Microsoft 365 Security: Essential Settings Every Business Should Enable

Microsoft 365 is the backbone of most small business IT. But many organizations use it with default settings, leaving significant security gaps. Here are the essential security features you should enable.

Why Microsoft 365 Security Matters

Microsoft 365 contains your email, files, and often identity management. A compromised M365 account gives attackers access to:

• All emails and attachments
• Files in OneDrive and SharePoint
• Teams conversations and files
• The ability to impersonate the user
• Potential access to connected applications

Essential Security Settings

1. Multi-Factor Authentication (MFA)

This is non-negotiable. Enable MFA for all users, especially administrators. Microsoft provides several MFA options:

• Microsoft Authenticator app (recommended)
• SMS codes (better than nothing, but less secure)
• Hardware security keys (highest security)

Use Security Defaults or Conditional Access policies to enforce MFA organization-wide.

2. Conditional Access Policies

Conditional Access (requires Azure AD Premium) lets you create smart access rules:

• Require MFA for risky sign-ins
• Block access from certain countries
• Require compliant devices for access
• Block legacy authentication protocols
• Require stronger authentication for sensitive apps

3. Block Legacy Authentication

Older email protocols (POP3, IMAP, SMTP AUTH) don't support MFA and are commonly exploited. Block legacy authentication for all users who don't absolutely need it.

4. Configure Email Security

Microsoft 365 includes several email protection features:

• Anti-phishing policies — Configure impersonation protection
• Safe Attachments — Detonate suspicious attachments in sandbox
• Safe Links — Scan URLs at click-time
• Anti-spam policies — Tune spam filtering sensitivity

5. Enable Audit Logging

Unified Audit Log records all activity across M365 services. Essential for:

• Investigating security incidents
• Compliance requirements
• Detecting unauthorized access
• Understanding what happened when something goes wrong

6. Configure Data Loss Prevention (DLP)

Prevent sensitive data from leaving your organization:

• Detect credit card numbers, SSNs, etc.
• Block or warn when sensitive data is shared externally
• Create custom policies for your specific data types

7. Manage External Sharing

Control how users share files and folders externally:

• Limit who can share externally
• Require guests to authenticate
• Set expiration dates for sharing links
• Review and audit external sharing regularly

Admin Account Security

Administrator accounts need extra protection:

• Use dedicated admin accounts (not daily-use accounts)
• Require hardware security keys for admin MFA
• Minimize the number of global administrators
• Use Privileged Identity Management for just-in-time access
• Review admin activity regularly

Security Monitoring

Use Microsoft's built-in security tools:

• Secure Score — Shows your security posture with recommendations
• Security Dashboard — Overview of threats and alerts
• Alert Policies — Get notified of suspicious activity