Shadow AI is the use of AI systems or tools within an organization without the knowledge, approval or oversight of IT governance or risk areas.
Shadow AI represents one of the most significant emerging risks for organizations. Employees using generative AI tools, third-party APIs or own models without going through the organization's risk assessment, privacy and security processes. It can expose confidential data, generate legal risks and compromise critical process integrity.
Shadow AI is a subset of Shadow IT specific to AI tools. It shares the same governance risks but adds AI-specific risks like bias, hallucinations and data exposure to external models.
Through network traffic monitoring to known AI APIs, staff surveys, subscription expense review and browsing log analysis.
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