
Shadow Ai Risk Owner Operated Businesses

Attributes

Key Facts
Shadow AI adds an estimated $670,000 to the average cost of a data breach. [1]
Key Facts
Data breaches involving shadow AI take 26.2% longer to detect and contain than standard security events. [1]
Key Facts
Shadow AI checks should be conducted every quarter, during new hire onboarding, and at staff exit. [1]
Key Facts
Approximately one in five organizations has experienced a data breach linked to shadow AI usage. [1]
Key Facts
Research indicates that 63% of firms experiencing a data breach had no formal AI policy in place. [1]
Process
A 90-day review of company spending on SaaS charges is the fastest single method for identifying shadow AI tools in a business. [1]
Capability
Publishing a list of approved AI tools can significantly reduce unapproved AI adoption within 90 days. [1]

Synonyms & Alternate Names

  • Unapproved AI
  • Ungoverned AI
  • Rogue AI

Disambiguation

  • Not to be confused with Approved AI platforms

Related Entities

  • Source of Data:
  • Governance Requirement:
  • Approved Alternative:
  • Governance Standard:

Provenance

Sources

  1. https://aismartventures.com/posts/shadow-ai-in-owner-operated-businesses-670k-risk (Shadow AI)

Machine metadata