The IT Disaster Lurking in the Shadows

Recent analyses suggest that nearly half of all cyberattacks involve elements of Shadow IT—also referred to as rogue IT, feral IT, stealth IT, grey IT, embedded IT, or client IT. The more common wording of shadow is apt, as these tools and systems frequently function beyond the visibility and oversight of IT departments.

Regardless of the label, Shadow IT is a very real and persistent issue in the everyday workplace. It has even made headlines, such as during the 2024 Disney/Slack incident.

At its core, Shadow IT refers to the use of applications, devices, or services in the workplace that have not been approved or vetted by the IT department. This practice is more common than many realize: estimates suggest that over 80% of employees use some form of unapproved technology, from personal phones and email accounts to third-party SaaS tools, to conduct business.

Crucially, Shadow IT is not usually the result of malicious intent. More often, employees adopt these tools to be more productive, bridge functionality gaps, or streamline their tasks. In some cases, Shadow IT can even deliver short-term benefits, such as increased efficiency, better user satisfaction, and lower internal costs.

However, the risks often outweigh the rewards. What employees may overlook is that officially sanctioned tools go through rigorous evaluation to ensure security, compliance, and system compatibility. When bypassed, the following risks emerge:

• Security & Data Protection Risks

  Unapproved or shadow IT tools increase exposure to unauthorized access, data breaches, and malware. These tools may bypass key controls like role-based access and multifactor authentication, leading to potential data loss, system compromise, or theft. Malicious code—intentionally or unintentionally introduced—can further jeopardize cybersecurity, especially in systems with inadequate patching or firewall gaps.

• Compliance & Legal Exposure

  Unauthorized applications may fail to meet regulatory requirements, creating audit challenges and potential legal liabilities. In industries under heavy regulation—like healthcare, finance, or utilities, shadow IT can cause noncompliance through data errors, system failures, or inaccurate reporting, leading to fines or litigation.

• Operational Disruption

  When IT is unaware of unvetted tools in use, visibility is lost, making it difficult to protect or manage systems effectively. Shadow IT can disrupt patch cycles, interfere with existing security software, and create hidden system dependencies that complicate troubleshooting and recovery efforts.

• Productivity & Collaboration Issues

  Disconnected, unauthorized tools can break workflows and hinder communication across teams. The lack of integration with approved systems creates silos, affecting overall efficiency and transparency in collaborative work environments.

• Strategic & Resource Impact

  Unsupported tools often don’t scale or integrate well, creating innovation bottlenecks. Investments of time and money in these tools can result in misalignment with organizational goals. Over time, this contributes to growing system complexity, wasted resources, and reduced agility.

• Reputational & Financial Risk

  Performance issues or data breaches caused by shadow IT can damage an organization's public image, stakeholder trust, and competitive standing. The longer these risks go undetected, the more severe the potential impact on brand and revenue.

Despite good intentions, Shadow IT can create the perfect environment for a cybersecurity breach, resulting in the exfiltration of sensitive data or the spread of malware throughout the organization.

This was starkly illustrated in the 2024 Disney incident, where the download of a free, AI-powered art tool on a company computer led to the loss of 1.1 terabytes of data, a class-action lawsuit, and one can imagine significant, though undisclosed, financial damage. The event underscores how quickly innocent actions can spiral into organizational crises.