What is Shadow AI?

Explained

Shadow AI arises when employees use public chatbots or apps without IT review—creating leakage and compliance risk. Programs need approved tools, data classification, and safe defaults.

Decision guides that use this term

• Build vs buy AI agents: which agents should you own, and which should you rent?
• Microsoft Copilot vs custom AI agents: when is the suite assistant enough, and when do you need your own agents?
• Single AI vendor vs multi-model strategy: should you bet on one provider?
• In-house team, AI consultancy or platform: who should build your AI?
• Centralised vs federated AI governance: who should decide what in your organisation?

Further reading

• Enterprise AI Transformation: A Strategic Roadmap for Competitive Advantage

Related terms

• Acceptance Criteria Testable conditions that define when a feature or model output is “done” and correct.
• AI Bill of Materials Inventory of model lineage, datasets, dependencies, and licenses for an AI system.
• AI Governance Framework of policies, processes, and controls for responsible and ethical AI use in the enterprise.
• AI Native Architecture and processes designed from the ground up for AI, not as an afterthought.
• CRM System for managing customer relationships; AI augments it with prediction and automation.
• CX Customer experience; AI enables personalization and automation at scale.