The Rise of Shadow AI in South African Businesses
Shadow AI and deepfake cybersecurity risks in South Africa: There is a critical ignorance in the AI Revolution in South Africa. AI tools are becoming an integral part of doing business, from internal Copilot implementations for data synthesis to fast drafting with models like ChatGPT. These tools are essential for organisations to be fast, efficient, and ahead of their competitors.
However, an uncontrolled and disastrous threat known as Shadow AI has emerged during this era of fast adoption.
When you use unapproved or unvetted artificial intelligence (AI) tools, extensions, or plugins on your company network without proper authority or security monitoring, you are engaging in shadow AI. Secret corporate information, such as client PII and valuable IP, is probably being copied, stored, and transmitted to external servers by that “harmless” chatbot that summarises executive emails or generates complicated formulas for financial reports.
Not only does this massive blind spot represent a policy failure, but it also poses a significant regulatory and financial responsibility for local organisations.
What Is Shadow AI and Why It’s a Serious Security Risk
Need and ease of use are frequently the driving forces for the adoption of shadow AI. When approved solutions are slow or nonexistent, or if the product is quicker or easier to use, employees will resort to it. However, each instance of illegal use introduces a serious risk.
Unknowingly creating significant compliance vulnerabilities, staff who breach official, safe systems open backdoors for attackers. These result in:
- Organisations run the danger of incurring heavy fines under the Protection of Personal Information Act (POPIA) if they transfer customer or employee personally identifiable information (PII) to a location that is not subject to an approved data jurisdiction or governance structure.
- Leak Private Information: When an AI tool collects data for model training using improperly configured or unprotected APIs, it can lead to the unauthorised access of sensitive information.
- Acting as Trojan horses within the network perimeter, they frequently bypass security protocols such as established firewalls, zero-trust rules, and permitted data flow regulations.
- The lack of an auditable record they produce makes post-breach incident response, forensic investigations, and compliance with regulatory requirements extremely challenging, if not impossible.
Shadow AI is the ideal, easy target for clever bad guys in today’s threat scenario.
Data Breach Report Localisation for 2025: The Hard Facts
According to a report by IMB, about 47% of companies in South Africa have official rules for how to use AI, while another 14% are working on making them. Some common controllers are:
Approval processes for deploying AI (45%)
41% of governance tech
Training employees about the hazards of AI (37%)
The Shadow AI Tax: As an example of the direct monetary costs of poor governance, organisations with significant levels of unauthorised “shadow AI” usage incur an additional breach cost of R2.2 million on average. In addition to this, cybercriminals are increasingly turning to artificial intelligence (AI) to automate and scale social engineering or launch deepfake attacks; this accounts for roughly one-sixth of all breaches (16%) worldwide.
In the same report, the most prevalent initial sources of breaches for local businesses include third-party vendor compromise (17%), compromised credentials (13% each), phishing, and denial-of-service assaults (13%). The time it takes to contain a breach is still quite considerable, even if there have been advances. This gives attackers more time to stay within the network. The threat is estimated to be in the millions of Rands, and these figures make it clear that it emanates from mismanaged internal systems.
The Deepfake Scam: A Novel Approach to Fraud
The use of generative AI to produce convincing deepfake media is becoming a weapon in the hands of cybercriminals. Phishing and impersonation attempts have become nearly undetectable to human senses, thereby elevating the level of social engineering.
Imagine yourself on the receiving end of a convincingly frantic voice message from a “CFO” authorising a hefty wire transfer right now or a video conference call that convincingly imitates an executive requesting access to sensitive files. These were once hypothetical dangers; now they are actual security incidents aimed at taking advantage of people’s trust.
Against the rapidity and veracity of AI-generated deceit, conventional awareness training for employees is inadequate. Without robust technical controls and multi-layered verification methods, it is easy to trick staff in a matter of seconds.
Why Critical Exposure Affects Small and Medium-Sized Businesses
In South Africa, small and medium enterprises (SMBs) are frequently the targets of cybercriminals due to their lack of a specialised security team and the sophisticated AI monitoring systems that larger companies have. As a security strategy, the fallacy that “we are too small to be noticed” is extremely problematic.
Data breaches have disproportionately negative effects on small and medium-sized businesses. Legal and financial consequences, on top of penalties under the POPIA, harm to the company’s image, and a decline in consumer confidence, can have a devastating effect on its capacity to stay in business.
A Solution: Enhanced Transparency and Control
Instead of banning AI, the way forward is to properly manage technology while prioritising security. You need to have unwavering, complete sight of your surroundings.
Regaining command begins with a thorough IT Health Check from Dotcloud, which will reveal your most vulnerable areas:
- The Shadow AI tools that are now operating within your firm without authorisation.
- Security flaws in your on-premises, cloud, or remote worker systems.
- Devices that are obsolete and susceptible to attacks because of weak access controls.
- Early symptoms of breach or configuration mistakes that contravene compliance guidelines.
We provide a clear, actionable roadmap, not corporate jargon or theoretical frameworks, but a prioritised plan outlining what’s wrong, what’s working, and what immediate steps you need to take to reduce your risk.
In a positive way, AI is changing the way we operate. But unmanaged AI is an unbudgeted, multi-million Rand liability. Take the proactive step to gain control and ensure the continuity of your business.
Uncover what’s really happening behind your systems.
Book your free Dotcloud IT Health Check today.