Microsoft 365 Security Assessment Guide for Tech Teams

Microsoft 365 Security Assessment: A Practical Guide for Technical Teams

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Microsoft 365 is widely used by businesses to communicate and collaborate with one another and for storage. Over 3.7 million companies worldwide use Microsoft 365, with more than 1 million businesses in the United States alone. With an increase in usage comes increased security risks. This highlights the need for continual security assessments that can identify gaps and help reduce risk. This handbook provides a crisp, explicit approach with a hands-on method that technical teams can use to assess and harden Microsoft 365 security.

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Why Security Assessments Matter in Microsoft 365

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Microsoft provides strong native security tools, but misconfigurations and weak identity controls remain common issues. Regular security assessments guarantee that your organization's Microsoft 365 environment is aligned with best practices and compliance requirements.

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This section outlines the major reasons for performing regular assessments and what threats you’re trying to reduce or prevent.

• Increase in credential-based attacks: Over 80% of breaches now involve stolen or weak credentials (Verizon DBIR 2024).
• Default settings often expose data: Many organizations don’t change insecure default configurations.
• Shadow IT and third-party apps: Microsoft 365 tenants often contain unmanaged apps or risky integrations.
• Compliance pressure: HIPAA, GDPR, and ISO 27001 require periodic reviews of access control and data protection.

Core Areas to Cover in a Microsoft 365 Security Assessment

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The Microsoft 365 security hardening of an environment cannot just concentrate on a single-vendor issue but must be investigated from the perspective of multiple layers and evaluated for risks and tools related to each of the following areas:

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1. Identity and Access Management (IAM)

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This is the most important area. Most attacks succeed due to poor identity controls.

• Review MFA usage: Ensure MFA is enforced via Conditional Access policies. Just enabling it isn't enough.
• Check legacy authentication: Disable it unless there’s a business need. Legacy protocols bypass MFA.
• Analyze sign-in logs: Use Microsoft Entra ID (formerly Azure AD) sign-in logs to check for risky sign-ins.
• Role-based access control (RBAC): Verify admin roles follow the least privilege model.

Visual representation of Microsoft Entra ID at the center, linking to devices, SaaS apps, public cloud, on-premises Active Directory, applications, and business partners from the Azure Architecture Center.

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2. Conditional Access Policies

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Conditional Access policies act as guardrails. They help control access based on user risk, location, device compliance, and other factors.

• Minimum baseline: Enforce policies for admins, guest users, and high-risk sign-ins.
• Location-based restrictions: Block access from countries your users never operate in.
• Session controls: Use Continuous Access Evaluation (CAE) to enable near real-time access revocation based on user or session risk.

3. Microsoft Defender for Office 365

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This protects Exchange Online, Teams, and collaboration tools against phishing, malware, and Business Email Compromise (BEC).

• Phishing protection: Enable anti-phishing and Safe Links policies.
• Safe Attachments: Use dynamic analysis to inspect attachments before delivery.
• Quarantine policies: Configure proper end-user and admin quarantine notifications.

4. Microsoft Purview and Data Loss Prevention (DLP)

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Purview helps track data, enforce compliance, and prevent leakage.

• DLP policies: Create policies for PII, health records, and financial data.
• Information protection labels: Classify data and enforce encryption.
• Audit logs: Enable unified audit logs to track data access and movement.

A diagram showing Microsoft Purview's six key functions: Information Protection, Data Loss Prevention, eDiscovery, Insider Risk Management, Information Barriers, and Governance.

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5. Application Security and OAuth Apps

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Third-party and custom apps often introduce risks through OAuth permissions.

• Review consented apps: Check what apps have access to mail, calendar, or files.
• Limit consent: Restrict user ability to consent to risky permissions.
• Monitor risky apps: Use Microsoft Defender for Cloud Apps to detect suspicious app behavior.

6. Device Compliance and Endpoint Security

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Microsoft Intune and Defender for Endpoint can protect data on user devices.

• Enrollment and compliance policies: Ensure devices are encrypted, compliant, and reported.
• Mobile Application Management (MAM): Protect organizational data even on unmanaged devices.
• Defender posture reporting: Regularly check for devices with missing updates or malware threats.

Tools and Reports to Use in Your Assessment

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Microsoft provides a number of built-in tools to help assess and improve your Microsoft 365 security posture. These tools give visibility and action steps across multiple layers.

• Microsoft Secure Score: Provides a percentage-based score and recommendations.
• Microsoft 365 Defender Portal: Central place to monitor incidents, alerts, and security recommendations.
• Entra ID Risk Reports: View sign-in risk, user risk, and risky users from Microsoft Entra ID Protection.
• Compliance Manager: Track and assess regulatory compliance across frameworks like NIST, ISO, and GDPR through prebuilt assessments and control mapping.
• Unified Audit Logs: Export and analyze logs for signs of suspicious activity.

Automation and Continuous Monitoring

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Assessments should not be one-time events. Security is a moving target. This section highlights ways to make security reviews part of your regular process.

• Use Microsoft Graph Security API: Automate reporting on secure scores and alerts.
• Set up scheduled reports: Send weekly security score or DLP policy reports to stakeholders.
• Integrate with SIEM/SOAR: Push alerts and audit data into tools like Microsoft Sentinel for correlation and action.
• Automated policy enforcement: Use Compliance Center automation rules to act on DLP or insider risk alerts.

Reducing Risk from Guest Access and Collaboration

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Microsoft 365 allows external sharing, which can increase risk if not properly managed, making it essential to balance collaboration and control. To reduce exposure, review and configure guest access settings, including expiration policies, audit guest user activity across Teams, SharePoint, and OneDrive, and use sensitivity labels to automatically apply restrictions to confidential data shared externally.

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Insight by
Gal Nakash
Cofounder & CPO at Reco

Gal is the Cofounder & CPO of Reco. Gal is a former Lieutenant Colonel in the Israeli Prime Minister's Office. He is a tech enthusiast, with a background of Security Researcher and Hacker. Gal has led teams in multiple cybersecurity areas with an expertise in the human element.

Expert Insight:

For security-mature organizations, go beyond checklists. Use advanced configurations and telemetry to reduce attack surfaces and respond faster.

• Just-in-Time Access with PIM: Reduce standing access by using time-bound, approval-based elevation for all admin roles—even read-only ones.
• Disable Unused Services: If you're not using SharePoint or Yammer, disable or restrict them; attackers often exploit dormant services.
• CA Policy Analytics Preview: Use Conditional Access Insights & Reporting to test policy changes before deployment.
• Advanced Hunting Queries: Use Microsoft 365 Defender's advanced hunting to write KQL queries across email, identity, and device signals.
• App Governance Add-on: Monitor risky app behaviors and enforce governance over OAuth apps with this underused but powerful add-on.

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Conclusion

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Microsoft 365 plays a critical role in most organizations' operations, making it a key factor in determining overall security posture. Structured and periodic assessments detect misconfiguration, lower risk, and ensure compliance. Begin by using Secure Score and Entra logs. Then, automate as much as possible and incorporate security assessments into your regular technical operations.