What is shadow AI?

Shadow AI is employees using AI tools their company has not approved or does not know about. A common example is pasting customer details or contract terms into a personal ChatGPT account to finish a task faster. The term comes from “shadow IT”, meaning software staff use without the IT team’s approval.

Why it matters for a business

On a personal or free account the company has no contract with the provider, no say over whether the text is kept or used for training, and no record that it happened. Consumer terms also change through an update nobody at the company reads. The control that works is ordinary policy rather than a ban: approved tools on company accounts that are the easiest ones to reach, and a short written list of what never goes into any AI tool.

Example

Let’s say a renewals manager pastes a signed customer contract into a personal chatbot account to find the notice period. The answer is right. The contract now sits on a provider’s servers under terms the employee accepted alone, and nobody in the business knows it is there.

Go deeper

The 4 risks of using AI in business

Related terms

• AI governance
• Responsible AI
• AI memory
• Private LLM

All terms, A to Z