Shadow IT: Top 5 Risks & 5 Ways to Mitigate Them

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Shadow IT

What Is Shadow IT?

Shadow IT refers to the use of information technology systems, devices, software, applications, and services without explicit IT department approval. It often arises when employees use unapproved solutions to meet their work needs.

While it can boost productivity and innovation, shadow IT poses security risks, data governance issues, and regulatory challenges if not managed properly. Unauthorized technology use makes organizational data vulnerable to breaches and compliance violations because these systems bypass the formal security measures and oversight of sanctioned IT solutions.

Employees might resort to shadow IT to circumvent perceived inadequacies in official tools. The rise of cloud computing and SaaS has enabled a broader spectrum of easily accessible, often cost-effective tools—complicating the IT department's ability to track and manage them.

Causes and Drivers of Shadow IT

Lack of Visibility Into IT Procurement

Shadow IT thrives when organizations lack transparency in IT procurement processes. Employees, frustrated by bureaucratic delays or inability to access needed tools, often turn to unauthorized solutions. This lack of visibility creates an environment where employees assume responsibility for selecting and deploying software.

Without clear insight into what the organization already offers or supports, teams default to what seems immediately beneficial, bypassing standard procedures and potentially endangering data security and compliance. An opaque procurement process also limits the IT department’s ability to enforce standardization and security protocols.

Employee Desire for Increased Productivity

Workers seek the fastest solutions to meet their needs, especially when official tools are deemed slow or inadequate. This is especially pronounced in the age of AI. Shadow IT promises immediate productivity gains, allowing employees to bypass slow-moving IT protocols and leverage the latest technology. This can lead to improved individual performance, but it introduces risks when systems are not vetted.

Organizations face a challenge when the quest for productivity takes precedence over established IT guidelines. While employees might benefit from perceived efficiency, shadow IT often lacks IT oversight and fails to align with broader organizational objectives. This divide highlights the need to develop IT offerings that meet employee demands for functionality.

Insufficient IT-Provided Solutions

Employees may find existing tools outdated or lacking necessary features, prompting them to seek alternatives that promise better functionality or alignment with their work requirements. Such insufficiency can stem from budget constraints, a lack of awareness of evolving user needs, or a focus on standardization over personalization. When official IT solutions lag, shadow IT fills the void but risks introducing unsecured platforms.

To combat this, IT must engage with users to understand their needs and anticipate future demands. This involves periodic assessments of tool effectiveness, embracing feedback channels, and promptly addressing technological gaps.

Proliferation of Cloud-Based Services and SaaS

The advent of cloud-based services and software as a service (SaaS) has fueled the growth of shadow IT. These solutions offer flexibility and are often offered free or at low cost, making them attractive to employees seeking quick and adaptable tools. The ease of acquiring these services without upfront IT approval further accelerates their adoption, often leading to a disconnect between end-user requirements and IT governance.

This proliferation can compromise data security and compliance as oversight diminishes. While cloud services provide undeniable benefits, they require stringent governance frameworks. IT departments need to identify, evaluate, and integrate valuable cloud offerings into the official IT stack to harness their potential securely.

Risks Created by Shadow IT

1. Security Vulnerabilities and Data Breaches

Shadow IT introduces significant security vulnerabilities due to its operation outside official IT governance. Unapproved tools often lack necessary security measures, leading to potential data breaches and unauthorized access to sensitive information. This risk amplifies when tools are unsanctioned and unmonitored, leaving organizations exposed to malware and phishing attacks.

2. Compliance and Regulatory Issues

Unapproved applications often bypass company-specific compliance requirements, leading to potential breaches of industry regulations and legal repercussions. Organizations face heightened risk of audits failing, penalties, and loss of credibility due to non-compliance with data protection standards such as GDPR or HIPAA, which govern how data must be handled and stored.

3. Inconsistent Data and Information Silos

Shadow IT often results in inconsistent data management and the creation of information silos. Unauthorized applications can disrupt data coherence, leading to inconsistencies and fragmentation across different platforms. These isolated pockets of information can obstruct effective decision-making processes, as decision-makers may rely on incomplete or inaccurately aggregated data to guide strategic direction.

