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Everything You Need to Know About Shadow IT

CategoryHuman Risk Management
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ByThe CultureAI Team
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What is shadow IT?

Shadow IT refers to the use of information technology systems, devices, software, applications, and services without explicit approval from an organisation's IT department. 

While it sounds sinister, and has certain implications, it is not always done maliciously or with the intent of breaching security. It encompasses a wide range of digital activities where employees leverage unapproved tools to be more productive or achieve specific goals. This phenomenon is driven by the increasing availability and accessibility of technology solutions, making it easy for employees to bypass official channels.

At its core, shadow IT can be understood through two primary activities. First, employees might use unapproved tools to access, store, or share corporate data. For example, instead of using the company-sanctioned file-sharing service, an employee might opt for a personal cloud storage service like Google Drive or Dropbox because they find it more convenient or familiar. This can lead to significant security vulnerabilities, as these external tools might not adhere to an organisation's security policies and protocols.

Second, shadow IT involves the use of approved tools, but in an unauthorised way. This occurs when employees use company-approved software or applications in ways not intended or monitored by the IT department. For instance, an employee might access corporate systems from personal, unsecured devices, which can expose the organisation to potential data breaches and other security threats.

The different aspects of shadow IT

Understanding the various forms that shadow IT can take is crucial for managing and mitigating its risks. Shadow IT is not limited to software alone; it encompasses hardware and cloud services too.

Hardware

This includes personal devices such as laptops, smartphones, and tablets that employees use for work without IT department approval. These devices often lack the necessary security configurations, making them vulnerable to attacks and data breaches. For example, an employee might use a personal laptop to access company emails and files, which can be risky if the laptop lacks proper security measures.

Off-the-shelf packaged software

Employees might download and use software applications that are not sanctioned by the organisation. These can range from project management tools to communication apps, which, while seemingly harmless, can lead to data fragmentation and security risks. An employee using a non-approved project management tool to collaborate with a team can inadvertently create data silos and security gaps.

Cloud services

With the rise of cloud computing, employees may sign up for cloud services such as file storage, collaboration tools, or SaaS applications without IT approval. These services can lead to data leakage and compliance issues if not properly managed. For instance, an employee might use a personal cloud storage account to save work-related documents, making it difficult for the organisation to maintain control and security over its data.

How and why do people partake in shadow IT?

Several factors drive employees to engage in shadow IT:

Unaware of security risks

Many employees are not fully aware of the security risks associated with using unsanctioned tools. They might see these tools as more convenient or user-friendly than those provided by the company, not realising the potential dangers they pose. For instance, an employee might use a popular but unapproved messaging app for quick communication, unaware of its lack of enterprise-grade security features.

Focus on efficiency

Employees often prioritise getting their work done efficiently. If corporate-approved tools are cumbersome or inefficient, they may turn to shadow IT solutions that seem to offer a quicker or easier way to complete tasks. For example, if an organisation’s official collaboration tool is slow or lacks certain features, employees might choose to use a faster, feature-rich alternative without waiting for IT approval.

Malicious intent 

While less common, some employees may use shadow IT for malicious purposes, such as stealing sensitive data or sabotaging company systems. These individuals might intentionally bypass IT controls to carry out unauthorised activities, posing significant risks to the organisation.

Unaware of participation

Sometimes, employees might not even realise they are engaging in shadow IT. They may think they are using tools in an acceptable manner, unaware of the risks and implications. For instance, an employee might install a new software application on their work computer without considering it shadow IT, simply because it helps them perform their tasks more effectively.

Risks of shadow IT: What to look for

Shadow IT poses several significant risks to organisations, as sanctioned use of third-party tools can give cyber criminals access to data, and the power to violate personal and corporate laws.

Some key risks of shadow IT include:

  1. Sensitive data compromise: Unapproved tools often lack the necessary security measures, making it easier for sensitive data to be accessed, stolen, or leaked. This can lead to severe consequences, including data breaches and loss of intellectual property.

  2. Violation of data compliance laws: Organisations may unknowingly violate data protection regulations and compliance requirements, such as GDPR or HIPAA, when employees use unsanctioned tools that do not meet these standards. Non-compliance can result in hefty fines and legal repercussions.

  3. Business inefficiencies: Shadow IT can lead to inefficiencies, such as data silos and fragmented information, making it difficult for teams to collaborate effectively. When different teams use different tools, it becomes challenging to maintain a unified and efficient workflow.

  4. Lack of visibility: IT departments cannot manage what they cannot see. Shadow IT creates blind spots, making it challenging for IT to monitor and protect the organisation's data and systems. Without visibility, IT cannot enforce security policies, or detect potential threats effectively.

Shadow IT cost implications

The financial impact of shadow IT can be significant, affecting both security and operational costs. In extreme cases, cybercriminals can gain access to sensitive data which they can then use as ransom demands.

Some key cost implications of shadow IT include:

  1. Security Costs: If a data breach occurs due to shadow IT, the financial repercussions can be severe. Companies may face legal fees, regulatory fines, and the costs associated with data recovery and breach notification. The loss of customer trust and potential damage to the company’s reputation can also have long-term financial implications.

  2. Operational Costs: Managing and mitigating the risks associated with shadow IT can be costly. IT departments may need to invest in additional tools and resources to monitor and control unsanctioned activities, diverting funds from other critical projects. Additionally, dealing with the fallout from shadow IT-related incidents can consume significant time and resources.

How to detect if employees are partaking in shadow IT

Organisations wishing to reveal shadow IT risks, or reveal security gaps, could consider the following as part of their strategy:

  1. Integrate shadow IT detection tools: Consider integrating tools specifically designed to identify and monitor unsanctioned applications and services within the organisation's network. These tools, like CultureAI, can provide visibility into shadow IT activities and help security teams take appropriate action.

  2. Use a Cloud Access Security Broker (CASB): A CASB acts as a gatekeeper between users and cloud services, providing visibility and control over shadow IT. It can enforce security policies, monitor user activity, and detect anomalies.

  3. Incorporate just-in-time coaching for employees: Employees are often unknowingly engaging in shadow IT. By utilising tools that enable Automated Interventions and Nudges, employees can be alerted when they are using applications that don’t adhere to security protocols, and encouraged to minimise risks through positive security behaviours. 

  4. Empower security teams with data: Shadow IT often stems from human behaviour, such as employees bypassing protocols for convenience or out of frustration. By leveraging a human risk management platform, organisations can access detailed insights into their employees shadow IT activity and proactively prevent risks from occuring in real-time.

How to prevent employees from partaking in shadow IT

Shadow IT represents a significant challenge for modern organisations, posing risks to data security, compliance, and operational efficiency. By understanding what shadow IT is, why employees engage in it, and the associated risks, businesses can take proactive steps to detect and mitigate these activities. Implementing the right tools and policies to gain control over their IT environment and protect their valuable data assets.

Shadow IT risks will always exist. But by leveraging data-driven tools, like CultureAI, security teams can gain visibility of these risks and automate fixes that will keep their organisation safe from cyber vulnerabilities. 

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