5 Risks that AI Present SMEs

Shadow AI, a subset of Shadow IT, refers to the use of artificial intelligence applications and tools that operate outside the knowledge and control of a business's IT department. While AI offers tremendous benefits, Shadow AI can introduce significant risks, particularly for small businesses. Understanding these risks and implementing mitigation strategies can help businesses to secure their IT estates more effectively.

Shadow AI tools often involve data processing and storage outside the secure environment of a business's official IT infrastructure. Employees might use unauthorised AI applications to handle sensitive business data, inadvertently leading to data loss.

However, unvetted AI tools might not have proper error-handling mechanisms, increasing the risk of data corruption. If an unauthorised AI tool fails or is no longer accessible, crucial business data might become irretrievable.

Mitigations of these risks should involve the implement of policies requiring all data to be stored and processed through approved and secure platforms. Conduct regular audits to detect and address any unauthorised AI tools being used within the business.

Furthermore, shadow AI creates blind spots in a company’s IT landscape. When AI tools are used without IT's knowledge, it becomes challenging to monitor and manage the data flow and processing activities.

This lack of visibility can lead to redundant or conflicting processes that waste resources. It's also important to consider that unmonitored AI applications might not adhere to the company’s security standards, introducing vulnerabilities.

There are two steps to tackle this. Firstly, educate employees about the risks of using unauthorised AI tools and encourage them to report any new tools they find beneficial. Secondly, use advanced monitoring tools to track AI application usage across the business.

Shadow AI significantly increases the risk of data breaches. Unauthorised AI tools may not comply with the business's cybersecurity protocols, making them easy targets for cyberattacks. Using unauthorised AI tools means businesses can't check if the tools have robust data encryption, meaning that sensitive data could be exposed to potential breaches. Furthermore, using unapproved AI tools can lead to violations of data protection regulations, resulting in hefty fines and legal repercussions.

To tackle these issues, implement strict access controls to ensure only authorised applications can handle sensitive data. You can conduct regular security assessments to identify and mitigate vulnerabilities associated with Shadow AI.

Managing the risks associated with Shadow AI requires a proactive approach that combines policy enforcement, technological solutions, and employee engagement. Create and enforce a comprehensive policy that outlines the acceptable use of AI tools and the procedures for introducing new technology into the business environment. Implement AI governance tools to track and control the use of AI applications within the organisation. These tools can help identify unauthorised usage and enforce compliance with security protocols. Foster a culture where employees feel comfortable reporting the use of unauthorised AI tools. This transparency can help the IT department take timely action to secure the business environment. Provide regular training sessions to educate employees about the dangers of Shadow AI and the importance of adhering to approved tools and processes.

Shadow AI presents significant risks to small businesses, including data loss, lack of visibility, and data breaches. By understanding these risks and implementing robust mitigation strategies, small businesses can protect themselves from the potential negative impacts of Shadow AI. Emphasising the importance of using authorised tools, conducting regular audits, and fostering a transparent culture can help businesses maintain a secure and efficient IT environment.

Effective risk management involves not only technological solutions but also policy enforcement and employee engagement. By taking a proactive approach to managing Shadow AI, small businesses can leverage the benefits of AI while minimising the associated risks.