Let’s set the scene: a group of developers at a grooming software company upload code to their personal GitHub. They quit. They launch a competing platform using that code. A federal court sides with the original company—$572K in damages, $1M more in default judgments.
Here’s the kicker: the court used a term that’s going to start showing up everywhere—“Shadow IT.”
That means your team using unauthorized apps or AI tools? Your contractors texting client info over personal phones? Your marketing lead uploading files to their personal Dropbox?
That’s now a legal risk. A big one.
Why You Should Care
Shadow IT opens the door to:
- Data leaks you can’t see or control
- Violations of GDPR, HIPAA, and CCPA
- Insurance denials when you need coverage most
- Courtrooms asking, “Why didn’t you stop this?”
And if you think your insurance will cover it? Think again. Use of unauthorized technology is often a violation of policy terms—and a fast path to claim denial.
According to IBM, shadow AI use alone adds $670,000 to the cost of a breach.
What You Should Do
- Get a policy in place. Make it clear what’s allowed and what isn’t.
- Train your team. Not just on threats—but on what’s legally risky.
- Use monitoring tools. Your MSP can help with this.
- Get an assessment. Ask your IT provider to walk you through a “Shadow IT Risk Report.”
Your Next Step
Talk to your MSP about Shadow IT. If they don’t bring it up, you need a new one. This isn’t just about security—it’s about legal survival. Want to see what top providers are doing? Check out this Shadow IT training to get up to speed.
Because ignorance isn’t just risky anymore—it’s expensive.
