Shadow AI: New Guidance Forcing Businesses to Take Control - Blockstars Technology

29 Oct 2025 5:30 AM

Key Facts:

• NAIC releases new Guidance for AI Adoption as Australian businesses face risks from unregulated AI implementation and shadow AI usage
• Research shows gap between AI adoption and governance, with less than one-third of businesses implementing responsible AI practices
• New guidelines outline practical steps including AI policies, formal registers, clear roles and accountability structures, and employee training
• Future regulation is on its way, businesses are urged to implement proper AI governance frameworks to avoid potential damages

As Australian businesses accelerate their integration of artificial intelligence (AI) technologies, the National Artificial Intelligence Centre (NAIC) just released the new “Guidance for AI Adoption” aimed to establish governance and implementation of AI into Australian businesses operating in the dangerous shadows of AI.

Recent research reveals a growing gap between the pace of AI uptake in organisations and the maturity of governance around its use. The NAIC’s own data identifies that while many businesses believe they align with Australia’s AI Ethics Principles, fewer than a third have implemented foundational responsible-AI practices.

Additionally, the phenomenon of “shadow AI” employees using unauthorised, consumer-grade AI tools without oversight, is emerging as a material risk for Australian businesses.

Australia has also lagged behind global AI legislation, leaving local businesses exposed to privacy, data, compliance and reputational threats. The newly released guidance signals a shift, placing greater accountability on companies and ending what experts have labelled the “Wild West era” of AI.

The NAIC guidelines outline practical steps for responsible AI, including AI policies, formal registers, clear roles and accountability structures, and employee training. Businesses that fail to act could find themselves on the wrong side of future regulation, with the government actively progressing AI-related legislation.

Experts warn that by jumping into AI without putting any practices in place can cause unrecoverable reputational, expense or operational damages.

“AI is no longer just an optional efficiency tool,” said Mr Kosala Aravinda, Chief Operations Officer at Blockstars Technology. “It is a business-critical capability. But the organisations that will succeed are those who adopt AI with governance, accountability and respect for people at their core.”

“From data leakage to incorrect storage of data, the risks of deploying AI without proper governance are real,” said Mr. Kosala Aravinda. “That’s why at Blockstars we build solutions specific to businesses needs and requirements from the ground up with data sovereignty, transparency and tailored governance in mind.”

The guidelines represent the use of Responsible AI with straight forward guidelines such as AI policies, registers, defining roles and responsibilities with oversight in the workplace along with training and awareness programs.

Leading expert warns this is the government just getting started, but businesses will be held liable and some of the biggest areas that aren’t being considered is protection and storage of individual company’s data.

“Now is the time to act,” Mr Aravinda urged. “Whether you’re a small enterprise experimenting with AI or a larger organisation scaling across multiple departments, adopting these best-practice frameworks will differentiate the leaders from the followers.”

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About us:

Blockstars Technology is a leader in AI solutions, dedicated to helping industries harness the power of Artificial Intelligence securely and responsibly. Blockstars help Australian companies adopt their own in-house AI which complies with guidelines and offer information and templates on their website. By combining cutting-edge technology with a focus on data privacy, sovereignty, and ethical AI practices, Blockstars Technology empowers Australian businesses to thrive in the digital age.

Contact details:

Blockstars Technology

Kirstie

[email protected]

+61 404 682 986

https://blockstars.ai/

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