What is shadow IoT? How to mitigate the risk

When someone in your organization starts using internet-connected devices without IT’s knowledge, that’s shadow IoT. Here's what you need to know about its growing risk.

Shadow IoT definition

Shadow IoT refers to internet of things (IoT) devices or sensors in active use within an organization without IT’s knowledge. The best example is from before the days of bring your own device (BYOD) policies when employees used personal smartphones or other mobile devices for work purposes. “Shadow IoT is an extension of shadow IT, but on a whole new scale,” says Mike Raggo, CSO at 802 Secure. “It stems not only from the growing number of devices per employee but also the types of devices, functionalities and purposes.”

Employees have been connecting personal tablets and mobile devices to the company network for years. Today, employees are increasingly using smart speakers, wireless thumb drives and other IoT devices at work as well. Some departments install smart TVs in conference rooms or are using IoT-enabled appliances in office kitchens, such as smart microwaves and coffee machines.

In addition, building facilities are often upgraded with industrial IoT (IIoT) sensors, such as heating ventilation and air conditioning (HVAC) systems controlled by Wi-Fi-enabled thermostats. Increasingly, drink machines located on company premises connect via Wi-Fi to the internet to accept, say, Apple Pay payments. When these sensors connect to an organization’s network without IT’s knowledge, they become shadow IoT.

How prevalent is shadow IoT?

Gartner predicts that 20.4 billion IoT devices will be in use globally by 2020, up from 8.4 billion in 2017. Shadow IoT has become widely prevalent as a result. In 2017, 100 percent of organizations surveyed reported ‘rogue’ consumer IoT devices on the enterprise network, and 90 percent reported discovering previously undetected IoT or IIoT wireless networks separate from the enterprise infrastructure, according to a 2018 report from 802 Secure.

One-third of companies in the U.S., U.K. and Germany have more than 1,000 shadow IoT devices connected to their network on a typical day, according to a 2018 Infloblox report on shadow devices. Infoblox’s research found that the most common IoT devices on enterprise networks are:

  • Fitness trackers such as Fitbits, 49 percent;
  • Digital assistants such as Amazon Alexa and Google Home, 47 percent
  • Smart TVs, 46 percent
  • Smart kitchen devices such as connected microwaves, 33 percent
  • Gaming consoles such as Xboxes or PlayStations, 30 percent.
shadow iot infographic v3.0 802 Secure

What are shadow IoT’s risks?

IoT devices are often built without inherent, enterprise-grade security controls, are frequently set up using default IDs and passwords that criminals can easily find via internet searches, and are sometimes added to an organization’s main Wi-Fi networks without IT’s knowledge. Consequently, the IoT sensors aren’t always visible on an organization’s network. IT can’t control or secure devices they can’t see, making smart connected devices an easy target for hackers and cybercriminals. The result: IoT attacks grew by 600 percent in 2018 compared to 2017, according to Symantec.

Vulnerable connected devices are easily discoverable online via search engines for internet-connected devices such as Shodan, Inflobox’s report points out. “Even when searching simple terms, Shodan provides details of identifiable devices, including the banner information, HTTP, SSH, FTP and SNMP services. As identifying devices is the first step in accessing devices, this provides even lower-level criminals with an easy means of identifying a vast number of devices on enterprise networks that can then be targeted for vulnerabilities.”

Why aren’t most shadow IoT devices secure?

When PCs were first released decades ago, their operating systems weren’t built with inherent security, Raggo observes. As a result, securing PCs against viruses and malware remains an ongoing struggle.

In contrast, the iOS and Android mobile operating systems were designed with integrated security, such as app sandboxing. While mobile devices aren’t bullet-proof, they’re typically more secure than desktops and laptops.

With today’s IoT and IIoT devices, “It’s like manufacturers have forgotten everything we’ve learned about security from mobile operating systems,” Raggo says. “There are so many IoT manufacturers, and the supply chain for building the devices is scattered all over the world, leading to a highly fragmented market.”

Because IoT devices tend to be focused on just one or two tasks, they often lack security features beyond basic protocols such as WPA2 Wi-Fi, which has its vulnerabilities. The result: Billions of unsecured IoT devices are in use globally on enterprise networks without IT’s knowledge or involvement.

