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Overcoming the Threat of Shadow Data

A data analyst using many EUC tools to complete his data analysis work. He sits at a desk with six computer screens.

Shadow data poses significant security and compliance risks for businesses. This article explores the nature of shadow data, its prevalence across industries, associated risks and effective strategies for managing and mitigating these threats to ensure secure and efficient operations.

What is Shadow Data, and Why Should You Care?

Defining Shadow Data

Shadow data refers to information stored and processed outside of authorised and supported IT systems. Common examples include complex Excel models, personal devices, and unsanctioned software. 

Unlike sanctioned data, which is managed and secured by IT departments, shadow data exists in the "shadows," often unknown to IT and thus posing significant risks to the organisation.

Shadow data originates from employees seeking quick solutions to immediate problems. Employees often resort to using personal devices and unsanctioned software for efficiency and flexibility. This can lead to serious implications, including security vulnerabilities, data breaches, and compliance issues.

How Prevalent is Shadow Data in Businesses Today?

Shadow data is a widespread issue across various industries. The rise of remote work has exacerbated this problem, as employees frequently use personal devices and cloud services outside of corporate oversight. In sectors like financial services, insurance, and energy, shadow data can lead to substantial operational and regulatory challenges.

The magnitude of the threat is significant. 

For example, in financial services, sensitive data stored in unsanctioned spreadsheets can compromise decision-making and expose the organisation to compliance violations and data breaches. Identifying and managing shadow data is critical to mitigate these risks and ensure data integrity and security.

What Are the Risks Associated with Shadow IT?

Understanding what the risks are and how to address them is the first step to developing strategies to mitigate the impact of shadow IT and protect critical data assets.

Security Risks

Shadow IT introduces several security risks due to the lack of oversight and control by the IT department. When employees use unauthorised applications and store data outside approved systems, it can lead to significant vulnerabilities. Key security risks include:

  • Data Breaches: Shadow data is often less secure than data within sanctioned systems, making it more susceptible to breaches. Unauthorised applications may lack essential security measures like encryption and access controls, increasing the risk of sensitive data exposure.

  • Unauthorised Access: Without proper IT oversight, shadow data is at higher risk of unauthorised access, which can lead to sensitive information, intellectual property and other critical business data being compromised and even stolen.

  • Vulnerability to Cyber Attacks: Shadow IT systems often lack the robust security defences found in approved IT systems, making them an attractive target for cybercriminals looking to exploit weaknesses in an organisation’s security infrastructure.

Operational & Compliance Risks

In addition to security concerns, shadow IT can lead to significant operational and compliance risks, as follows:

  • Operational Inefficiencies: The use of unsanctioned tools and data storage solutions can create data silos, leading to inconsistencies and inefficiencies. A fragmented data landscape makes it challenging to obtain accurate insights and can slow down decision-making processes.

  • Increased Costs: Managing and rectifying issues caused by shadow IT can be costly. Organisations may need to invest significant resources to integrate shadow systems into the sanctioned IT environment or to clean up after data breaches.

  • Compliance Challenges: Shadow data often exists outside the purview of regulatory compliance frameworks. If shadow data is non compliant with industry regulations, it can result in fines, legal penalties and damage to an organisation’s reputation. Ensuring that all data complies with relevant regulations is crucial for avoiding these risks.

Learn more about the risks of shadow IT here.

How To Control Shadow IT

Strategies To Mitigate the Risks of Shadow Data

It’s important to tackle shadow data with a multifaceted approach. 

Here are some strategies we recommend:

  1. Regular Audits: Conduct periodic audits of data stored in Excel spreadsheets and other unsanctioned tools. This helps identify shadow data and integrate it into the official IT framework.

  2. Employee Training: Set up employee training sessions around shadow IT so employees know how and why to adhere to company policies. Training programs should highlight the potential security and compliance issues that arise from using unauthorised tools.

  3. Use of Technology: Leverage advanced technologies to monitor and control shadow IT. Implementing solutions like Schematiq can help centralise data access, enhance control and provide better visibility into data usage.

  4. Comprehensive Shadow IT Policy: Develop a robust policy for shadow IT that includes clear guidelines, access controls and reporting mechanisms. This policy should outline acceptable use cases, specify the process for getting new tools approved, and detail the consequences of non-compliance.

