Shadow AI is putting Canadian businesses at risk

Do you know which artificial intelligence tools have been authorized by your workplace? 

It’s possible that many Canadians don’t. Shadow AI — i.e. AI tools and applications being used in the workplace without formal approval or oversight from a company’s IT department — is becoming increasingly common across Canada.   

Though 79% of full-time office workers in Canada say they use AI at work, only 25% rely on enterprise grade AI tools. The rest rely on personal and employer tools (33%) or entirely on personal apps (21%). 

This “signals a widening disconnect between employee expectations and enterprise readiness,” according to a new IBM study. 

But this presents a whole host of risks for Canadian businesses, including the potential for data leaks, compliance issues, and leaked sensitive business information. 

It’s more costly for businesses, too. The use of unsanctioned AI tools in the workplace added nearly $308,000 per data breach, according to IBM’s previous Cost of a Data Breach report from earlier this year. 

Closing the AI gap 

The difference between the tools employees are using and the ones enterprises are authorizing signals a gap in enterprise readiness, IBM suggests.  

In fact, only 29% of polled Canadian workers believe their employer is using AI to its full potential. 

Employees believe their companies can better use AI for data analysis and reporting (60%), automation of repetitive tasks (55%), and content creation (37%). 

Almost half (46%) said they would leave their current job for one that uses AI more effectively. Among Gen-Z workers, that number climbs to 62%. 

CAIB New Edition 1.0 – a New Standard for Broker Education Image

Insights Paid Content

CAIB New Edition 1.0 – a New Standard for Broker Education

Preparing brokers to navigate an increasingly complex insurance landscape.

By 

Sponsor Image

“Without secure, enterprise-grade solutions, to transform core systems and processes, businesses risk productivity losses and data exposure as employees seek alternatives,” said Rob Wilmot, general manager and managing partner, IBM Consulting Canada. “Considered and focused action is needed to bridge this gap for Canadian enterprises to capture tangible productivity gains and robust data protection.” 

In order to keep pace with the workforce and become more efficient, IBM recommends Canadian businesses focus on five key priorities:

1. Build a modern data foundation: Businesses can do this by investing in AI infrastructure that allows for access to clean, trusted data, and addresses AI bias, privacy and regulatory requirements.  

2. Integrate AI governance: Businesses must put tools and processes in place to assess AI maturity, manage risk, and ensure compliance with global regulations.

3. Implement a responsible AI framework: AI systems must be designed and deployed ethically, prioritizing principles such as explainability, fairness, robustness, transparency, and privacy.  

4. Focus on business-driven use cases: AI must be aligned to actually improve operations, such as streamlining internal services, improving customer interactions, or reducing costs.  
5. Invest in inclusive ‘skilling’ and adoption: Employees must be equipped with the skills to use AI confidently and responsibly. (The survey finds 61% of workers say their employer is prioritizing AI upskilling, but many remain unsure whether a formal plan is in place.) 

Alyssa DiSabatino

Alyssa Di Sabatino has been a reporter for Canadian Underwriter since 2021, covering industry trends, market developments, and emerging risks.