Sleepwalking into Shadow AI: The silent threat to your organisation

While AI can bring a raft of efficiencies to organisations, many employees are unknowingly using Shadow AI tools – unaware of the potential data privacy and security risks this could present.

The case for AI use is compelling. OneAdvanced’s 2025 Sector Trends Report found that 43% of operators within the wholesale and logistics market are already using AI, with an additional 34% planning to invest in an AI strategy within the next 12 months. From speaking with partners from an array of sectors, we’ve seen that AI has been successfully deployed to help with tasks such as:

• Optimised resource allocation: AI can help businesses make the most of their resources by intelligently planning schedules, routes, and workflows. This leads to less waste, lower costs, and better environmental outcomes.
• Proactive equipment maintenance: Using AI, companies can predict when equipment is likely to fail, allowing for maintenance to be performed before issues cause costly downtime. This keeps operations running smoothly and extends the life of valuable assets.
• Enhanced performance insights: This tech can analyse various operational and behavioural data to identify patterns and areas for improvement. This helps businesses understand what's working well and where additional training or process adjustments could boost overall efficiency.
• Improved workforce wellbeing & productivity: By analysing work patterns and employee data, AI can help identify potential signs of fatigue or stress, allowing companies to implement proactive measures that support employee health and improve overall productivity.

While it is encouraging that organisations are embracing this technology to drive efficiencies, are they implementing AI in a considered and planned way? Without fully understanding the AI landscape, they risk sleepwalking into the problem of Shadow AI. 

The perils of unapproved Shadow AI

So, what is Shadow AI? In simple terms it is the unauthorised use of artificial intelligence tools within a company. It occurs when staff use free or low subscription AI engines, like ChatGPT or Google Gemini, without the explicit approval, knowledge, or oversight of their IT department or security teams. Even if it's done with good intent, without understanding how your data is being handled, processed, used, and stored, there could be wider implications for data privacy and your security policies.

This is why I strongly believe information security and the application of AI should absolutely be a board level agenda item. When it goes wrong, it goes wrong big time and often with huge ramifications for an organisation’s reputation. Examples of data that should not be shared on unauthorised AI tools include:

• Internal financial data revealing profit/loss statements, budgets, or forecasts
• Customer or client data violating GDPR, or other privacy laws
• Legal contracts and agreements exposing strategies, NDAs, or supplier agreements
• Employee records and HR data breaching HR confidentiality and labour laws
• Strategic Business Plans leaking upcoming acquisition, investment strategies, or market expansions
• IT Security & Infrastructure details providing a blueprint for hackers to exploit vulnerabilities
• Board Meeting Minutes and executive discussions - leaking confidential decisions or sensitive leadership strategies 

Just as we wouldn’t share this information outside of our own organisations without proper safeguards in place, why would we happily upload it to external third-party AI agents without having our eyes open to the possible security implications.

A survey we commissioned as we launched our own AI product – revealed a shocking 64% of UK workers are using AI in their jobs without restriction. Over a quarter (26%) of businesses have no way of tracking AI use in the workplace, putting their data security at risk. And 28% of teams or departments within logistics organisations are using AI tools independently, without a cohesive, company-wide plan of action. This is where the risks of Shadow AI come into play.

Meanwhile, 85% of workers are now logging into AI tools at work, with more than a third (38%) saying their biggest worry is data security and privacy – which goes to show there is some awareness of how these systems may put data at risk.

How to stay safe

Don’t get me wrong… for future growth across the business landscape, it’s essential the potential offered by AI is embraced. And as outlined, the opportunities for greater efficiencies are huge. But information security and the strategic application of Artificial Intelligence are two of the most significant topics facing any leadership team today. It’s crucial they prepare thoroughly for its deployment and adoption.

With that in mind, here are five suggestions for starting the process and avoiding the pitfalls of Shadow AI:

1. Establish a clear AI strategy and usage policy: Develop a company-wide AI strategy and a separate AI usage policy. This provides guidelines for responsibly using AI within the organisation and ensures it is used in the right way, for the right purposes, and complements your overall data protection and privacy policies.

2. Prioritise data quality, accessibility, and management: Recognise that AI systems are only as good as the data that goes into them. Significant effort should be made to ensure data is of good quality, accurate, consistent, and accessible, with proper permissions in place. Centralise all relevant business data from disparate sources into a regimented system.

3. Utilise secure and authorised AI platforms: Opt for AI solutions built with data privacy at their core, where data remains private, is not used to train models, and is processed entirely within secure, approved environments (e.g., within the UK). This counters the risk of sensitive information being leaked through unauthorised public AI tools.

4. Invest in AI literacy and training for employees: Promote AI literacy among staff, emphasising that AI is a co-pilot to help with jobs, rather than a replacement. Train employees on how to understand what this technology can and cannot do, and how to effectively interact with it by providing context and specific prompts. This also means making AI accessible for all through user-friendly interfaces and training materials. Being proactive with your teams can take a lot of the perceived fear-factor out of using this tool.

5. Start small and collaborate with data experts: For mid-sized companies, it's advisable to start small with AI adoption and then scale up. Collaborate closely with data experts within the organisation to ensure any plans are thoroughly discussed, and that data is managed correctly from the outset. This approach helps bridge the gap in understanding around how to interact with AI effectively. Mid-sized organisations may not have experts specifically in data-security, so the responsibility may fall to the likes of the CFO, COO or Company Secretary. Also, don’t be afraid to seek expert support when devising your AI strategy. 

The path ahead: AI’s role within a changing business landscape

Many industries continue to face pressures - from talent shortages, rising costs, increased ESG scrutiny, and rapidly changing regulations. There is no doubt AI offers a path forward in terms of resilience, scalability, efficiencies, and a competitive edge.

With an integrated AI strategy alongside a clear governance framework, OneAdvanced helps you to navigate this transformative phase, ensuring you avoid the pitfalls of Shadow AI and placing you perfectly to embrace the exciting opportunities that lie ahead.

For further reading, here is some more information on how we’re supporting businesses with their use of AI.