Artificial intelligence is changing the way businesses operate. Employees are using AI to write emails, summarize meetings, analyze information, create reports, troubleshoot technical problems and streamline everyday tasks.
The productivity opportunities are enormous. But there is a growing concern that many organizations are overlooking: What happens when employees use AI without understanding the security risks or having company-approved guidelines in place?
This growing problem is known as Shadow AI — the use of artificial intelligence tools, applications and services without the knowledge, approval or oversight of an organization's IT or leadership teams.
And it is becoming a significant business risk.
The Problem: Employees Are Already Using AI
Employees don't necessarily turn to AI with bad intentions. More often, they are looking for ways to work smarter, save time and accomplish more.
An employee might paste a customer email into an AI chatbot to draft a response. A salesperson might upload a customer list to analyze opportunities. An IT employee might enter proprietary source code to troubleshoot an issue. A manager might upload an internal meeting transcript to generate a summary.
All of these activities may seem harmless. But without appropriate safeguards, they can expose confidential business information, customer data, intellectual property and sensitive company records to systems that have not been evaluated or approved.
A particularly well-known example involved Samsung. In 2023, employees entered confidential source code and internal meeting information into ChatGPT. The incidents highlighted how quickly well-intentioned productivity efforts can create serious information security concerns. https://www.techradar.com/news/samsung-workers-leaked-company-secrets-by-using-chatgpt?utm_source=chatgpt.com
The problem isn't that employees are using AI. The problem is that organizations often don't know how it is being used, what information is being shared or whether the tools have appropriate protections.
Five Ways Employees Can Put Your Business at Risk
1. Sharing Confidential Company Information
Employees may unknowingly submit customer records, financial information, employee details, contracts, passwords, source code or proprietary business information into public AI platforms.
Depending on the platform, subscription, configuration and data-handling terms, that information may be stored or processed outside the organization's security environment.
2. Trusting AI-Generated Information Without Verifying It
AI can produce answers that sound authoritative but are inaccurate, incomplete or entirely fabricated.
When employees use unverified AI-generated information in customer communications, financial reports, technical configurations or business decisions, the consequences can extend well beyond an embarrassing mistake.
3. Using Unapproved AI Applications
Employees may download browser extensions, install AI applications or connect third-party services without involving IT.
These tools may request access to email, documents, calendars, customer databases or other company resources. Without proper vendor reviews and access controls, organizations can lose visibility into where information is going.
4. Introducing Security Vulnerabilities
AI-generated code, scripts, configurations and technical recommendations are not automatically safe.
Employees who copy and deploy AI-generated code without appropriate testing and security review could introduce vulnerabilities into company systems.
AI-powered applications and agents can also introduce risks such as prompt injection, excessive permissions and unauthorized access to information.
5. Allowing AI to Make Decisions Without Human Oversight
AI should assist employees, not replace accountability.
Allowing AI to independently make important decisions involving customers, employees, financial transactions, security configurations or contractual commitments can create significant operational, legal and reputational exposure.
How Can Businesses Protect Themselves?
The answer isn't to prohibit AI altogether. Businesses that simply block AI may find employees using it anyway, often through personal accounts and unapproved applications.
Instead, organizations need a thoughtful AI governance strategy that allows employees to benefit from the technology while protecting company information.
Here are seven important safeguards every business should consider.
1. Establish a Clear AI Acceptable Use Policy
Create written guidelines explaining which AI tools employees may use, what information they may share and which activities require approval.
At a minimum, employees should understand:
- Which AI applications are approved for business use.
- What company, customer and employee information must never be entered into unapproved AI tools.
- Whether AI-generated content must be reviewed before being used or distributed.
- Which business activities require management, IT, legal or compliance approval.
- How to report accidental disclosure or suspicious AI activity.
Make the policy practical and easy to understand. Employees should know exactly what is acceptable and what is not.
2. Provide Company-Approved AI Tools
If employees are expected to use AI, give them secure tools that have been evaluated and approved by the organization.
