Shadow IT: What Is It, What Are The Risks, and How To Avoid It

It creeps into organizations slowly, often unnoticed at first. It starts with an employee who needs to get something done quickly and can't wait for the Information Technology (IT) Department's ‘lengthy’ approval process. They found a cloud-based tool online that fit the bill perfectly.

With just a credit card, they're up and running in minutes, sharing files and collaborating with colleagues. Word spreads, and soon, other teams are using the same tool, drawn to its ease of use and its ability to solve pressing needs. However, everyone is unaware of any security risks that may exist with the solution.

This is called Shadow IT. This happens when employees use any IT hardware, software, or services without the knowledge or approval of Enterprise IT. These actions can potentially create security risks and compliance issues for businesses and the Enterprise environment.

The Risks Of Shadow IT

The primary risks of shadow IT include increased vulnerability to data breaches, potential compliance violations from unauthorized software, data loss from unapproved platforms, lack of visibility for IT teams, and inefficiencies from poorly integrated systems.

(WyIT 2002, Data Protection for Electronic Government Services)

When employees circumvent IT policies and venture outside of authorized solutions to share and disseminate company-owned data (i.e. using cloud storage solutions like DropBox), it inadvertently puts unsubstantiated risk on both the employee and the employer.

These types of solutions typically lack the robust access controls, encryption, and other safeguards needed to properly protect confidential business information. Sensitive financial data, customer records, product plans, and more could easily fall into the wrong hands if stored on an unsecured cloud platform.

Similarly, storing sensitive company data on unapproved platforms is a risky practice that can lead to accidental leaks or exposure to confidential information. When employees use personal cloud storage, USB drives, or unsecured apps to save or share files, it opens up vulnerabilities that threat actors could potentially exploit to gain unauthorized access. (WyIT 2002-GL, Data Loss Prevention Guideline)

Even if a data breach isn't malicious, inadvertent sharing of files containing customer PII, financial records, product plans, or other proprietary data with the wrong parties can cause major incidents.

Unapproved platforms typically lack the robust access controls, encryption, monitoring, and other enterprise-grade security measures that IT teams use to protect sensitive information. Using them bypasses critical safeguards and makes it much more likely that private data will end up in the wrong hands, resulting in compliance violations, reputational damage, financial losses, and eroded customer trust.

Shadow IT can pose significant compliance challenges for organizations. When employees or departments implement their own technology solutions outside of officially sanctioned IT systems, it becomes difficult for the organization to maintain a complete inventory of where data is being stored and accessed.

This lack of visibility and control over usage can lead to major gaps in regulatory compliance efforts. If auditors or regulators request information on how data is being handled, the organization may be unable to provide a full accounting, since they don’t know of all the places data resides within shadow systems.

When employees start using unapproved apps and services to get their work done, it can spell big trouble for data security. These shadow IT platforms often fly under the radar of official IT and security policies.

While they may help people collaborate and be productive, they also open up huge risks of sensitive company and customer data leaking out or falling into the wrong hands. This is a recipe for accidental breaches, compliance violations, and data loss nightmares.

The apps people adopt on their own usually lack the strict access controls, encryption, backup procedures, and other safeguards that IT would normally put in place.

IT teams often struggle with shadow IT. This can create significant challenges when managing risks across the organization. When employees get and use their own tech solutions, it leads to a complex, fragmented IT environment that is difficult for IT to maintain full visibility into.

From unsanctioned cloud storage apps to messaging platforms to hardware connected to the network, shadow IT means there may be countless systems operating under the radar, storing corporate data and connecting to company infrastructure. This prevents any IT Team from ‘seeing’ a complete picture of an organization’s IT footprint, and they cannot effectively assess vulnerabilities, monitor for threats, ensure proper data handling practices are followed, and keep systems patched and up-to-date.

Using technology deployed without the knowledge or approval of the IT department can lead to significant challenges with system integration and overall productivity. When employees implement their own apps, software, or cloud services to get work done, these tools often aren't compatible with a company's core systems and infrastructure.

This creates information silos and duplicate processes, as data gets spread across disparate platforms that do not seamlessly connect or share information. Time is wasted manually transferring data, dealing with formatting issues, or even re-doing work.

Without centralized management and governance, shadow IT creates an inefficient patchwork of isolated solutions that don't play well together. While the original intent may be to solve a business need quickly, the downstream impact hinders productivity as people struggle with workarounds, mistakes, and extra effort to cope with poorly integrated systems.

Shadow IT Best Practices for Employees

When it comes to shadow IT, there are some best practices employees should follow. First, always get approval from IT before using any currently unapproved apps or services for work.

(WyIT 3002, Security Exception Request Policy)

They need visibility into what's being used to keep things secure.
(WyIT 3001, Security - Acceptable Use Policy)

It's also smart to stick with well-known, reputable tools rather than obscure ones, even if the latter seems more convenient. The ‘big names' usually have better security and support.

Lastly, if you find a great tool you think would benefit the company, route it to IT through the proper channels rather than just running with it on your own.
(WyIT 3002, Security Exception Request Policy)

They can vet it properly and roll it out safely if it makes sense. The bottom line is a little proactivity and communication with IT goes a long way in keeping shadow IT from putting the organization at risk.

Conclusion

Shadow IT may provide short-term gains in speed and agility, but the long-term risks and costs often outweigh any benefits. When business units circumvent IT and implement their solutions, it leads to a fragmented technology landscape that becomes increasingly difficult and expensive to manage over time. By bringing shadow IT into the light, organizations can optimize their technology investments and enable the business while keeping risks in check.