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Security in Microsoft 365 is not a one-time task. It requires ongoing effort, thoughtful configuration, and operational discipline. For many organizations, especially those with limited security resources, it can be difficult to know where to begin.
A strong security foundation starts with identity.
In today’s cloud-first world, identity has become the primary control plane. Most attacks do not begin with malware or advanced exploits. They often start with compromised credentials, weak authentication, or excessive permissions. According to Microsoft, customers face more than 600 million cybercriminal and nation-state attacks every day, ranging from ransomware to phishing to identity-based intrusions. This makes protecting Identity and Access Management (IAM) systems one of the most critical elements of modern cybersecurity.
Microsoft 365 Security Focus Areas
The Microsoft 365 security best practices outlined in this guide focus on three core areas that define secure identity posture: how users authenticate, how access is governed, and how activity is monitored through logging. These elements form the first layer of defense, helping to prevent intrusions before they happen and providing visibility if something goes wrong.
The five essentials below are focused on identity, authentication, and logging. These are foundational practices that offer immediate impact for Microsoft 365 environments. While they are especially impactful to smaller organizations, they reflect broader principles that benefit any organization working to improve its security posture.
1. Enforce Strong Authentications
The most effective way to reduce account compromise is to implement and enforce strong authentication practices throughout the entire organization.
- Multi-Factor Authentication (MFA) should be enabled for all users, including admins, service accounts, and guests.
- Legacy authentication protocols, such as basic auth for Exchange Online and SharePoint Online, should be disabled. These protocols often bypass MFA and are frequently exploited by attackers.
- Conditional Access policies, where available, offer consistency and scalability. They are preferable to per-user MFA settings, which can be difficult to manage securely.
Microsoft has found that enabling MFA blocks 99.2 percent of account compromise attacks, yet many organizations still have not implemented it across all accounts. The 2024 Microsoft Digital Defense Report (MDDR) urges organizations to adopt phishing-resistant, passwordless authentication methods to mitigate these threats at scale. Security defaults available in Business Basic and Standard plans apply these protections automatically, helping ensure your environment is secured from the start.
2. Secure Administrative Accounts
Administrative accounts are high-value targets. If compromised, they can lead to full control of your Microsoft 365 environment. To mitigate these risks, adhering to Microsoft 365 security best practices, such as the ones detailed below, is essential:
- Use dedicated, cloud-only admin accounts. Avoid hybrid admins, which expose your environment to lateral movement from on-prem compromises, and never use admin accounts for daily tasks like email or Teams, as this increases your attack surface.
- Maintain break-glass accounts that bypass MFA and Conditional Access for emergency access. Secure them with strong credentials, restrict their visibility, and implement logging and alerting to monitor all usage.
- Avoid assigning unnecessary licenses to administrative accounts. Minimizing entitlements reduces the attack surface, limits exposure to user-targeted threats, and helps control licensing costs.
The MDDR highlights that many identity-based attacks succeed due to predictable human behaviors, including password reuse and poorly managed administrative access. Implementing strict password hygiene, separating admin roles, and enforcing monitoring policies can significantly reduce this risk.
📝 Sidebar
There’s an ongoing debate in the identity community about whether service principals should be included in your break-glass strategy. While traditional guidance focuses on human emergency access accounts, some experts are exploring the role of service principals as a “Plan B” for automation continuity during outages.
Catch up on the discussion here: Service Principal as a Plan B Emergency Access Account – by Merill Fernando
3. Implement Modern Authentication and Email Protections
Email remains the leading entry point for phishing, credential theft, and business email compromise. The threat is not only persistent—it is becoming more personalized and harder to detect.
Phishing attacks increased by 58% in 2023, attributing this surge to the adoption of AI by cybercriminals, with an estimated financial impact of $3.5 billion USD in 2024, according to TrendMicro. Microsoft’s MDDR also notes a continued rise in sophisticated phishing campaigns, particularly those that exploit legacy authentication protocols and misconfigured email security settings.
Another trend highlighted in the MDDR report is the localization and personalization of phishing campaigns. Attackers are increasingly tailoring messages to specific regions, using native languages and more convincing outbound communication to bypass traditional detection methods with the help of AI and open-source LLMs. This shift makes even well-trained users more vulnerable.