Enterprise AI offerings may provide important protections such as administrative controls, identity management, audit capabilities, contractual data protections and restrictions on using customer prompts to train foundation models.
However, don't assume every AI subscription offers the same protections. Review the specific product, plan, settings and contractual terms before approving it.
For organizations using Microsoft 365, Microsoft Copilot's enterprise data protection capabilities are worth evaluating. When employees sign in with an eligible work account, the protections differ from using a personal AI account.
3. Implement Data Loss Prevention (DLP) and Access Controls
Technology should help enforce the policies you establish.
Consider implementing:
- Data Loss Prevention (DLP) policies to identify and restrict the sharing of sensitive information.
- Cloud Access Security Broker (CASB) or Secure Service Edge (SSE) capabilities to monitor and control access to cloud-based AI applications.
- Identity and access management to ensure employees can only access information appropriate to their roles.
- Multi-factor authentication and single sign-on for approved applications.
- Endpoint and network monitoring to identify unauthorized applications and unusual data transfers.
- Appropriate logging and auditing of AI application activity.
These controls help organizations identify risky behavior before it becomes a serious security incident.
4. Classify and Protect Your Business Data
Not all information carries the same level of risk.
Establish clear data classifications, such as public, internal, confidential and restricted.
Employees should understand that customer information, employee records, financial data, credentials, proprietary source code, contracts and sensitive business documents require additional protection.
Use technical controls to enforce those classifications wherever possible rather than relying entirely on employees to remember the rules.
5. Require Human Review and Accountability
AI-generated information should be treated as a starting point, not automatically as a final answer.
Require employees to verify important information before using it in customer communications, financial decisions, legal documents, technical configurations or other high-impact activities.
For AI agents capable of taking actions, establish additional restrictions. Limit their access to only what they need, require approval for sensitive actions and maintain an audit trail.
6. Train Employees on Responsible AI Use
A policy is only effective if employees understand it.
Provide practical training that demonstrates:
- What information should never be entered into public AI tools.
- How to recognize potentially unsafe AI applications.
- Why AI-generated answers must be verified.
- How to identify suspicious AI-generated content and prompt injection attempts.
- What to do if confidential information is accidentally shared.
Make responsible AI use part of your ongoing cybersecurity awareness program.
7. Conduct Regular AI Risk Assessments
AI technology is evolving rapidly. New applications, integrations and capabilities are appearing constantly.
Organizations should periodically review which AI tools are being used, whether employees are following established policies, what data is being accessed and whether existing security controls remain effective.
AI governance should be an ongoing part of your overall cybersecurity and IT risk management strategy, not a one-time policy exercise.
Where Should Your Business Start?
You don't have to implement everything at once. Start with a few practical steps:
- Identify: Find out which AI applications employees are already using, including tools built into existing software.
- Evaluate: Review the security, privacy, data retention and contractual protections of those applications.
- Establish: Create an acceptable use policy and identify approved AI tools.
- Protect: Implement appropriate identity, access, data loss prevention and monitoring controls.
- Educate: Train employees to recognize risks and use AI responsibly.
- Review: Reassess your policies, applications and security controls regularly.
The National Institute of Standards and Technology (NIST) provides a valuable starting point through its AI Risk Management Framework and Generative AI Profile. These resources help organizations establish a structured approach to identifying, evaluating and managing AI-related risks.
AI Is an Opportunity. Uncontrolled AI Is a Business Risk.
Artificial intelligence is not going away. Businesses that embrace it thoughtfully will have opportunities to improve productivity, enhance customer experiences and operate more efficiently.
But innovation should never come at the expense of security.
The organizations that succeed will be those that recognize AI as both a business opportunity and a technology that requires responsible oversight.
At PremCom, we believe that smarter technology decisions begin with a strong IT foundation. From cybersecurity and managed services to cloud infrastructure and employee awareness, protecting your business means preparing for the technologies your employees are already using.
Don't wait for an AI-related security incident to start asking questions. Put the right guardrails in place now.
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