4. Increased IT Complexity and Costs

The proliferation of unapproved tools requires additional resource allocation for monitoring, security, and support, stretching IT capabilities and budgets. Over time, managing disparate technology stacks results in increased maintenance and integration costs, detracting from strategic IT initiatives and potentially leading to inefficiencies.

5. Lack of Centralized Control and Governance

Shadow IT makes it harder to maintain centralized control over the organization’s technology environment. When employees independently adopt tools without IT oversight, it fragments governance structures and makes enforcing security policies difficult. Without centralized control, IT teams struggle to track data flow, ensure software updates, and apply security patches. When departments use different tools for similar functions, it complicates integration.

Related content: Read our guide to vulnerability assessment.

Dima Potekhin

Tips from the Expert

Dima Potekhin
CTO and Co-Founder

Dima Potekhin, CTO and Co-Founder of CyCognito, is an expert in mass-scale data analysis and security. He is an autodidact who has been coding since the age of nine and holds four patents that include processes for large content delivery networks (CDNs) and internet-scale infrastructure.

In my experience, here are tips that can help you better manage and mitigate the risks of shadow IT:

  • Use deception technology to identify shadow IT: Deploy deception tools that create fake but realistic IT assets across the network. Employees using shadow IT may interact with these decoys, allowing IT teams to detect unauthorized usage patterns and gain intelligence on unapproved tools in use.
  • Leverage AI-driven anomaly detection: Traditional monitoring tools may not catch all shadow IT activities. AI-driven behavioral analytics can identify unusual patterns, such as unexpected SaaS logins or data transfers, flagging potential unauthorized applications in real-time.
  • Implement just-in-time access controls: Restrict access to cloud services and sensitive data by enforcing just-in-time (JIT) access policies. This approach grants temporary permissions only when necessary, reducing the risk of persistent unauthorized access from shadow IT applications.
  • Use browser security tools to block unsanctioned SaaS: Employees often access shadow IT through web browsers. Deploy browser security solutions that provide visibility into web-based applications and can block access to high-risk, unapproved SaaS tools without disrupting legitimate work.
  • Create a rapid IT approval sandbox for new tools: One of the biggest drivers of shadow IT is slow approval processes. Establish a secure, temporary "sandbox" environment where employees can test new tools under IT supervision before formal adoption, reducing the temptation to use unauthorized solutions.
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Examples of Shadow IT in the Enterprise

Unauthorized Cloud Storage Solutions

Unauthorized cloud storage services, such as Dropbox, Google Drive, or OneDrive, are a common example of shadow IT. Employees often use these platforms to share and store work-related files, bypassing approved systems due to their ease of use and accessibility. However, these tools pose significant risks, including data leakage, unauthorized access, and non-compliance with organizational policies or data protection regulations like GDPR or HIPAA.

Unapproved Collaboration Tools

Unvetted collaboration tools such as Slack, WhatsApp, or Trello are frequently adopted by teams seeking efficient communication and project management solutions. While these tools can boost productivity, they often operate outside the IT department's oversight, making it difficult to monitor data exchanges, ensure secure communications, and maintain consistent record-keeping.

Personal Devices and BYOD Challenges

The bring your own device (BYOD) trend has amplified shadow IT concerns, as employees use personal smartphones, laptops, or tablets to access corporate resources. While BYOD improves convenience and productivity, it introduces security vulnerabilities such as unsecured networks, outdated software, and lack of endpoint protection. These challenges complicate IT management and increase the likelihood of data breaches.

5 Best Practices to Mitigate Shadow IT Risks

Here are some of the ways that organizations can ensure better management of shadow IT.

1. Educate Employees on Security Policies

Organizations must prioritize educating employees on the risks of shadow IT and the importance of adhering to security policies. Training programs should address the dangers of using unauthorized tools, including potential data breaches, financial losses, and regulatory non-compliance. These sessions can also highlight the organization's approved tools and explain how to request new ones if necessary.

