Why Microsoft 365 Security Requires More Than Just Defaults

 

Microsoft 365 is one of the most widely used productivity platforms in the world. While its scale and reliability are unmatched, a dangerous misconception persists: many small and mid-sized businesses (SMBs) believe Microsoft automatically covers all security needs out of the box. In reality, Microsoft 365 environments require proactive configuration, monitoring, and governance to stay secure—especially against increasingly sophisticated threats like business email compromise (BEC), token hijacking, and malicious OAuth abuse.

The Risk of Mail Forwarding Exploits

One of the most common—and often undetected—attack vectors in Microsoft 365 is the use of hidden mail forwarding rules. Once attackers gain access to a user’s account (often via phishing or token theft), they silently configure rules that forward sensitive emails to external accounts.

This tactic is central to BEC attacks, which now represent 73% of all reported cyber incidents in 2024. These malicious rules often go unnoticed because Microsoft 365 logs such changes, but does not generate alerts unless custom policies or an XDR/SIEM is in place. In many SMBs, audit logging isn’t even enabled by default, leaving IT teams unaware of these changes until after a compromise is discovered.

Token Hijacking: Bypassing MFA

Token hijacking has emerged as a particularly effective way to bypass Multi-Factor Authentication (MFA). When a user logs into Microsoft 365, Azure AD issues an access token that allows seamless access across services like Outlook, OneDrive, and Teams. Attackers can steal these tokens—often through phishing pages or token-grabbing malware—and use them without ever needing a password or MFA prompt.

Why this matters:

• Tokens can remain valid for hours or longer through refresh tokens.

• Once a token is stolen, the attacker can impersonate the user without triggering any security alerts.

• Microsoft may not flag activity if it comes from the same user agent, IP region, and headers.

Without advanced monitoring and behavioral analysis, this type of access appears normal—even when it’s not.

The OAuth App Backdoor

Another increasingly exploited vulnerability in Microsoft 365 environments is malicious OAuth app registration. By default, users in many SMB environments can authorize third-party apps without administrative review. This opens the door for attackers to send phishing emails linking to legitimate Microsoft OAuth consent pages.

If a user clicks “Accept,” the attacker gains persistent access to:

• Read and send emails

• Access files on OneDrive or SharePoint

• View contacts and calendar entries

Because this access happens via trusted Microsoft Graph API connections, MFA is never triggered, and most businesses lack the alerting or policies to detect it. These malicious apps effectively function as invisible backdoors with full user-level access.

Why SMBs Are at Higher Risk

SMBs face a unique combination of challenges that make them particularly vulnerable in Microsoft 365 environments:

• Limited IT resources – Many teams don’t have dedicated security staff or time to monitor dashboards like Azure Enterprise Applications.

• Lack of governance policies – Default settings allow users to grant high-risk permissions without oversight.

• Assumed safety – Relying on Microsoft’s default configurations gives a false sense of security.

Microsoft itself detected 35 million BEC attempts, with daily activity exceeding 150,000 attacks. A significant number of successful compromises occurred in SMBs that failed to implement the platform’s built-in protections.

How to Strengthen Microsoft 365 Security

The good news is that Microsoft 365 offers robust security tools—it’s just that many are disabled or unconfigured by default. Here’s how businesses can proactively secure their environment:

1. Mail Forwarding Protection

• Enable audit logging and alerting for rule creation events

• Use XDR or SIEM tools to monitor mailbox rule changes

• Regularly audit forwarding rules, especially those targeting external domains

2. Token Hijacking Defense

• Implement XDR with behavioral detection for abnormal token use

• Configure Conditional Access Policies to evaluate session risk

• Reduce token lifetimes and enforce device compliance for access

3. OAuth App Governance

• Disable user consent to unverified apps

• Require admin approval for high-risk permission scopes

• Audit OAuth apps regularly through Azure AD Enterprise Applications

Secure by Design, Not by Default

Microsoft provides enterprise-grade security options, but businesses must take deliberate steps to enable, configure, and monitor them. Default settings prioritize convenience—not security.

To protect against today’s threats, SMBs must adopt a “secure by design” mindset that assumes breach and implements layered defense accordingly.

Your Microsoft 365 environment is only as secure as your most overlooked configuration. Attackers exploit the gaps between assumed and actual security—and in most cases, those gaps are created by default trust settings left untouched.