The uncomfortable truth is your employees are using AI tools you don’t know about. Right now. Today.

IBM’s latest research found that 20% of organizations already suffered a breach due to what they’re calling “shadow AI” – employees using unauthorized AI tools without IT’s knowledge. The kicker is that those breaches added an average of $200,000 to remediation costs.

Think about that for a second. The issue is not the technology failing or hackers breaking through your firewall. The cause is your own people, trying to do their jobs faster, pasting proprietary information into ChatGPT, Gemini, or whatever AI tool made their work easier that day.

Why Shadow AI Happens (And Why You Can’t Stop It)

Varonis found that 98% of employees use unsanctioned apps. That’s not a typo. Ninety-eight percent. If you think your company is the exception, you’re wrong.

Why does this happen? Because your employees are struggling. They’re being asked to do more with less, and they’re exhausted. Then they discover this magical tool that can summarize a 50-page document in 30 seconds or write that email they’ve been dreading. Of course, they’re going to use it.

The problem isn’t that they’re lazy or malicious. The problem is that they have no idea what happens to the data they feed into these systems. Some AI services train their models on your inputs. Some store everything you type. Some have security controls. Most don’t.

Why Banning AI Tools Doesn’t Work

Banning these tools outright works. Right? Gartner predicts that by 2027, 75% of employees will acquire or create technology outside IT’s visibility. Bans just push people to hide what they’re doing better.

This happens constantly with the accounting firms and law offices we work with. A partner bans ChatGPT, but an associate uses it on their phone anyway. Now, instead of managing the risk, you’ve just lost visibility into it entirely.

The Real Cost of Shadow AI

The financial impact goes beyond the $200,000 average breach cost. Consider what happens when:

• Your proprietary client data gets fed into a public AI model
• Your trade secrets become part of an AI training dataset
• Your confidential legal strategy gets stored on servers you don’t control
• Your financial projections end up accessible to your competitors

These aren’t theoretical risks. These are things happening right now to businesses that thought their employees would never do something that careless.

What You Actually Need to Do About Shadow AI

You need an actual policy about AI use. Not a ban. A policy.

This is what works:

Identify which AI tools are safe for your business. Not every AI tool is a security nightmare. Some have proper data handling. Some don’t train on your inputs. Figure out which ones meet your requirements.

Make approved tools easy to access. If your employees need AI to do their jobs effectively, give them a way to use it safely. The property management firms we work with that have implemented approved AI tools see almost zero shadow AI usage.

Train people on what they can and cannot share. Most people don’t realize that pasting client information into ChatGPT might expose it. They’re not trying to cause a breach. They’re trying to work faster. Teach them the difference between safe and unsafe usage.

Create a culture where people can ask questions. Your employees should feel comfortable asking, “Is this AI tool safe to use?” instead of just using it and hoping for the best.

The Bottom Line on Shadow AI

This isn’t going away. The only question is whether you’re managing it or pretending it doesn’t exist.

The firms sleeping well at night aren’t the ones who banned AI. They’re the ones who acknowledged it exists and created safe pathways for using it.

Because your employees are already using these tools, you just don’t know about it yet.

The Quick and Easy: Shadow AI, unauthorized AI tool usage by employees, has already caused breaches in 20% of organizations, costing an average of $200,000 each. With 98% of employees using unsanctioned apps and 75% projected to acquire technology outside IT visibility by 2027, banning AI tools doesn’t work. Instead, businesses need clear AI usage policies, approved tools that are easy to access, employee training on safe data sharing, and a culture that allows people to ask questions before using new tools. Technology isn’t the risk, but using it without oversight or understanding the consequences.