Source: Corporate Compliance Insights

Corporate Compliance Insights warns that a "shadow AI" crisis is brewing within organizations, creating significant and often unseen risks that must be managed by the General Counsel's office. "Shadow AI" refers to the use of public, third-party artificial intelligence tools by employees for work-related tasks without the company's knowledge, approval, or oversight. While employees may be seeking efficiency gains, this unsanctioned use exposes the company to a host of severe compliance, security, and legal liabilities. The article stresses that a failure to address this trend proactively can lead to disastrous consequences.

The primary risks detailed include data privacy breaches and the loss of confidentiality. When employees input sensitive company data, customer information, or privileged communications into public AI platforms, that data can be absorbed into the AI model, potentially becoming accessible to others or used by the AI provider for its own purposes. This can lead to violations of regulations like GDPR and CCPA. Another major concern is intellectual property risk; incorporating AI-generated content into work products could lead to copyright infringement if the AI's output is derivative of its training data. The article urges General Counsels to take immediate action by developing clear AI usage policies, providing training on the risks, and deploying secure, enterprise-level AI solutions to offer employees a safe alternative.