5 Microsoft 365 Security Settings Businesses Should Review to Reduce Hidden Security Risks

Microsoft 365 has become the backbone of daily business operations, powering email, file sharing, collaboration, and productivity tools for organizations of all sizes.

However, having Microsoft 365 does not automatically mean your business is fully protected.

Over the years, Microsoft has introduced stronger security defaults to help new tenants start with better protection. But organizations that created their Microsoft 365 environment several years ago may still be running on older configurations.

This creates a common security challenge: new security improvements do not automatically update your existing tenant settings.

A sharing link created years ago may still expose company files. A forgotten third-party application may still have access to business data. An outdated authentication setup may leave gaps in your identity protection strategy.

For businesses using Microsoft 365, regular security reviews are essential to identify hidden risks before they become security incidents.

Here are five Microsoft 365 security settings every organization should review.

1. Review SharePoint and OneDrive Sharing Permissions

File sharing is one of the biggest productivity benefits of Microsoft 365. Employees can quickly share documents with colleagues, clients, and external partners.

However, incorrect sharing settings can unintentionally expose sensitive business information.

Older Microsoft 365 tenants may still have default sharing options configured to “Anyone with the link.” This means anyone who receives the URL may access the file without signing in.

The risk is that these links can continue working long after they were created.

For example, an employee may have shared a pricing document with an external contact months ago. If that link was forwarded or stored elsewhere, the company may no longer know who has access.

Businesses should review:

• Tenant-level SharePoint sharing settings

• OneDrive sharing permissions

• Expiration settings for external sharing
  

A more secure approach is to use options such as “Specific people” or “Only people in your organization” whenever possible.

This ensures users must authenticate before accessing business files and reduces the chance of unauthorized data exposure.

2. Check for External Email Forwarding Rules

Email remains one of the most targeted areas for cyber threats because it often contains sensitive business information.

Microsoft has strengthened protection against automatic external forwarding by making it disabled by default for newer configurations.

However, older inbox rules may still exist.

An employee who created a forwarding rule years ago could unintentionally or intentionally send company emails to a personal email account.

This creates several risks:

• Confidential information leaving company systems

• Customer data exposure

• Reduced visibility for IT teams

• Increased risk during employee offboarding
  

Businesses should review:

• Microsoft Defender outbound spam policies

• Existing mailbox forwarding rules

• Suspicious inbox rule activities

• Audit logs related to rule creation
  

Regular monitoring of email forwarding settings is a simple but effective step in improving Microsoft 365 cybersecurity.

3. Audit Third-Party Applications with Microsoft 365 Access

Modern businesses rely on many productivity applications that connect with Microsoft 365.

Project management tools, automation platforms, productivity apps, and collaboration software often request permission to access emails, calendars, files, or user information.

The challenge is that these permissions can remain active long after the application is no longer needed.

For example, an employee may have approved an external application during a short-term project two years ago. Even if the project ended, that application may still have access to company resources.

Organizations should regularly review:

• Microsoft Entra ID enterprise applications

• User consent permissions

• Applications with access to emails, files, and calendars

• Unused or unfamiliar applications
  

A good practice is to establish an application approval process where employees cannot grant high-level permissions without IT review.

This helps prevent unauthorized applications from becoming hidden entry points into your Microsoft 365 environment.

4. Review Microsoft 365 Audit Log Retention Settings

Security visibility depends on having reliable records.

Microsoft 365 audit logs help organizations investigate suspicious activity, track changes, and understand what happened during a security event.

However, the default retention period may not meet every organization’s requirement.

Standard audit logs are typically retained for a limited period, while businesses with advanced licensing options can extend retention for longer periods.

Companies operating in regulated industries such as finance, healthcare, and professional services should carefully evaluate whether their retention settings align with compliance requirements.

Review:

• Microsoft Purview audit retention policies

• Available audit history

• Required retention periods for your industry

• Licensing requirements for extended storage
  

Without sufficient audit history, businesses may struggle to investigate incidents or provide evidence during compliance reviews.

5. Verify MFA and Conditional Access Protection

Multi-factor authentication (MFA) is one of the most important security controls for Microsoft 365 accounts.

A strong password alone is no longer enough. If credentials are stolen through phishing or data breaches, MFA provides an additional layer of protection.

Newer Microsoft 365 environments typically have stronger MFA enforcement through Security Defaults.

However, older tenants may have inconsistent configurations, especially if Conditional Access policies were introduced later.

A common issue occurs when organizations disable Security Defaults but do not properly configure Conditional Access policies.

This can result in some users, including administrators, not receiving the expected level of protection.

Businesses should check:

• Whether Security Defaults are enabled

• Conditional Access policies enforcing MFA

• Administrator account protection

• Emergency access accounts
  

MFA should cover all users, especially privileged accounts with access to sensitive business systems.

A Practical Approach to Updating Microsoft 365 Security Settings

Not every security improvement needs to happen immediately.

Changing everything at once can create unnecessary disruption for employees.

A better approach is to prioritize changes based on security impact and user impact.

A recommended order:

Start with low-impact reviews

Begin by reviewing:

• Audit log retention

• Third-party application permissions

• External forwarding rules
  

These activities typically do not affect daily workflows.

Communicate changes before updating sharing settings

File-sharing changes may affect employee habits, especially for teams that frequently collaborate with external parties.

Notify users before changing default sharing permissions to reduce confusion.

Carefully plan MFA and Conditional Access changes

Authentication changes require the most attention because incorrect configurations can lock users out.

Before implementing changes, review existing policies, test with selected accounts, and maintain emergency access procedures.

Frequently Asked Questions About Microsoft 365 Security Settings

Are older Microsoft 365 tenants more vulnerable?

Older tenants may have weaker default security configurations because many Microsoft security improvements only apply automatically to newly created environments.

Existing settings, permissions, and user activities still need to be reviewed manually.

How often should businesses perform a Microsoft 365 security audit?

Businesses should review Microsoft 365 security settings regularly, especially after major changes such as employee turnover, IT provider changes, or new application integrations.

Many organizations benefit from quarterly security reviews.

Can Microsoft 365 security settings prevent all cyber threats?

No security configuration can eliminate every threat. However, properly configured Microsoft 365 security settings significantly reduce risks related to unauthorized access, data exposure, and account compromise.

Security works best when combined with employee awareness, monitoring, and a broader cybersecurity strategy.

Why should businesses review third-party app permissions?

Third-party applications may retain access to company data even after they are no longer actively used. Regular reviews help remove unnecessary permissions and reduce potential attack paths.

Conclusion: Strengthen Your Microsoft 365 Security Before Problems Appear

Microsoft 365 provides powerful security capabilities, but those protections depend on proper configuration and ongoing maintenance.

Businesses should not assume that older settings are still aligned with today’s security standards. Regular reviews of sharing permissions, email forwarding rules, application access, audit retention, and MFA policies can help uncover risks before they impact operations.

If your organization is unsure whether your Microsoft 365 environment is properly secured, a professional review can help identify gaps and recommend improvements.

Looking to strengthen your organization’s Microsoft 365 security and reduce cybersecurity risks? Contact our team to discuss how we can help review and improve your cloud security setup.