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Generative AI is transforming workplaces, making teams and individuals more productive than ever before. According to ̽»¨´óÉñ’s Q1’25 SME IT Trends research report, 33% feel the impact of AI is
even greater than they thought it would be just six months ago. And almost 4 out of 5 respondents are accelerating their plans to implement AI initiatives since we asked them last summer.

But it also comes with serious security risks due to a lack of oversight and control.

Sensitive information, like customer data and financial plans, is being unintentionally exposed. IT leaders need to act now to address the growing challenge of shadow AI.

The Security and Compliance Risks of Shadow AI 

Shadow AI refers to the unsanctioned use of artificial intelligence tools within organizations. While employees turn to these tools to increase productivity, their usage often bypasses IT’s governance frameworks, creating a perfect storm for data leakage, non-compliance with regulations, and reputational risk. 

According to a recent report, nearly 90% of enterprise AI use occurs outside IT’s visibility, with corporate data shared with GenAI tools up to four times per day per user.

Here’s why the risks are escalating:

• Unauthorized Data Exposure: Generative AI tools store user inputs on external servers, which could include sensitive or proprietary data. 
• Non-Compliance with Regulations: Regulations like GDPR and HIPAA mandate strict control over data handling. Shadow AI use can result in hefty fines for violations. 
• Lack of Monitoring: Without visibility into unsanctioned applications, IT leaders can’t detect or mitigate risks in real time. 

The challenge is that many employees aren’t acting maliciously—they’re simply unaware of the risks. This issue requires a combination of education, clear policies, and technology to address.

Proactive Steps to Combat Data Leakage 

IT leaders need to move from reacting to threats to proactively addressing the risks of shadow AI. Here’s how to get started:

Set Clear AI Usage Policies

Define which AI tools are acceptable to use and establish clear guidelines for data sharing. Keep these policies simple, visible, and easy to follow so employees understand the boundaries.

Offer Approved, Secure AI Tools

If employees are using AI tools to boost productivity, provide approved options that meet your organization’s security and compliance standards. This helps prevent them from turning to unapproved tools.

Use Monitoring and Management Tools

Invest in solutions like ̽»¨´óÉñ’s SaaS Management tool to track and manage AI tools across your organization. ̽»¨´óÉñ helps IT teams:

• See all SaaS tools in use, both approved and unapproved, in one view. 
• Block unauthorized tools and domains to ensure compliance. 
• Enable Single Sign-On (SSO) for secure access to SaaS apps. 
• Reduce SaaS costs by identifying and fixing spending gaps. 

Train Employees on Best Practices

Educate employees on data security, compliance, and the risks of using unauthorized tools. A well-informed team is your best defense against shadow IT.

Enforce Multi-Factor Authentication (MFA)

Strengthen security by requiring MFA for accessing AI tools. This adds a critical layer of protection to ensure only authorized users can log in.

IT Leaders Need to Act Now 

̽»¨´óÉñ’s SaaS Management solution helps IT leaders take back control and manage shadow AI and other SaaS applications effectively. It provides clear visibility into and control over your ecosystem, keeping your organization’s data secure, compliant, and optimized.