Crucial Advice for Decision-Makers Addressing Shadow Data

If you are just embarking on addressing shadow data in your organisation, keep these tips in mind:

  • Start with Audits: Understand the extent of shadow data by conducting thorough audits. This will help you identify the scope of the issue and develop targeted strategies to address it.

  • Educate Employees: Emphasise the importance of data security and compliance through regular training sessions. Make sure the risks of shadow data are communicated to employees, and promote the benefits of using sanctioned tools.

  • Invest in the Right Tools: Utilise tools like Schematiq to integrate and secure Excel data and other key applications. These tools can help mitigate risks by providing better control and visibility.

  • Develop Clear Policies: Create comprehensive policies that define shadow IT and shadow data, outline acceptable use and specify access controls. For best results, consider how policies will be best communicated to employees at all levels.

  • Continuous Monitoring: Implement a process to regularly monitor and detect the use of shadow data. Use advanced security measures to identify vulnerabilities and protect sensitive information.

  • Avoid Common Pitfalls: Don’t overlook user behaviour and how employees use data. Continuously educate and train employees and consistently enforce policies to avoid persistent shadow data issues.

How Does Schematiq Help You Control Shadow IT?

Enhancing Control Over Shadow IT with Schematiq

Schematiq offers a solution for businesses looking to control shadow IT and mitigate the risks associated with it. 

Here’s how Schematiq can help:

  1. Centralised Data Access: Schematiq integrates Excel with centralised data systems, allowing businesses to reduce their reliance on shadow data. By bringing all data under a single, controlled environment, Schematiq ensures that data created by Excel models can be shared securely with strategic systems and other stakeholders.

  2. Improved Audibility: One of the unique features of Schematiq is its ability to make spreadsheets more auditable. This ensures compliance with regulatory standards, as businesses can track and monitor data access and changes within Excel, providing a clear audit trail.

  3. Enhanced Control and Security: Schematiq provides better control over data access and usage within Excel spreadsheets. This includes implementing secure integration with other systems to protect data from being accessed by anyone not authorised to.

  4. Streamlined Workflows: By enhancing productivity through streamlined data workflows, Schematiq reduces operational inefficiencies associated with manual processes like cutting and pasting data or applying formulas to large datasets. This not only saves time but also minimises the risk of errors.

  5. User-Friendly Interface: With its intuitive Excel interface, Schematiq requires minimal training, allowing for rapid ROI and benefits realisation. Employees can continue to use a familiar tool while ensuring that their data handling practices comply with organisational policies.

Unique Features of Schematiq’s Solutions

  • Seamless Integration: Schematiq easily integrates with your business systems and data sources, ensuring a smooth transition and minimal disruption to current workflows.

  • Auditability: Full audit trails for data access and changes within Excel provide transparency and compliance with regulatory requirements.

  • User-Friendly: The intuitive Excel interface means that users require minimal training, facilitating quick adoption and utilisation of the tool’s features.

By using Schematiq, companies can better manage and secure their Excel spreadsheets, mitigating the risks associated with shadow data while enhancing overall data governance and operational efficiency.

How Will the Issue of Shadow Data Evolve in the Future?

Shadow data is influenced by advancements in digital infrastructure and changing work environments.

Here are some predictions for the future:

  • Increased Data Volumes and Complexity: Growing digital transformation will make managing shadow data more challenging, necessitating advanced tools and technologies.

  • Greater Risks: Enhanced connectivity and remote work increase the risk of unauthorised data usage, requiring comprehensive security measures.

  • Advanced Solutions: Sophisticated tools like Schematiq will become vital for detecting and managing shadow data, ensuring compliance and visibility.

  • Stricter Regulations: Expect tighter data protection regulations, making proactive data governance policies essential.

  • AI and Machine Learning: AI and ML will automate shadow data detection and risk prediction, aiding in secure data management.

  • Future Trends in IT Policy Development: IT policies will need to be dynamic and flexible, regularly updated to reflect new threats and technologies.

By staying informed and proactive, businesses can confidently secure and manage shadow data effectively.

Addressing shadow data is crucial to manage risk & ensure security

Take the next step towards securing your data and optimising your business operations. Visit Schematiq’s homepage to learn more about how our solutions can help you manage shadow data effectively and drive your digital transformation journey.


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