The Business Risks of Shadow IT

If your business has an Information Technology (IT) department or person, you may assume that your data and network are relatively secure. That’s a reasonable assumption, since you’ve got at least one dedicated person overseeing your IT components. Unfortunately, it’s not necessarily a valid assumption. Odds are high that your employees have brought IT systems and solutions into the workplace that your IT person or department doesn’t know about and isn’t monitoring. According to a study conducted by cloud management firm 2nd Watch, more than 60% of employees circumvent their IT departments and use shadow IT. It’s important to understand the business risks of shadow IT and to have Indiana Cyber Liability Insurance protection in place.


One of the negative aspects of shadow IT is that when employees use it for work that’s shared between multiple employees, their results may be incompatible with IT-approved programs that do the same thing. For example, if employee A uses a shadow IT program to create a spreadsheet that will be used by employees B, C, and D who use the IT-approved spreadsheet program, the two versions may not be interchangeable.

Data Security

Because IT may be unaware of shadow IT programs, they’re not able to confirm that proprietary information and sensitive data is adequately protected or backed up. This puts a business at risk of cyber crime and loss of company intellectual data if an employee leaves the business and the business has no backup of the company information stored within the unauthorized program.

Lost Productivity

When your employees use shadow IT programs, they spend time installing them, managing them, and troubleshooting problems that arise. Since they can’t go to IT for help, because they’re using an unauthorized program, it’s up to them to research solutions. This is time spent on something other than the job you’re paying them to do.

While there are definite risks associated with shadow IT, there are also potential benefits. Embracing a corporate culture that encourages transparency about shadow IT can help your IT personnel stay on the cutting edge of new technologies. If your employees are using shadow IT, that indicates your existing IT may be inadequate. To protect yourself against shadow IT risks, call Walker & Associates Insurance at (888) 760-7292 to discuss cyber liability coverage.