Your employees could be your greatest cybersecurity threat, not just because they might click on phishing emails or reuse passwords, but because they are using applications that your IT department is unaware of.

This phenomenon is known as Shadow IT, and it is rapidly becoming one of the most significant security threats for businesses today. Research from Gartner estimates that shadow IT accounts for 30% to 40% of IT spending in large enterprises, and the risk is even less visible at smaller firms. For CPA firms, law firms, and financial services companies in San Jose, Campbell, Cupertino, and across the Bay Area, shadow IT is especially dangerous because unauthorized tools may violate client confidentiality requirements and regulatory obligations. Employees often download and utilize unauthorized applications, software, and cloud services—typically with good intentions—but this behavior creates substantial security vulnerabilities without their awareness.

What Is Shadow IT?

Shadow IT encompasses any technology employed within a business that has not been approved, vetted, or secured by the IT department. Examples include:

  • Employees utilizing personal Google Drives or Dropbox accounts to store and share work-related documents.

  • Teams signing up for unapproved project management tools like Trello, Asana, or Slack without IT oversight.

  • Workers installing messaging apps such as WhatsApp or Telegram on company devices for communication outside official channels.

  • Marketing teams employing AI content generators or automation tools without confirming their security.

Why Is Shadow IT So Dangerous?

The lack of visibility and control over these tools means that IT teams cannot secure them, leading to various threats for businesses.

  • Unsecured Data-Sharing: Employees using personal cloud storage, email accounts, or messaging apps may inadvertently leak sensitive company information, making it easier for cybercriminals to intercept.

  • No Security Updates: While IT departments regularly update approved software to address vulnerabilities, unauthorized applications often remain unchecked, leaving systems vulnerable to hackers.

  • Compliance Violations: Businesses subject to regulations like HIPAA, GDPR, or PCI-DSS may face noncompliance, fines, and legal issues due to the use of unapproved applications. The IBM Cost of a Data Breach Report found that organizations with high levels of noncompliance paid an average of $5.05 million per breach.

  • Increased Phishing And Malware Risks: Employees might unknowingly download malicious applications that seem legitimate but carry malware or ransomware.

  • Account Hijacking: Utilizing unauthorized tools without multifactor authentication (MFA) can expose employee credentials, enabling hackers to access company systems.

Why Do Employees Use Shadow IT?

In most cases, the use of Shadow IT is not malicious. For instance, the “Vapor” app scandal revealed an extensive ad fraud scheme uncovered by IAS Threat Labs. In March, over 300 malicious applications were found on the Google Play Store, collectively downloaded more than 60 million times. These apps masqueraded as utilities and health tools but were designed to display intrusive ads and, in some instances, to phish for user credentials and credit card information. Once installed, they concealed their icons and inundated users with full-screen ads, rendering devices nearly unusable. This incident underscores how easily unauthorized applications can compromise security.

Employees may also resort to unauthorized apps because:

  • They find company-approved tools frustrating or outdated.

  • They seek to work more quickly and efficiently.

  • They do not recognize the associated security risks.

  • They believe that obtaining IT approval takes too long, leading them to take shortcuts.

Unfortunately, these shortcuts can have significant consequences for your business in the event of a data breach.

How To Stop Shadow IT Before It Hurts Your Business

To address Shadow IT effectively, you must take a proactive approach. Here are some steps to consider:

1. Create An Approved Software List

Collaborate with your IT team to develop a list of trusted, secure applications for employee use. Ensure this list is regularly updated with newly approved tools.

2. Restrict Unauthorized App Downloads

Implement device policies that prevent employees from installing unapproved software on company devices. They should request IT approval before acquiring any new tools.

3. Educate Employees About The Risks

Employees must understand that Shadow IT is not merely a productivity shortcut but a genuine security risk. Conduct regular training sessions to inform your team about the dangers associated with unauthorized apps.

4. Monitor Network Traffic For Unapproved Apps

IT teams should utilize network-monitoring tools to identify unauthorized software usage and flag potential security threats before they escalate.

5. Implement Strong Endpoint Security

Deploy endpoint detection and response (EDR) solutions to monitor software usage, prevent unauthorized access, and detect any suspicious activity in real-time.

Don’t Let Shadow IT Become A Security Nightmare

The most effective way to combat Shadow IT is to address it proactively before it leads to a data breach or compliance crisis.

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employees are using right now**? Start with a FREE Discovery Call. We’ll identify vulnerabilities, flag security risks and help

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Frequently Asked Questions

What are the risks associated with employees using unauthorized apps in the workplace?

Using unauthorized apps, often referred to as Shadow IT, poses several risks, including unsecured data sharing, increased exposure to phishing and malware, and the potential for compliance violations. Since these apps are not vetted by IT, they often lack necessary security updates, leaving systems vulnerable to cyberattacks.

How can businesses identify instances of Shadow IT within their organization?

To identify Shadow IT, businesses can conduct regular audits of software and applications in use, engage employees in discussions about the tools they utilize, and implement monitoring software that tracks application usage. Creating an open dialogue about technology needs can also encourage employees to communicate their tool preferences, making it easier for IT to manage risks.

What steps can companies take to mitigate the risks of Shadow IT?

Companies can mitigate Shadow IT risks by establishing clear policies that outline acceptable software and applications, as well as providing employees with approved alternatives that meet their needs. Regular training and awareness programs can help employees understand the importance of using authorized tools and the potential risks of using unapproved ones.

How can One82 help firms manage Shadow IT effectively?

One82 offers tailored IT and cybersecurity solutions that help businesses identify unauthorized applications and implement effective policies to manage Shadow IT. By partnering with a managed IT provider, firms can enhance their security posture while ensuring employees have access to the tools they need to work efficiently.