Employee use of ‘shadow AI’ poses significant risks for companies
By 
Neil Hodge2025-10-20T19:28:00
Companies may face significant financial and legal risks if they fail to vet suppliers and third parties over their use of unauthorized AI and how the technology may use and share their corporate data.
Experts also believe companies could be at risk of violating data privacy laws if, by using “shadow AI”, their information is passed on by vendors and contractors to train AI models without explicit consent, while potentially sensitive corporate information could be leaked in the process as well.
“The reality is that shadow AI isn’t just inside your four walls anymore. If your governance doesn’t account for your entire ecosystem, you’re flying blind,” said Mike Scott, CISO at data security software firm Immuta.
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