Ongoing education can take the form of workshops, e-learning modules, or hands-on demonstrations. Incorporating real-world examples of shadow IT incidents and their consequences can make the training relatable and impactful. Organizations should also ensure that training materials are accessible to all employees, updated regularly, and supplemented with reminders through emails, newsletters, or intranet notifications.

2. Offer Secure and Approved Alternatives

Employees should have access to secure and user-friendly tools that meet their operational needs. IT departments should engage with employees to identify pain points in existing tools and evaluate alternatives that align with user requirements and organizational policies. If solutions offer adequate functionality, employees are less likely to seek unapproved software.

It's also critical to simplify the process of requesting new tools or features. Bureaucratic hurdles often drive employees to shadow IT, so creating a responsive, simplified approval system encourages compliance. Offering quick-access libraries of pre-approved tools and providing clear guidelines for their use further reduces the need for unsanctioned applications.

3. Regularly Audit and Monitor Network Activities

Organizations should leverage advanced monitoring tools like firewalls, endpoint protection systems, and network traffic analyzers to track unauthorized application usage. These tools can provide real-time insights into data flows, flag suspicious activities, and pinpoint unapproved software.

Regular audits should extend beyond detecting shadow IT to assessing compliance with organizational standards and legal regulations. A structured audit process can reveal vulnerabilities, such as outdated tools or overlapping functionalities, and help IT teams address gaps in security and efficiency. Establishing a cycle of audits—quarterly, bi-annually, or annually—ensures that shadow IT risks are consistently reviewed and managed.

4. Foster a Culture of Compliance and Security

A security-conscious workplace culture is critical in preventing shadow IT from proliferating. Organizations can achieve this by emphasizing the value of compliance and collaboration during onboarding sessions, team meetings, and internal communications. Leaders should consistently advocate for secure IT practices, setting an example for employees to follow.

Creating open and non-punitive communication channels encourages employees to voice concerns, report unauthorized tools, or request guidance without fear of reprimand. Recognizing and rewarding individuals or teams that demonstrate strong adherence to IT policies can further promote a positive and security-focused environment. Hosting regular workshops can bridge gaps between employees and IT departments.

5. Create and Maintain an Asset Inventory

Organizations should catalog all authorized hardware, software, and cloud services to establish a baseline for approved technologies. This inventory should include details such as ownership, usage, licensing status, and security controls. To keep the inventory accurate, IT teams must implement automated asset discovery tools that continuously scan the network for unauthorized applications and devices.

These tools help detect shadow IT in real time, allowing organizations to take corrective action before risks escalate. Regular updates and reconciliations of the inventory ensure that new tools are properly vetted and obsolete ones are decommissioned securely. Asset management and security and compliance frameworks also help improve visibility into potential vulnerabilities.

Detecting and Preventing Shadow IT with CyCognito

Organizations that start using the CyCognito platform often find that their attack surface is larger than they expected. The difference in attack surface size comes from unmanaged or unknown assets that were invisible to IT and security departments, including cloud environments and applications, third-party networks, partners, subsidiaries and other shadow IT.

Visibility into your entire attack surface is critical to your ability to identify and eliminate your shadow risk, the risk associated with your attacker-exposed assets. CyCognito’s seedless discovery process identifies any assets linked to an organization – even shadow IT assets that security teams don’t know about. CyCognito also identifies key context and attributes for each asset, including attributing it to the right part of the organization to accelerate attribution and remediation.

On-Demand Webinar

Gain Visibility and Enforce Security Policies for Assets across Public Clouds

The digital transformation from on-premise environments to public cloud environments has made managing all assets exposed to the internet very challenging for IT and Security teams.

Aviel Tzarfaty

Join Aviel Tzarfaty, Product Manager at CyCognito, as he explains how your Security team can create a plan to increase visibility into internet-facing cloud environments, run automated and continuous testing across all assets, and be made aware as soon as any security risks arise for any cloud-based assets.

Watch the Webinar