As artificial intelligence use grows across UK businesses, it’s good business practice to establish some clear rules on what software you want your employees using. This is because the rise of shadow AI may lead to legal risks for your business, or unproductive working days.

In this expert guide, our expert team of UK HR consultants offer important insights into controlling this new technology in your workplace.

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What is shadow AI?

Shadow artificial intelligence is when employees use AI tools independently and without the approval or knowledge of their employer. Staff members may do this to streamline their daily tasks, but it can present potential risks your business should be aware of.

You can refer to our AI in the workplace guide for further insights on the policies you may want to introduce.

The risks of shadow AI for your business

According to a recent survey by Software AG, 75% of desk workers regularly use AI for work. What’s more, approximately 50% of desk workers are accessing tools that aren’t provided or approved by their employer, raising significant concerns about the risks involved in such practices.

The rise of shadow AI isn’t without its benefits, though. Employees who have embraced the technology report significant improvements in productivity and job satisfaction. These improvements have been attributed to AI’s ability to automate repetitive tasks, allowing employees to focus on more creative and strategic activities.

However, the lack of formal guidelines and trust in AI’s outputs creates a risky workplace environment. Many professionals are using tools that haven’t been vetted for security, compliance, or consistency – potentially exposing the company to significant legal and data protection risks.

The legal risks associated with shadow AI in the workplace include the potential for data breaches, intellectual property theft, and non-compliance with industry regulations. For example, when employees input sensitive company data into public AI tools, there’s a risk that this information could be exposed or misused.

Additionally, using unauthorised tools could result in inconsistent or inaccurate outputs, leading to legal liabilities, especially if those outputs affect business decisions, contracts, or customer interactions.

Preventing the rise of shadow AI in your business

As the employer, it’s good business practice to take proactive steps to address these growing challenges. You can do this with the following steps:

1. Establishing clear AI usage guidelines to provide employees with a framework for safe experimentation.
2. Investing in education and training to ensure employees understand how to use these tools effectively, ethically, and in compliance with UK data protection regulations.

In short, shadow AI isn’t going away, but you can turn this challenge into an opportunity by fostering a culture of innovation with the right support, policies, and training.