Shadow Data: The Hidden Data Security Risk Organizations Cannot Ignore
In the era of digital transformation sensitive information spreads across employee devices, cloud storage, SaaS applications, shared folders, development environments, and backups. Some of this data eventually falls outside the oversight of IT, security and compliance teams.
This serious security risk is shadow data.
According to IBM’s Cost of a Data Breach Report 2024, 35% of data breaches involved shadow data. These incidents were also more expensive: the average breach involving shadow data cost USD 5.27 million, 16.2% more than breaches without shadow data.
What Is Shadow Data?
Shadow data is corporate data that exists outside an organization’s expected, monitored, or properly governed data environment.
It may be completely legitimate business data, but stored or copied somewhere the organization does not properly monitor. Security controls and policies typically aren’t applied to this data, which makes it more difficult to find and monitor, and more vulnerable to unauthorized access.
Shadow Data Is Not Only a Cloud Problem
Shadow data is often associated with cloud services and shadow IT, but it can exist anywhere. It may be stored on employee workstations, file servers, shared network folders, USB devices, email attachments, local archives, development environments, old databases, or backups.
IBM found that 25% of breaches involving shadow data occurred entirely in on-premises environments.
How Shadow Data Occurs: Common examples
- Files stored in personal accounts. An employee sends a corporate document to personal email or cloud storage for easier access.
- Data downloaded to personal devices. Sensitive files remain on a personal laptop or tablet after an employee finish working with them.
- Unapproved SaaS tools. Employees upload corporate information to cloud services, file converters, collaboration tools without security approval.
- AI services. AI tools are becoming an increasingly important source of shadow data, as employees may upload confidential documents, source code, customer data, or other sensitive information for analysis, summarization, or content generation. Learn more in the SearchInform white paper: AI as a Data Leak Channel.
- Unaccounted copies of sensitive data. Information from CRM, ERP, HR, or accounting systems is exported into spreadsheets and stored locally.
- Development and testing environments. Production databases are copied into test environments and receive weaker protection than the original system.
- Old backups and temporary files. Sensitive information remains in archives, snapshots, exports, or forgotten folders long after it is needed.
Shadow data is difficult to secure in both on-premises and cloud environments when organizations do not know where it exists.
Why Shadow Data Is a Business Risk
Higher Risk of Data Leaks
Every unmanaged copy creates another point of exposure.
For example, confidential customer data downloaded to a personal laptop may no longer be protected by corporate access controls or monitoring. It can then be exposed through malware, personal cloud backups, sharing, or simply being forgotten.
Longer Incident Investigations
Shadow data also complicates incident response for security teams.
IBM reported that breaches involving shadow data took 26.2% longer to identify and 20.2% longer to contain.
Compliance Risks
Shadow data can also create regulatory problems.
Personal, financial, or other regulated information may remain subject to data protection requirements even when employees move it outside approved systems.
Typical compliance risks include:
- retaining personal data longer than permitted;
- giving too many employees access to sensitive files;
- storing confidential data in unapproved cloud environments;
- transferring information to another country through cloud or SaaS services;
- failing to locate all copies of personal information when responding to data subject requests.
Losing track of information does not remove the organization’s responsibility for protecting it.
How to Control Shadow Data
The most effective and practical approach is to continuously discover sensitive information and control how it is stored and transferred.
1. Discover sensitive data
Organizations should identify sensitive information across endpoints, file servers, network storage, and cloud environments.
The volume of corporate data today makes manual management increasingly difficult. DCAP solutions can help organizations bring order to file storage, detect unauthorized copies, and understand where sensitive information is located.
2. Classify data
Sensitive information should be classified according to its content and value.
Typical categories include personal data, financial records, intellectual property, contracts, credentials, and other confidential corporate documents.
Data classification makes it easier to apply the right security controls.
3. Review access rights
Organizations should regularly check who has access to sensitive files and whether that access is still necessary.
Applying the principle of least privilege reduces the number of users who can reach confidential information. SearchInform DCAP-class solution FileAuditor automatically discovers files, classifies them by labels, ensures content-based access rights distribution and helps organizations keep corporate storage system under control.
4. Monitor data transfers
Security teams also need to understand where sensitive information is being sent.
DLP systems can monitor data transfers through email, web applications, cloud services, corporate messengers, removable devices, and other channels.
DCAP technologies can complement DLP by helping organizations discover sensitive files, classify them, and analyze access rights across storage environments. To see how this works in practice, SearchInform DLP is available for a free 30-day trial.
Conclusion
Shadow data gradually increases compliance and data exposure risks. Effective data protection starts with knowing what sensitive data exists, where it is stored, who can access it, and how it moves.
ABOUT SEARCHINFORM
SearchInform is an information security and risk management product vendor as well as an MSS provider. The company's clients are more than 4000 companies in 20+ countries. Today, the team has products and services for comprehensive protection against insider threats at all levels of corporate information systems: FileAuditor (the DCAP class solution); DLP system with extended functionality; Risk Monitor (advanced platform for internal threat mitigation); SIEM system, Information Security outsourcing service.
