What it is
Shadow AI is staff using ChatGPT, Copilot, or other AI tools on their own, often on a personal account, because the company never issued a sanctioned option. The work gets done. The data (client files, payroll, legal) may now live in a tool nobody approved.
ExampleWhat it looks like
An office manager pastes a spreadsheet of employee SSNs into a free chatbot to "make a nicer table," because that was faster than waiting on IT.
How we handle it
People will use AI whether you bless it or not. WolfTech's advice is to issue a sanctioned tool, write a short policy, and train the team. Blocking everything just pushes the same work onto personal credit cards.