There is now very good evidence that shyness is at least partly temperament (simply put, some of us are born shyer than others), and some of that temperament is inherited (shy children are more likely to come from shy parents). This means there is a part of being shy that can’t be helped, but this doesn’t mean kids can’t learn new skills to manage their anxious feelings. It just takes time and understanding.
One of the simplest ways you can do this with young children is with a trick called ‘externalising the problem’. Join forces with your little one to help them overcome these feelings by describing the feelings as if they were something outside of themselves. Talk about how you’ve noticed that ‘the jinglies’ (or whatever word you and your little one come up with) seem to be trying to trick your child into being quiet and missing out on fun by tricking them into being scared. You could then try and work out ways that your child can silence the jinglies, trick them back, or simply overpower them.