Artificial intelligence tools like ChatGPT are reshaping the modern workplace. They help teams move faster, generate ideas, and solve problems in new ways. Along with those benefits comes a new layer of risk that many organizations are still learning to manage.

One of the biggest concerns is employees feeding sensitive company information into generative AI platforms without realizing the consequences. What feels like a harmless shortcut can expose data in ways that are difficult to undo.

When Shadow IT Takes on a New Form

Shadow IT has been around for years. It refers to employees using software or services that have not been approved by the company’s IT or security teams.

Think about personal cloud storage accounts used for work files, messaging apps for project discussions, or free online tools that convert documents. These options are convenient, but they can create security gaps and increase the chances of data leaks.

Generative AI tools have become the newest version of shadow IT. Research from LayerX shows that employees often input confidential material into these platforms, including internal reports, customer databases, and sensitive personal or payment information.

Once that data is entered into an AI system, control becomes limited. Even if the provider outlines privacy protections, information may be stored, processed, or incorporated into future model training. That uncertainty alone creates risk.

How Good Intentions Can Lead to Data Exposure

Most employees are not trying to cause harm. They turn to AI tools because they want to complete tasks faster or improve their output. In doing so, they may copy and paste proprietary content or upload documents that were meant to stay within secure systems.

This type of oversharing can escalate quickly. Sensitive information leaving your controlled environment can lead to compliance issues, damaged client relationships, or even a data breach.

AI platforms also make it harder to track where information flows. Once data is entered, tracing its path becomes more complex than with traditional software.

Steps You Can Take to Reduce AI-Related Risks

Businesses do not need to reject generative AI to stay secure. Instead, they need thoughtful guardrails.

Start by educating your team. Make sure employees understand what kinds of information should never be shared with public AI platforms and why those limits matter.

Create clear internal policies that define acceptable AI use. When expectations are spelled out, employees are less likely to make risky judgment calls.

Provide approved tools that offer stronger privacy protections and enterprise-level controls. When secure options are available, employees are less likely to seek out unapproved alternatives.

Keep an eye on unapproved software within your network. Monitoring solutions can help you spot shadow IT before it becomes a larger issue.

Encourage open communication. Employees should feel comfortable asking about new tools instead of quietly experimenting with them.

Generative AI offers powerful advantages, but it is not without tradeoffs. As these platforms become part of everyday workflows, organizations must pay close attention to how they are used. One well-intentioned upload can expose more than anyone expected.

With clear guidelines and secure solutions in place, you can empower your team to use AI productively while keeping your company’s sensitive information protected.