The Hidden Costs of Unmanaged AI: Why Real-Time Detection Matters
The use of generative AI (GenAI) is growing exponentially and organizations are rapidly adopting these technologies. In fact, Gartner’s survey identifies GenAI as the leading AI solution being implemented in businesses today.
While many users are still on a steep learning curve in terms of optimization, generating value and gaining return on investment, the potential benefits of using GenAI tools are immense, from content generation and automating operational processes, to coding, development and fraud detection.
As a result, GenAI tools have quickly become embedded in business processes but with this adoption comes an increasing complexity in managing them. One of the key indicators for success in GenAI programs is successfully managing the risks associated with usage, in terms of security, protecting IP and compliance—something that is also becoming more difficult as the technology evolves. Even organizations with the best laid plans are unaware of the effects of unmanaged AI.
Understanding the implications of unmanaged AI, as well as what it actually means to organizations is a crucial step in tackling the risks and hidden costs associated with it.
Understanding the Impact of Unmanaged AI
For the most part, unmanaged AI refers to the use of GenAI tools where there is no governance, oversight or understanding of the risks associated with it. It includes a prevailing trend, shadow AI, which is the unsanctioned use of GenAI tools within an organization by employees. While this is often a positive, employees showing initiative and reaping the benefits of using AI tools, these tools do fall outside of technical governance. As a result, there is no understanding or management of what is being used (organizations are deploying multiple tools with more than half already managing more than five), how it is being used, by whom and to what effect.
Unmanaged AI also includes misuse of approved tools either deliberately or due to lack of training, and issues arising from quick adoption that often sees steps in implementation in terms of risk management ignored. All of which have real implications for organizations, regardless of if they have a GenAI strategy in place.
Unmanaged AI’s unseen influence
While the risks of using GenAI are well documented, there are other dangers that are less obvious and lurk beneath the surface of its everyday use. Take employee usage for example, when employees freely use various GenAI tools without proper oversight, they may inadvertently share sensitive company information, rely on inaccurate outputs without verification, or make decisions based on GenAI-generated content that hasn’t been properly vetted. This unmanaged use can cost organizations far more than just inefficiency—it can lead to data breaches, compliance violations, and decisions that undermine strategic goals.
The risk of data exposure is particularly acute with employee usage and can create significant security vulnerabilities within the organization. When employees input company information into these public platforms—whether it’s customer data or internal documentation—they or you may be unaware that data could be retained and potentially used to train future versions of these models. This means sensitive company information could unknowingly become part of the Gen AI tool’s knowledge base, accessible to competitors or other users. Even seemingly innocent queries might contain proprietary information, trade secrets, or confidential data that organizations cannot afford to have leaked into public AI systems – a data breach that can cost an organization millions to rectify.
And, while you can mitigate such breaches with proper policy enforcement and GenAI visibility, failure to properly manage GenAI usage all together can lead to an inability to investigate such breaches. So, while systems are implemented to minimize their likelihood of happening in the first place, without full 360 visibility, even if they were to happen, you’d never even know- in essence, without centralized visibility and governance, organizations risk seeing their most valuable asset become their most dangerous blind spot.
Why Real-Time Detection is Critical
As mentioned, as more tools are being embedded within organizations, the complexity of managing them also increases. This directly affects risk and the potential of dire consequences. For example, when organizational data is used by unmanaged AI tools the risk of losing that data or exposing it to bad actors is very real. If managed correctly, with real-time insights generated, IT or security teams can be alerted of potential threats whether that is a loss of sensitive data, or the potential for a breach. Real-time monitoring and alerts provide guardrails to secure and manage the risks associated with both sanctioned and unsanctioned use of GenAI tools.
Diving Deeper – The Financial Implications of Shadow AI
Unmanaged AI can have both short- and long-term financial implications on an organization. In the shorter term, it’s about inefficiencies and wasted resources brought about by duplication of effort, misalignment between teams and departments and unanticipated licensing costs and uncontrolled spending for the variety of tools being used by employees.
Then there are productivity concerns; employees might be paying for and using AI tools for tasks that can be carried out with existing tools. Without oversight this can quickly spiral out of control leading to longer-term issues that create budgetary imbalances, wasted spending and investment, and financial losses.
