How governance gaps are creating a shadow AI risk for finance leaders

Date:
Tue, 04 Aug 2026 10:31:34 +0000

Description:
The risk, if left unaddressed introduces a significant shadow AI risk with consequences that far outweigh productivity gains

FULL STORY ======================================================================Copy link Facebook X Whatsapp Reddit Pinterest Flipboard Threads Email Share this article 0 Join the conversation Follow us Add us as a preferred source on Google Newsletter Subscribe to our newsletter The use of AI across finance functions is soaring as it quickly becomes a key tool for getting the job done.

As such, businesses are investing heavily and spending continues to rise, meaning adoption has more than doubled since 2024. But governance isnt
keeping pace, as almost half (49%) of UK finance leaders admit their organization has gaps in its AI governance strategy. Latest Videos From TechRadar Watch full video here: Brandon Till Social Links Navigation

Head of Business Solutions, Soldo. Thats a concern for two reasons. One, because governance is a compliance exercise, and two, because it underpins
how confidently businesses can adopt AI at scale.

Without clear guardrails, employees will naturally start making their own decisions about which tools to use and how to use them creating ripe conditions for Shadow AI to emerge and thrive. You may like Agentic AI adoption outpaces governance in regulated industries The AI governance gap: why AI is moving faster than the rules meant to control it AI is reshaping
the finance industry, but governance concerns remain front of mind for CFOs The widening adoption-governance gap I speak from experience when I say that AI is and will continue to be transformative for the finance function.

And for an industry that is largely accepting of the tried and tested status quo, its genuinely encouraging to see how positively leaders in the finance space view AI. Our research showed that 8 in 10 (83%) believe it will play an important role in helping them achieve their business goals. Are you a pro? Subscribe to our newsletter Sign up to the TechRadar Pro newsletter to get
all the top news, opinion, features and guidance your business needs to succeed! Contact me with news and offers from other Future brands Receive email from us on behalf of our trusted partners or sponsors By submitting
your information you agree to the Terms & Conditions and Privacy Policy and are aged 16 or over.

Whats less encouraging, and somewhat worrying, is that almost a quarter (23%) say they have little to no AI governance measures in place. And that disconnect really matters.

Too often, governance is viewed as something to tackle only once adoption of new technology is well underway. But it has to be built alongside adoption. Theres often a fear, not always unfounded, that governance can slow innovation. But thats not always a bad thing, because the point of governance is to make sure innovation happens safely and in a way that business can measure and trust.

Without it, AI adoption can quickly become fragmented, increasing a business exposure to compliance and security risks that will only intensify as AI becomes more deeply embedded. What to read next Shadow AI a step too far, or an opportunity? If everyone is rushing to board the AI ship why are so few workflows secure? As AI scales, is meaningful governance possible? When processes create friction, people will find another way While governance gaps are directly linked to organizational risk, they also shape employee
behavior. If approved tools are difficult to access, limited, or policies arent clear, people will look for another way to get the job done. Employees as a whole want to embrace the productivity benefits of AI and wont let a
lack of formal guidance stop them.

And thats exactly what research tells us.

More than a quarter (27%) of UK employees admit to purchasing AI tools for work without approval in the last year. More broadly, 67% say they regularly bend rules or find loopholes to access company money, while 27% report
missing business opportunities because of delays accessing spending.

These findings arent suggestive of employees deliberately trying to undermine company policy. More often, its a sign that existing processes arent keeping pace with the way people want to work.

Thats where shadow IT starts to emerge. Shadow AI is a symptom of a wider governance problem Its easy to think of Shadow AI as the problem itself. But in reality, its usually a symptom of something bigger.

The concern is that this unchecked use of AI can lead to data leakage, compliance failures, poor record-keeping and inconsistent decision-making.
So, its an important problem to nip it in the bud before it spirals out of control.

When employees feel they need to work around approved processes to stay productive, businesses quickly lose visibility over which AI tools are being used and how company data is being handled. Finance teams can quickly lose track of where money is being spent.

That creates a practical challenge for finance leaders, while businesses can find themselves managing duplicate tools, fragmented AI adoption, unmanaged spend and inconsistent governance. Exposure to scrutiny and compliance risks can also increase exponentially.

The longer those issues go unaddressed, the harder they become to unwind.
Good governance enables AI The goal is never to slow AI adoption or place unnecessary barriers in front of employees. When governance is implemented well, it makes the approved route the easiest and best way to support employees in new, more productive ways of working.

It means making sure employees have access to tools that help them work effectively, putting clear policies in place for how to use them, and making it clear whats expected.

When governance supports productivity and innovation, helping employees to address areas of friction in their roles instead of adding to it, theyre far less likely to look elsewhere for solutions. We've listed the best business software . This article was produced as part of TechRadar Pro Perspectives , our channel to feature the best and brightest minds in the technology
industry today.

The views expressed here are those of the author and are not necessarily those of TechRadarPro or Future plc. If you are interested in contributing find out more here: https://www.techradar.com/pro/perspectives-how-to-submit



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