Securing adoption in the era of shadow AI

Artificial intelligence (AI) is rapidly becoming embedded in the modern workplace, with employees are increasingly turning to AI tools to work more efficiently and boost productivity.

This growing demand for faster, more effective ways of working is driving the rise of shadow AI - the use of AI tools outside approved organizational controls and governance frameworks – which results in organizations quickly losing visibility into data usage and potential risks.

The scale of this challenge is significant.

While 90% of executives are confident in their organizations' visibility into AI tools, just 52% of employees admit to using AI tools without approval, often through personal accounts.

As a result, organizations are left grappling with a widening gap between AI adoption and AI governance.

The next frontier of AI risk When AI is used without formal oversight, it can bypass governance controls, increasing the risk of errors, regulatory breaches and sensitive data leakages.

Organizations are most exposed when AI is already influencing business-critical activities, from customer service and operational decision-making to software development and content creation.

The challenge will intensify as businesses move beyond large language models , which generate information, to large action models and agentic systems that can take action.

These systems can diagnose issues, recommend actions and execute workflows with minimum human input, increasing both the speed and scale at which mistakes occur.

A shadow agent operating outside approved governance frameworks could trigger harmful actions before organizations have the visibility and governance capabilities needed to intervene.

There is also a longer-term risk that future AI systems will be trained on synthetic or lower-quality data, weakening performance and decision-making over time.

Transparency and traceability will be critical to maintaining accountability, protecting ethical standards and preserving the effectiveness of AI systems as adoption continues to accelerate.

AI governance as an enabler What works is AI governance that enables innovation while putting clear guardrails in place that are integrated, transparent, auditable, and aligned with existing risk and compliance frameworks.

If AI is to be used safely, firms must be able to successfully identify exactly what went wrong and why when issues arise.