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4 Practical Strategies To Eliminate Shadow IT Risks

As per statistics, a business used 130 SaaS applications on average in 2022. The number has been steadily increasing since 2015. 65% of these SaaS applications are unapproved by the corresponding IT departments – hence, a part of shadow IT.

Considering the speed and agility with which businesses move today, it is almost impossible to eliminate shadow IT. An attempt to do that could do more harm than good in terms of productivity, employee morale, and efficiency. What a business can benefit from is the identification and mitigation of the risks posed by shadow IT.

This article will discuss the risks posed by excessive and unmonitored usage of unauthorized IT tools and applications, followed by strategies that can be implemented to reduce risk and enhance productivity. First, it is important to understand why shadow IT is risky for a business.

Understanding the entry point of shadow IT

Shadow IT refers to the usage of information technology tools and services by an organization’s employees without the IT department’s explicit approval. For instance, an employee logs into a third-party service with a business email ID, shares certain data that belongs to the business and potentially leaves the site without logging out, and all of this happens outside the IT department’s knowledge.

While an individual or a group may adopt shadow IT practices to increase productivity and improve workflow, the chances of these practices backfiring are quite high. Even if a particular SaaS application fits perfectly with the business needs, bypassing IT protocols is bound to have its consequences.

Strategies to Mitigate Shadow IT Risks

Businesses can significantly decrease the negative impact of shadow IT while empowering their teams and employees with more agility.

Create policies that are empowering rather than restrictive

Employees try out new tools or install new applications to do their jobs better often without realizing the importance of due diligence even for the smallest installation. It is important for an organization to create comprehensive policies that take the impulse of an employee to get something done in a hurry into account.

IT protocols should be accessible to all employees across teams. Policies should be explained in a way that is digestible for everyone. Most important, companies should have regular dialogue to understand their needs and preferences in terms of using various tools and third-party applications.

Employees should not feel that the organization is trying to restrict their ability to find better and more efficient solutions. Instead, they should be encouraged to incorporate appliances that can benefit the business so that the IT department can get involved and create sanctions.

Identify and analyze assets

Organizations need to detect shadow IT assets. This can be done with the help of an enterprise password management solution like Uniqkey that can create an inventory of all services and applications being used within an organization with or without the IT department’s approval.

Once all such assets are identified, they need to be contextually analyzed for importance, utility, security, and cost-effectiveness.

At this point, the organization can immediately discard unnecessary or underutilized tools and bring the rest under formal IT governance so that all security policies apply to them.

Get the right tools for the teams

The use of shadow IT is an indication that the sanctioned IT assets are falling short and employees are forced to try alternatives. It is important to build a bridge of communication between the IT department and the rest of the organization.

An open dialogue involving different stakeholders ensures the right balance is struck between IT policies and functional needs and the most effective services are bought.

Be it buying a document-sharing platform, a communications tool, a design tool, or cloud storage, it is important that the purchases serve the end users and help them tackle their key pain points.

Implement sufficient security measures

  • Deploy multifactor authentication and the principles of least privilege to control and monitor access to the company’s network as well as data.
  • Use a zero-knowledge password management solution to store, encrypt and access all credentials.
  • Set up an attack surface monitoring system and an intrusion detection and prevention system.
  • Have an effective incident response protocol in place.
  • Conduct frequent internal and external security audits.   

Why is shadow IT risky?

Shadow IT opens up new attack surfaces that are unaccounted for by the IT teams. By using unapproved software or hardware, individuals or groups may end up causing data breaches, malware injection attacks, and credential theft, among other things.

Apart from causing a loss of reputation and revenue, these occurrences can result in violations of security regulations like the GDPR, SOC2, HIPAA, PCI-DSS, or ISO 27001, leading to hefty fines and penalties.

A business protects itself from common cyber threats and compliance violations by following certain security policies. These policies are administered by security teams that are part of the IT department.

The policies and protective measures are taken based on the organization’s attack surfaces among other factors. The security personnel identify assets and potential points of exposure to mitigate security risks. Shadow IT creates blind spots for the security teams, making the organization vulnerable.

The 6 shadow IT risks that could sink your business

Shadow IT can take many forms, from collaborating on a specific data-sharing platform without the IT department’s knowledge to working with an Infrastructure as a Service (IaaS) or cloud service provider without the IT department’s explicit approval.