Diving Deeper – Compliance and Regulatory Risks of Unmanaged AI
Regardless of industry there are compliance and regulatory risks that organizations face as a result of unmanaged AI. The legal landscape for AI itself is only developing but incorrect usage of GenAI can lead to non-compliance and violation of regulations and standards, such as those pertaining to data privacy, as well as more industry specific regulations such as HIPAA or Sarbanes-Oxley Act (SOX). And that is not to mention the risk of intellectual property loss, copyright infringement or plagiarism. Along with potential fines for non-compliance, organizations also face reputational damage, as well loss of customer and market trust.
Diving Deeper – Data Security Vulnerabilities in Shadow AI
With lack of oversight and control over GenAI tools, organizations face significant threats to data security and overall cyber security. Depending on what company data is being inputted into GenAI platforms, employees could be sharing sensitive data outside the organization or even generate content containing confidential information. More than that, unmanaged AI platforms broaden the attack surface for cyber criminals.
According to an IBM report, just under one-quarter of GenAI programs implemented by organizations actually have a security consideration. This figure doesn’t include organizations dealing with shadow AI.
Unsanctioned AI tools, for example, are unvetted by IT teams in terms of safety, updates and patches and therefore could make the organization more vulnerable to cyber attacks and data breaches. These unmanaged AI platforms provide cyber criminals with new threat vectors to access to company networks and systems.
The threat is significant, as is the potential cost. To put that into context, in 2024 the global average cost of a data breach is $4.88 million—up 10% from the previous year, and figures for the US have the average cost at over $8 million. These costs include mitigation efforts, recovery, loss of revenue and longer-term reputational damage.
How Portal26 Can Help You Manage Unmanaged AI Risks and Their Costs
The Portal26 AI TRiSM solution has been designed to manage all sanctioned and unsanctioned GenAI usage by providing complete visibility, data security, insight, governance and risk management for organizations.
GenAI Visibility: A Clear View of AI Use Across Your Organization
With Portal26’s GenAI Visibility, organizations can understand exactly which tools are being used, which employees are using them, how they are being used and what they are being used for. This visibility is provided in real time, with insights into trends, usage patterns and user activity to help inform decisions around deriving business value, identifying training needs and, of course, ensuring that sensitive or confidential data isn’t being misused.
This clear view of GenAI ensures that shadow AI can be eliminated along with the risks associated with unsanctioned usage.
GenAI Data Security: Safeguarding an Organization from Threats
The key to optimizing the value of GenAI tools is to ensure organizations are able to properly manage the data security risks associated with the technology. Portal26’s GenAI Data Security does just that, providing comprehensive security capabilities to mitigate the risk of data breaches and vulnerabilities linked to AI. The platform gives users a deep understanding of AI risks, ensures sensitive information is kept safe, compliant and uncompromised, mitigates the threat of shadow AI, and provides an organization’s security team with the tools needed to manage the risks.
GenAI Education: Empowering Employees with AI Literacy
The best monitoring and management of GenAI can only go so far if employees aren’t empowered with the skills and knowledge to use the tools properly and get the most value from them. GenAI Education and Training from Portal26 ensures employees are using the technology to its full potential, understand the risk of unsanctioned AI usage and are leveraging the tools to increase productivity and drive innovation.
GenAI Governance: Ensuring Responsible AI Development and Deployment
Portal26’s GenAI Governance platform enables organizations to control, manage and understand AI usage. This includes making sure all employees are using GenAI tools responsibly and efficiently. More than that, the AI governance solution provides an organization with the means to monitor performance, enforce internal AI policies, manage AI risks and enforce security and privacy protocols to protect confidential data.
In a world where every AI implementation could have far-reaching impacts, unmanaged AI is a ticking time bomb. It’s not just about poor decision-making or inefficiencies—it’s about the risks associated with lack of compliance, security vulnerabilities, and the hidden costs that arise when these tools are not governed and monitored in real-time.
Portal26 can help your organization unlock the full potential of generative AI through governance, security, education and visibility. To find out how, schedule a demo with us today.