I’ve been having a lot of conversations with industry leaders lately about the prevalence of so-called “shadow AI.” They’re worried about the risks of unapproved AI tools at work, and most come to me wanting to know how to rein in their employees. But that’s looking at the problem backwards.

Their concern is well founded. Among organizations surveyed in IBM’s Cost of a Data Breach Report 2026 that had experienced a data breach, 43% reported security incidents involving shadow AI, up from 20% the previous year. And the problem isn’t going away. In our own recent survey, we found that roughly one in three respondents reported shadow AI use at their companies.

The problem is, leaders are missing what shadow AI is actually telling them about their businesses. Most chalk it up to an employee problem, when it’s really a leadership one.

The prevalence of shadow AI means your company is trying to innovate faster than you’re letting it. That’s a significant risk in and of itself.

Picture an HR professional who, frustrated with a repetitive task like assembling personalized onboarding materials, automates this process with an unauthorized tool.

Some might say they put the company’s security at risk to avoid doing the job they’re paid to do. But another way of looking at it is this: Your employee just revealed a way to create better onboarding materials, save time and money, and free up an entire team for deeper work. In other words, they’re showing you how to trim the fat on your business so everyone can focus on new opportunities to grow the company.

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