It is not limited to software. Personal computers, phones, tablets, and data storage devices, all can be categorized as shadow IT unless they are duly authorized. Each use case comes with risks in terms of security and the return on investment.

Lack of visibility and control

By definition, shadow IT goes unmonitored by the IT security teams. As a result, vulnerabilities, misconfigurations, and potential compliance violations that may be introduced by the use of unapproved software and personal devices stay unnoticed.

These applications do not receive regular patches nor do they come under due scrutiny during vulnerability assessments. Organizations keep running their operations completely oblivious of the lingering cybersecurity vulnerabilities. According to a 2019 survey by IBM, 1 in every 5 companies faced a security incident triggered by shadow IT.

Data at risk

If an employee uses a personal account with a software service to create and store data that belongs to the organization, chances are that the latter will face data loss when the employee resigns. Not only that, but since the personal account and the data stored in it is outside the jurisdiction of the organizational information security policies, they may not be backed up, encrypted, or protected by intellectual property rights.

Poor data quality

This issue follows the previous one closely. When employees use self-provisioned tools to ease up their work, the organization finds it hard to maintain a single source of truth. Oftentimes, data is unavailable, inconsistent, and incorrect as it flows from one platform to another. The prospect of data-driven decision-making is dilapidated when teams use shadow IT.

Unprotected attack surfaces

Shadow IT significantly expands an organisation’s attack surface – entry points for malicious actors. Worse, the hardware and software not governed by IT policies are also not protected by the security protocols.

For instance, an organization might have a strict password management policy for all third-party apps used for functionality. Still, it means nothing if employees use unauthorized, more critical, unrecognized applications for work, use easy-to-guess passwords, and store them without encryption.

Businesses lay down access and security controls, conduct security audits, and design intricate data policies to comply with stringent data security and privacy regulations like the General Data Protection Regulation (GDPR), Health Insurance Portability and Accountability Act (HIPAA), and Payment Card Industry Data Security Standard (PCI-DSS) among others.

Shadow IT appliances are usually set up and used without compliance expertise. Hence, they introduce the risk of compliance violation which may lead to hefty fines and even legal action against the organization.

Operational inefficiency

Using shadow IT to enhance workflow and increase productivity proves to be counterintuitive in the long run. When the IT department makes changes to the network resources or reprovisions assets, it doesn’t take shadow IT into account, thereby disrupting the workflow that depends on such tools.

There is more to this issue. When employees and teams take matters into their own hands to counter IT inefficiencies, the organization fails to recognize the need for additional IT resources or policy changes.

The financial burden

On average, shadow IT accounts for a third of an organization’s IT spending. Here’s how the cost of shadow IT builds up and becomes a burden.

  • If individuals and teams use shadow IT solutions, the sanctioned software may stay underused and the licensing amounts go to waste.
  • Enterprise-scale applications are better suited to cater to corporate needs. They offer cheaper scalability than personal subscriptions.
  • An organization is in a much better position to negotiate while buying software than individual buyers. A business ends up saving a lot of money in this way.
  • Security incidents associated with shadow IT may incur hefty fines and penalties.

There are ways to mitigate the threats introduced by shadow IT practices within an organization. The following section will discuss some approaches to reducing the dependencies on shadow solutions and some strategies to mitigate shadow IT security risks.

Why not just banish shadow IT altogether?

Trying to completely shun shadow IT is equivalent to prohibiting employees from exploring better and faster ways to get their jobs done. Technology is advancing so rapidly that businesses risk being left behind unless they do not allow their people to push forward and look for better solutions. Here’s what managed shadow IT may help accomplish:

  • Enable employees to align themselves with the ever-evolving technological landscape and become more agile.
  • Increase the efficiency of employees
  • Reduce the cost of procuring IT assets where not necessary.

Shadow IT needs to be monitored, managed, and controlled to ensure security, data loss prevention, and compliance.

Protect your business from the risks of shadow IT with Uniqkey. Get started for free today.


Uniqkey is the perfect password management solution for teams and businesses. Built with high usability in mind, Uniqkey makes it easy for employees to adopt secure password habits, raising company-wide security in a simple and effective way.