Expense records, DNS and proxy logs, browser telemetry and on-device discovery each find a different slice of shadow AI. None finds all of it, and the gap between what staff report and what the fleet shows is usually large enough to change the policy.
The four methods
Each one sees a different slice.
Running one of these and stopping is the common mistake. Expense data finds what was paid for, which is the smallest and least risky category, because a tool somebody paid for usually went past somebody.
The tools that matter most are free, signed into with a personal account, and invisible to everything except the device.
- 01
Expense and procurement
Finds paid subscriptions and shadow spend. Misses every free tier, which is where most of the risk sits.
- 02
DNS, proxy and CASB logs
Finds the hostnames reached from the corporate network. Misses anything on a personal device, on a home network, or on a domain nobody recognised as an AI tool.
- 03
Identity and SSO logs
Finds tools people signed into with the work identity. Misses, precisely, the personal account on the same product.
- 04
On-device discovery
Finds what is actually opened and used on the managed laptop, including free tiers and personal logins, and can report the hostname without reading the content.
What the numbers look like
The reported figure and the measured one rarely match.
Employee AI adoption has moved extremely quickly: industry reporting through 2025 and 2026 put it at roughly a threefold rise inside a single year, and incidents attributed to shadow AI have risen several times over in DLP data sets.
IBM's breach cost research put the shadow AI premium at roughly $670,000 on top of an average breach, which is the figure most useful in a business case because it is about consequence rather than volume.
Check the figures before you quote them. These numbers move every reporting cycle, and a slide citing last year's study is easy to challenge in a room.
What to do with it
Sanction a few tools, then watch the rest.
Discovery is not a prelude to a ban. The organisations that handle this well pick a small number of tools, put them under contract properly, and make those the easiest option available.
Everything outside that list is then a reporting question rather than an enforcement one, and the policy can be written against measured behaviour instead of an assumption. A tool that reports a hostname and never the content is what makes that defensible to the people being measured.
Reading the output
Rank the output by data class rather than by volume.
The first discovery run produces a longer list than expected, and the instinct is to start at the top by request count. That ranking is almost exactly wrong.
The tool with four thousand events is usually a translation or summarising habit with nothing regulated in it. The tool with nine events can be the one where somebody pasted a patient list. Sort by what was in the message, with destination as the second key, and the queue becomes short enough to work through in an afternoon.
Two entries deserve attention on their own. Personal accounts on tools you have already approved, because your contract governs the tenant and not the login. And hostnames nobody recognises, which is where a genuinely new tool shows up before procurement has heard of it. A count of unrecognised hosts is a better weekly number than a total event volume, and it is the one we would look at first.
Combining them
The gap between the survey and the fleet is the finding.
Running one discovery method and treating the output as the answer is the common mistake. The useful move is to run two and read the distance between them.
The pair worth running is the survey and the endpoint. The survey tells you what people believe they are doing and are willing to write down. The fleet tells you what is actually happening. Where they agree, you have a tool people use openly and you can go and contract for it. Where the fleet shows something the survey did not, you have either a tool people were not sure they should mention or one that arrived inside software you already approved, and those need different responses.
Report the gap rather than the raw count. A steering group that hears "staff named four tools and the fleet shows nineteen" understands the problem immediately, where a list of nineteen hostnames produces a debate about whether each one matters.
| Method | Sees | Misses |
|---|---|---|
| Survey | Intent, and the tools people will admit to | Anything unapproved, and assistants inside approved software |
| Network logs | Hostnames, volume, timing | Content, so severity cannot be judged |
| Extension inventory | Installed add-ins | Everything used in an ordinary browser tab |
| Endpoint discovery | What the device does, with content | Personal phones, which are outside the fleet |
The monthly number
Track how fast your approved list is going out of date.
Discovery is usually run once, which is the mistake that guarantees running it again in a year as though it were new.
The number worth reporting every month is not total AI usage, which rises as adoption rises and tells you nothing about risk. It is the count of destinations nobody has seen before. That number is a direct measure of how fast your approved list is decaying, and it is the one that tells you whether your review cycle is frequent enough or whether your policy is describing a world that has moved on.
Two or three new destinations a month is ordinary and healthy, and means the triage is working. Twenty means your sanctioned tool is not doing the job people need, and no amount of policy will fix that. The limit worth stating: this measures the devices you manage, so a rising number is a signal and a flat number is not proof of anything.
Questions
Can we just ask people what they use?
You can, and the answer will be incomplete. Not through dishonesty: people forget the tool they used twice last month, and they rarely count the assistant built into something they already had. Survey results are a useful prompt for a conversation and a poor basis for a policy.
Will a CASB or web proxy find shadow AI?
Partially. It sees hostnames reached from your network, which is real coverage. It does not see a personal device, a home network, or the many AI features now embedded in products that are not categorised as AI tools.
Does discovery mean reading what people type?
It should not. Reporting that a device reached a hostname is a different operation from inspecting the content of the session, and a product should be able to do the first without the second. If a vendor cannot separate them, that is worth knowing early.
How long does a first pass take?
Expense and identity data can be pulled in a day. Network logs depend on whether anybody has categorised AI domains. On-device discovery gives a usable picture within about a week of the agent reaching the fleet, because it reports as it goes.
What do we do about a tool we find that nobody approved?
Usually nothing punitive. The useful question is whether regulated data is reaching it. A popular unapproved tool is a signal that a sanctioned option is missing or worse, and the fix is often procurement rather than enforcement.
Is this a one-off exercise?
No, and that is the main trap. The tool list changes monthly. Discovery that runs continuously is worth considerably more than an audit that produced a spreadsheet somebody filed.
How long does a first discovery run take?
Two to four weeks of observation gives a stable picture. Shorter than that and you are reading a sample distorted by whatever happened that week. The first few days always look worse than the steady state, which is a measure of how long the gap has been open, not of your staff.
Should we tell people we are running discovery?
Yes, and in several jurisdictions you must. Beyond the legal position, discovery run quietly and then revealed is the version that costs you the goodwill a rollout depends on. Announced as finding out which tools to support, it is usually uncontroversial.
What should we do with the list once we have it?
Rank it by what was in the messages rather than by request volume, pick the sanctioned tool for the common use cases, and only then write the policy. The number worth tracking afterwards is how many unrecognised destinations appear each month, because that is how fast your approved list goes out of date.
Keep reading
- Glossary Sanctioned AI tool A tool approved under contract with agreed data handling terms, and why that approval attaches to the account rather than to the website. 3 min read
- The business case What an AI data leak costs The numbers that stand up in a budget conversation, where they come from, and the two costs that never appear in the breach studies. 6 min read
- Product Itzal Lens Finds where sensitive data already lives and which AI tools are already in use. Product page
- Product Surface coverage An honest coverage matrix for AI DLP: which surfaces Itzal inspects, which it doesn't. Product page