Security Risks in Microsoft 365: Why Enterprises Are Taking a Closer Look Before Deploying at Scale

In a move that’s turning heads across the enterprise IT world, Amazon has paused its $1 billion Microsoft 365 rollout, just months after signing the deal. Originally announced in late 2023, the agreement aimed to bring Microsoft’s cloud productivity suite—Word, Excel, Outlook, Teams, and more—to 1.5 million Amazon employees. But a major disruption hit: following a Russian state-linked cyberattack on Microsoft, Amazon’s Chief Information Security Officer (CISO) pressed pause, citing concerns around security visibility.

Amazon’s hesitation is a big concern. If one of the world’s most cloud-savvy companies is cautious about adopting Microsoft 365 at scale, others should be asking serious questions. Microsoft 365 is powerful, but also expansive, interconnected, and, at times, dangerously opaque. Underneath its productivity perks lie a set of overlooked risks that could undermine even the most mature security programs.

Here’s why more enterprises are taking a closer look before diving all-in on Microsoft 365, and what your organization should do about it.

The Scale Problem: Visibility Drops as Usage Grows

Microsoft 365’s suite spans a massive range of tools: email, file storage, video meetings, collaborative workspaces, and more. As organizations scale up usage across departments and geographies, security teams face a common problem: they can’t see everything. Admin consoles become cluttered. Third-party add-ons creep in. Access rights go stale.

Amazon reportedly requested more granular user activity logging, especially near real-time access to usage data across apps. That’s not a casual ask. It reflects the underlying challenge: when 1.5 million people are using a productivity suite every day, blind spots can quickly turn into breaches.

Identity and Access: Your Greatest Asset and Weakest Link

Microsoft 365’s identity layer is built on Entra ID (formerly Azure AD), the backbone of user access and authentication. But therein lies the problem. A compromised identity (via phishing, token theft, or misconfigured access) can open the door to every connected Microsoft service.

In the Midnight Blizzard breach, threat actors reportedly used OAuth token abuse and dormant accounts to access sensitive email data. This wasn’t a brute-force attack. It was quiet, methodical, and largely undetected until it was too late. In Microsoft 365, identity is the new perimeter. If it’s not tightly managed, everything behind it is exposed.

Default Settings = Default Risk

One of Microsoft 365’s strengths is how quickly it can be deployed. But that ease often comes at a cost: security misconfigurations.

By default, many tenants launch with:

• External file sharing enabled
• Legacy authentication protocols turned on
• Over-permissioned admin roles
• Weak alerting on privilege escalation

These settings, if left unchanged, create open doors for attackers and liability for enterprises. Most organizations never revisit their Microsoft 365 defaults if they lack dedicated SaaS security teams.

Shadow Integrations: The Silent Threat from SaaS-to-SaaS Connections

Microsoft 365 offers deep integration with thousands of third-party applications via OAuth. On the surface, this boosts productivity. But under the hood, it creates serious risk. When a user authorizes a third-party app, it can gain broad access to emails, files, calendars, even if that app is rarely used. And because OAuth grants aren’t always monitored, malicious or compromised apps can fly under the radar.

Microsoft 365 doesn’t consistently alert on this type of behavior. That’s why shadow integrations have become a rising concern in SaaS security circles and why they’re increasingly targeted by sophisticated attackers.

Logging and Monitoring: You Might Be Paying for Invisibility

Not all Microsoft 365 logging is created equal. In fact, many critical security logs, such as mailbox access logs, file activity tracking, and detailed audit trails, are locked behind premium Microsoft 365 E5 licenses.

This creates a two-tiered reality:

• Organizations on lower-tier plans get limited visibility into user behavior and breach indicators.
• Only those on higher-cost plans (or using third-party tools) can monitor deeply enough to respond effectively.

Amazon’s CISO demanded access to real-time logs. That request shows how the current model can delay or hinder incident response for companies that don’t know what they’re missing.

Compliance isn’t Automatic but Your Responsibility

Microsoft 365 is used by healthcare firms, financial institutions, government agencies—and each must meet its own strict compliance requirements (GDPR, HIPAA, PCI-DSS etc.). Here’s the catch: using Microsoft 365 doesn’t automatically make you compliant.

You still need to:

• Configure retention and deletion policies
• Manage access and encryption standards
• Document audit trails
• Ensure data residency rules are met

Many organizations assume Microsoft handles this all by default. That’s a costly mistake. The shared responsibility model places the burden of configuration and compliance squarely on the customer.

What You Can Do: Six Steps to Safer Microsoft 365 Usage

If your organization is using or planning to use Microsoft 365, here are six practical steps to reduce your risk:

1. Run a SaaS security assessment: Understand what’s configured, what’s not, and where your exposure lies.
2. Limit access by design: Apply least-privilege access and regularly review user roles.
3. Turn off legacy authentication protocols: They’re a common vector for brute-force and token-based attacks.
4. Audit third-party app integrations: Revoke unused OAuth connections and restrict new ones.
5. Invest in deeper visibility: Either upgrade to E5 or use a third-party SaaS security tool for full logging.
6. Build Microsoft 365 into your zero-trust framework: Treat it as a key node in your broader security strategy.

CheckRed Secures Your Microsoft 365 Environment

Microsoft 365 is one of the most widely adopted SaaS platforms in the world and that popularity makes it a prime target. Enterprises can’t afford to assume that built-in equals secure. From misconfigurations and shadow integrations to limited visibility and identity abuse, the risks are real and growing. Whether you’re onboarding 500 users or 500,000, the need for proactive SaaS security has never been greater. At CheckRed, we help you uncover hidden risks in your Microsoft 365 environment. Speak to our SaaS security experts today.