Given that the average organization uses over 130 cloud applications, identity compromise through email remains one of the most effective entry points for attackers. As a result, modern authentication and email hygiene are now baseline requirements, not optional enhancements.
To begin to mitigate these threats:
- Require modern authentication (OAuth2) for all email clients.
- Disable legacy protocols such as POP and IMAP unless absolutely necessary.
- Implement domain protection standards like SPF, DKIM, and DMARC.
- Regularly review mail flow rules and alert policies for anomalies.
These controls reduce your exposure to phishing-based identity attacks and help maintain a more resilient Microsoft 365 environment.
4. Limit External Threats and Unauthorized Access
External collaboration can drive productivity, but it must be properly governed to avoid introducing unnecessary risk.
Start by implementing guest user access restrictions by default. Grant it only when explicitly needed, and always define expiration dates or review intervals to avoid long-term, unmanaged exposure. According to the MDDR, organizations should prioritize retiring unused applications, pruning stale guest accounts, and limiting overly permissive access to reduce the size of their identity surface.
Proper configuration of Microsoft Teams and Exchange Online settings is critical for protecting collaboration surfaces. Recommended actions include:
- Prevent external Teams users from initiating conversations.
- Block anonymous users and dial-in callers from starting meetings.
- Limit lobby bypass to people within your organization.
- Require lobby entry for users dialing in.
- Disable the ability for external participants to give or request control during meetings.
- Restrict sign-in to shared mailboxes unless explicitly licensed and secured.
Regularly review and clean up access in Teams, SharePoint, and Entra ID. Remove inactive guests and eliminate unnecessary permissions to align with least privilege access policies.
According to the MDDR, organizations should focus on retiring unused applications, pruning stale guest accounts, and limiting overly permissive access to tighten control over their identity surface. These steps ensure that access remains intentional and transparent across business relationships.
5. Enable Auditing and Logging Across the Tenant
Without visibility, incidents go undetected and investigations become much more difficult. Logging and auditing are not just reactive tools, they are the telemetry foundation for proactive threat detection and forensic analysis.
- Enable audit logging for all users, not just administrators.
- Standardize mailbox auditing settings and extend log retention to the maximum your license allows.
- Turn off mailbox audit log bypass options. Ensure every mailbox logs activity unless there is a strong reason not to.
In October 2023, Microsoft announced an expansion to default audit log retention. Audit (Standard) customers now receive 180 days of log retention by default, an increase from the previous 90 days. Audit (Premium) customers retain logs for 1 year by default, with the option to extend up to 10 years. This shift significantly improves security visibility for more customers and emphasizes the strategic value of centralizing log data.
The MDDR recommends investing in log enrichment, AI-driven alerting, and contextual telemetry from endpoints and identities to strengthen threat detection and incident response capabilities. Microsoft Entra ID provides both sign-in logs and audit logs that capture changes to users, roles, licenses, and application behavior. These telemetry sources form the forensic foundation of any identity-centric security response.
Your Path to a Stronger Security Posture
These five essentials are not an exhaustive list of every available security control. Rather, they represent a practical and effective starting point grounded in Microsoft 365 fundamentals and widely accepted best practices. For organizations using Microsoft 365 Business Basic or Standard, these actions provide meaningful protection without requiring advanced licensing or complex infrastructure.
Security posture is not a one-time initiative. It is a continuous journey that must evolve alongside your users, applications, permissions, and the constantly shifting threat landscape. By focusing on identity, authentication, and logging, you create a resilient foundation that strengthens your ability to prevent, detect, and respond to modern threats.
This foundation must also be maintained. As configurations drift from secure baselines due to changes, misconfigurations, or human error, organizations need continuous monitoring to identify and alert on deviations. Proactively detecting this drift is key to sustaining your security investments and avoiding silent exposure over time.
This focus becomes even more critical as identity remains the control plane of the cloud and the primary target for attackers. Prioritizing these areas today enables your organization to scale securely and operate with confidence in the face of evolving threats.
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