“I bought 10 or 15 IoT devices a few years ago to check out their security,” says Chester Wisniewski, principal research scientist at Sophos. “It was shocking how fast I could find their vulnerabilities, which means anyone could hack them. Some devices had no process for me to report vulnerabilities.”

Have criminal hackers successfully targeted shadow IoT devices?

Yes. Probably the most famous example to date is the 2016 Mirai botnet attack, in which unsecured IoT devices such as Internet Protocol (IP) cameras and home network routers were hacked to build a massive botnet army. The army executed hugely disruptive distributed denial of service (DDoS) attacks, such as one that left much of the U.S. east coast internet inaccessible. The Mirai source code was also shared on the internet, for criminal hackers to use as building blocks for future botnet armies.

Other exploits are available that enable cybercriminals to take control of IoT devices, according to the Infoblox report. “In 2017, for example, WikiLeaks published the details of a CIA tool, dubbed Weeping Angel, that explains how an agent can turn a Samsung smart TV into a live microphone. Consumer Reports also found flaws in popular smart TVs that could be used to steal data as well as to manipulate the televisions to play offensive videos and install unwanted apps.”

Along with amassing botnet armies and conducting DDoS attacks, cybercriminals can also exploit unsecured IoT devices for data exfiltration and ransomware attacks, according to Infoblox.

In one of the oddest IoT attacks thus far, criminals hacked into a smart thermometer inside a fish tank in a casino lobby to access its network. Once in the network, the attackers were able to steal the casino’s high-roller database.

The future potential of IoT-enabled cyberattacks is enough to give CSOs and other IT security professionals concern. “Consider the damage to vital equipment that could occur if someone connected into an unsecured Wi-Fi thermostat and changed the data center temperature to 95 degrees,” Raggo says. In 2012, for instance, cybercriminals hacked into the thermostats at a state government facility and a manufacturing plant and changed the temperatures inside the buildings. The thermostats were discovered via Shodan, a search engine devoted to internet-connected devices.

To date, the impact of IoT device exploits hasn’t been hugely negative for any particular enterprise, says Wisniewski, in terms of exploiting sensitive or private data. “But when a hacker figures out how to make a big profit compromising IoT devices, like using a brand of smart TVs for conference room spying, that’s when the shadow IoT security risk problem will get everyone’s attention.”

3 ways to mitigate shadow IoT security risks?

  1. Make it easy for users to officially add IoT devices. “The reason you have shadow IT and shadow IoT is often because the IT department is known for saying ‘no’ to requests to use devices like smart TVs,” says Wisniewski. Instead of outright banning IoT devices, fast-tracking their approval whenever possible and feasible—within, say, 30 minutes after the request is made—can help reduce the presence of shadow IoT.

    “Publish and circulate your approval process,” Wisniewski adds. “Get users to fill out a brief form and let them know how quickly someone will get back to them. Make the process as flexible and as easy for the requester as possible, so they don’t try to hide something they want to use.”
  2. Proactively look for shadow IoT devices. “Organizations need to look beyond their own network to discover shadow IoT, because much of it doesn’t live on the corporate network,” Raggo says. “More than 80 percent of IoT is wireless-enabled. Therefore, wireless monitoring for shadow IoT devices and networks can allow visibility and asset management of these other devices and networks.”

    Traditional security products list devices by a media access control (MAC) address or a vendor’s organizationally unique identifier (OUI), yet they are largely unhelpful in an environment with a plethora of different types of devices, Raggo adds. “IT really wants to know ‘what is that device?’ so they can determine if it’s a rogue or permitted device. In today’s world of deep-packet inspection and machine learning, mature security products should provide human-friendly categorizations of discovered assets to ease the process of asset management and security.”
  3. Isolate IoT. Ideally, new IoT and IIoT devices should connect to the internet via a separate Wi-Fi network dedicated to such devices that IT controls, says Wisniewski. The network should be configured to enable IoT devices to transmit information and to block them from receiving incoming calls. “With the majority of IoT devices, nothing legitimate is ever transmitted to them,” he says.

Anything shadowy is a problem

“Shadow anything is a problem, whether it’s an IoT device or any other addressable, unmanaged item,” says Wisniewski. “The key is controlling access to the network from only authorized devices, keeping an accurate inventory of authorized devices, and having clear policies in place to ensure employees know they aren’t allowed to ‘bring their own’ devices and that HR sanctions will be enforced if they do.”

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