In today's digital era, the use of applications Artificial Intelligence (AI) It's commonplace among both beginners and professionals. However, the ease of automation and the instant results it offers are often exploited extensively in work without close supervision.
This condition is called shadow AI or shadow AI. Using AI to analyze or create content is not wrong.
However, when company data is entered into these applications without clear controls, this can trigger various crucial risks and problems for the organization.
What Is It Shadow WHO?
Shadow AI is the use of applications Artificial Intelligence (AI) such as ChatGPT, Gemini, or Claude by employees without official approval and supervision from the company.
Generally, employees use AI technology to automate daily tasks, such as document summarization, text editing, data analysis, and handling marketing content creation.
In practice, AI is used to complete tasks more quickly. However, because its use falls outside of company-approved boundaries, it poses risks to corporate security, governance, and compliance.
Why Shadow Is AI a Serious Risk for Companies?
Shadow AI can pose a serious risk to companies because it operates outside of organizational control systems without oversight. As a result, companies risk losing visibility and control over data, processes, and the most informed decisions.
Simply put, every application that will be used by company employees must go through the IT team's approval to check its security, access, and storage.
But in shadow Employees can directly open the AI, copy and paste company data, send it to the AI, and without knowing whether the AI system stores the data. This is risky because data that should be securely stored is shared with external systems.
Ultimately, this situation triggers a greater risk of data leaks and loss. When this happens, there are no controls in place to retrieve the data.
As a result, legal and reputational risks such as breaches of business and client contracts can arise. Companies cannot demonstrate compliance and struggle to comply with regulatory requests, such as data deletion.
Risks of Illegal and Uncontrolled Use of AI
1. Data and Security Breaches
Employees unknowingly input sensitive data into AI systems, and the AI makes business decisions without proper validation. As a result, data shared with AI systems is stored externally, untraceable, and deleted.
Therefore, it is important to establish AI security policies to prevent similar things from happening.
2. Non-Compliance with the Rules
The unauthorized use of AI also exposes companies to the risk of regulatory non-compliance. When companies comply with regulations, they should know where data is stored, who accesses it, and be able to delete it upon request. However, when shadow AI happens, companies lose control of data.
Financial Implications
AI costs are different from other application costs, because AI generally charges per use, per API. call, or per output.
When employees use AI without control, the company cannot centrally record its usage. Meanwhile, each team can use it. tools or different features. As a result, costs are difficult to monitor and uncontrollable.
1. Affects Reputation
AI-generated content, recommendations, or decisions are used without verification and oversight, invalid information can damage the company's credibility.
Because, the resulting decisions have the potential to be biased, the information inaccurate, and the content compiled is misleading.
2. Vulnerable to Misinformation and Bias
AI generates answers based on a combination of user input and knowledge it has learned from its training data.
In some cases, AI can provide inaccurate or biased information, especially when the context is unclear or beyond its scope of understanding. Therefore, AI results must still be thoroughly verified.
Shadow AI Governance in the Context of GRC
In the context of GRC, governance or governance can be the main foundation for controlling shadow AI. Formulating good corporate governance can be achieved by establishing direction, regulations, and ensuring that AI usage is in accordance with policy.
Companies can also establish AI ethics committees to address shadow AI or other potential adverse impacts. This team would be tasked with determining which AI can be used, what data can be uploaded to AI, evaluating data security risks, and monitoring AI use.
Framework AI Risk Mitigation for Managing Shadow AI
Banning the use of AI without providing solutions is not a guaranteed solution to prevent employees from using AI. Therefore, companies can take the following mitigation measures.
- Provide AI that has been curated by the company, is secure, meets operational needs, and adheres to company security, compliance, and performance standards.
- Establish clear specifications and ethical practices for their use.
- Create AI usage policies, data security standards, access rules, and the purpose of its use.
- Form a dedicated team or unit responsible for managing, directing, and overseeing the use of AI to ensure it remains under control.
- Train employees so they have good knowledge in using AI and can know when the right time to use it.
- Give employees time to adapt to AI applications in a safe, monitored space.
- Use monitoring tools QA which can assess whether the team is using shadow AI is consistent and appropriate to the working conditions or not.
The Role of GRC Technology in Controlling Shadow AI
According to Deden Wahyudiyanto, an Independent ERM, GRC, and ESG Consultant, GRC can provide safe boundaries for the use of AI.
- Governance (governance) – establishment of an AI ethics committee: which AI tools may be used, what data may not be included in AI, and what accountability steps should users take when something goes wrong?
- Risk (risk management) – risk assessment of each use of AI. GRC can ensure any risks are identified before AI is used.
- Compliance (compliance) – GRC acts as a system that keeps companies within legal boundaries. GRC ensures that all data and AI technology is within legal boundaries. AI applications are held to security standards that align with company policies.
Impact If Shadow Uncontrolled AI
- Data leaks and privacy – sensitive company data accidentally uploaded to AI can easily be exposed to the public.
- Regulatory violations – uploading a company's personal information to AI may violate applicable laws, rules, and internal regulations. This could even undermine client trust in the company if the use of AI is proven to be in breach of contract.
- Inaccurate information quality – AI is a tool that can generate answers from previously trained or uploaded data, so it has the potential to provide false or biased information.
- Increasing cyber security gaps – opening loopholes for outsiders such as hackers to send malware or link maliciously through AI to target companies.
- Damaged company reputation – companies tend to receive negative attention from the media and the public.
Conclusion
Shadow Artificial Intelligence (AI) is the use of artificial intelligence (AI) without oversight and official company policies. This activity may seem commonplace in today's digital age. However, its use in companies can have detrimental effects and become the starting point for various major problems.
To address this, companies cannot simply prohibit its use but also need to provide a systematic approach through GRC. A GRC framework can be an effective approach to managing and controlling shadow AI risks.
In practice, this approach is less effective if it is only implemented in the form of policies. To maximize it, use the Audithink audit application to execute GRC in a real and measurable manner. Try our app demo through the available pages and get attractive offers.
