Employee AI Use & Shadow AI Risk in Organisations Using Artificial Intelligence

Employee AI Use & Shadow AI Risk

In most organisations, artificial intelligence adoption is not being driven by strategy or policy. It is happening quietly, from the bottom up. Employees use AI tools to draft emails, summarise documents, analyse information, generate code, or speed up routine work. They do so because it is efficient, available, and rarely discouraged.

This form of adoption creates what is now commonly referred to as shadow AI.

Shadow AI does not arise from malicious intent. It emerges when employees use AI tools without clear guidance, approval, or oversight. The risk is not that AI is being used, but that its use is happening outside any documented or controlled framework.

How shadow AI risk develops in practice

Shadow AI risk typically develops through ordinary, well-intentioned behaviour. Employees paste information into AI tools without fully understanding what happens to that data. Outputs are reused without verification or challenge. Decisions influenced by AI are made without clarity on accountability. Over time, the organisation loses visibility into where AI is being used and what role it is playing in operational or decision-making processes.

Because this activity sits outside formal systems, it is rarely monitored. There may be no guidance on what constitutes acceptable use, no training to distinguish safe from unsafe behaviour, and no mechanism to intervene when use becomes risky. The absence of oversight, rather than the technology itself, is what creates exposure.

How employees quietly adopt AI tools without oversight, creating hidden risks in organizations.

Why organisations are only now becoming aware of the issue

Many organisations become aware of shadow AI only when a concern is raised. Legal or compliance teams may notice unusual data flows. Managers may question the reliability of AI-generated outputs. Clients or auditors may ask how AI is used internally. In some cases, a near miss or incident brings the issue into focus.

At that point, the organisation is no longer dealing with a hypothetical risk. It is confronting a lack of clarity about employee behaviour, data exposure, and responsibility.

What assessing employee AI use involves

Assessing employee AI use is not about policing staff or introducing blanket bans. It is about understanding reality.

A proper assessment identifies where AI tools are being used across the organisation, what types of data are involved, and which uses present unacceptable risk. It distinguishes between activity that must stop immediately and activity that can continue safely with appropriate controls. It also clarifies where guidance, training, or oversight is missing.

The aim is to replace assumption with evidence and fear with proportionate control.

What effective controls look like

Effective management of employee AI use does not rely on heavy surveillance or complex tooling. It relies on clarity and accountability.

Employees need to understand what is permitted, what is prohibited, and why. Managers need visibility into how AI supports work without becoming a substitute for judgment. The organisation needs documented rules, risk controls, and escalation paths that reflect how AI is actually being used.

When these elements are in place, AI can remain a productivity tool rather than a hidden liability.

How we help organisations address shadow AI risk

We support organisations in bringing employee AI use into view and under control without disrupting legitimate work. This involves identifying where AI is used, understanding associated data and decision risks, and establishing clear, proportionate rules.

Our work typically results in documented employee AI usage guidance, defined controls and guardrails, targeted training requirements, and a management oversight model that makes responsibility explicit. The focus is always on stabilisation and defensibility, not restriction for its own sake.

How this connects to wider AI governance

Employee AI use is often the largest and least visible source of AI risk within an organisation. For this reason, it is closely linked to AI governance, data protection, and audit readiness. Understanding how staff are using AI provides critical input into broader risk assessments and governance frameworks.

Ignoring shadow AI undermines any wider AI compliance effort.

When organisations should act

Organisations should address employee AI use now if staff are already using AI tools, if there is uncertainty about what data may be involved, if outputs are being relied on without review, or if the organisation could not confidently explain its internal AI practices if asked.

Once AI use is embedded in daily work, the risk already exists. Visibility and control are the only meaningful responses.

Next steps

If you need to understand how employees are using AI and what risks this creates, the first step is an assessment of current practice.

Review employee AI use risk to bring clarity, control, and accountability into place. Guidance for staff is most effective when it is grounded in an organisation-wide position on AI and a coherent set of policies and controls. Those elements are defined through our AI Policies & Governance Frameworks work.