Managing Shadow AI Risks: How Businesses Can Stay Secure While Using AI Tools
Artificial intelligence tools are transforming the workplace — fast. From writing emails to summarizing reports, employees are using AI to save time and boost output. But when these tools are used without approval or oversight, they create what cybersecurity experts call Shadow AI — and it’s quietly becoming one of the biggest data security risks for small and mid-sized businesses in Washington.
According to Netskope’s 2025 Cloud & AI Report, organizations now use an average of 15 different generative AI apps, many of which are unapproved. Data uploads to AI platforms are climbing every month — a clear sign that convenience is outpacing caution.
🧠 What Is Shadow AI?
Shadow AI occurs when employees use unapproved AI tools to complete work tasks — often with good intentions, like saving time or improving quality. But because these tools may store or learn from uploaded content, it’s easy to accidentally expose sensitive business data, client information, or intellectual property.
Even a simple prompt like “help me rewrite this contract” could share private details with an external AI system, violating privacy or compliance rules such as HIPAA, GDPR, or state data-protection laws.
⚠️ The Hidden Risks
-
Data Leakage — Client lists, financial details, and internal notes can be exposed on public AI servers.
-
Compliance Violations — Using external chatbots may break confidentiality clauses or privacy agreements.
-
Bad Decisions — Employees might act on inaccurate or biased AI output without proper verification.
-
Expanded Attack Surface — Connecting internal tools to external AI platforms creates new cybersecurity vulnerabilities.
-
Delayed Discovery — Because Shadow AI often flies under IT’s radar, breaches or leaks may go unnoticed.
✅ How to Manage Shadow AI Safely
Forward-thinking businesses don’t ban AI, they govern it. With the right controls, you can unlock productivity while keeping your data secure.
-
Acknowledge & Discover
Run an internal check to identify all AI tools in use. Use monitoring tools to detect unauthorized AI activity or risky data transfers.
-
Create a Simple AI Use Policy
Publish a one-page guide outlining approved tools, acceptable use, and what employees must never paste into an AI prompt (like PII or client data).
-
Provide Safe Alternatives
Give your team secure, enterprise-grade AI tools, such as Microsoft Copilot or Gemini for Business, to make the secure option the easiest option.
-
Train Employees
Host short sessions or simulations to show real examples of AI misuse and how to “trust but verify” AI outputs.
-
Monitor & Enforce
Use data-loss prevention (DLP) tools to catch unusual uploads or API connections to generative AI platforms.
-
Review Vendors & Contracts
Ask third-party vendors how they handle data and add AI governance language to your contracts and incident response plans.
🧩 Quick Wins You Can Do This Week
-
Survey your team — Ask what AI tools they use and why.
-
Post a “Do Not Share” list — One page showing exactly what data must never be entered into public AI tools.
-
Host a 30-minute briefing — Teach one specific safe practice, like redacting sensitive fields before using an AI assistant.
🔒 The Takeaway
Shadow AI isn’t about having bad employees; it’s about the absence of essential guardrails. With smart AI governance and practical training, businesses can harness AI’s power safely without exposing client or company data.
At CircleTwice, we help Washington businesses manage AI governance, prevent AI-related data leaks, and build a cyber-aware culture through practical training and policy design.
📞 Ready to safeguard your business while keeping AI productivity?
Contact CircleTwice today to schedule a consultation and learn how our AI security training can help you stay compliant, efficient, and protected.
