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Configure Microsoft Entra for Zero Trust: Protect tenants and isolate production systems

Protecting your tenant and isolating production systems is about setting tenant boundaries and keeping your production systems isolated from test and pre-production environments. Lateral movement was a critical concern from the Secure Future Initiative.

Even smaller organizations can protect their environments by implementing stricter guest access policies and limiting who can create tenants. Larger organizations that manage several environments should take action to prevent unauthorized tenant sprawl and lateral movement. All organizations can benefit from these checks to reduce attack surface area through unmanaged tenants.

Zero Trust security recommendations

Permissions to create new tenants are limited to the Tenant Creator role

A threat actor or a well-intentioned but uninformed employee can create a new Microsoft Entra tenant if there are no restrictions in place. By default, the user who creates a tenant is automatically assigned the Global Administrator role. Without proper controls, this action fractures the identity perimeter by creating a tenant outside the organization's governance and visibility. It introduces risk though a shadow identity platform that can be exploited for token issuance, brand impersonation, consent phishing, or persistent staging infrastructure. Since the rogue tenant might not be tethered to the enterprise’s administrative or monitoring planes, traditional defenses are blind to its creation, activity, and potential misuse.

Remediation action

Enable the Restrict non-admin users from creating tenants setting. For users that need the ability to create tenants, assign them the Tenant Creator role. You can also review tenant creation events in the Microsoft Entra audit logs.

Protected actions are enabled for high-impact management tasks

Threat actors who gain privileged access to a tenant can manipulate identity, access, and security configurations. This type of attack can result in environment-wide compromise and loss of control over organizational assets. Take action to protect high-impact management tasks associated with Conditional Access policies, cross-tenant access settings, hard deletions, and network locations that are critical to maintaining security.

Protected actions let administrators secure these tasks with extra security controls, such as stronger authentication methods (passwordless MFA or phishing-resistant MFA), the use of Privileged Access Workstation (PAW) devices, or shorter session timeouts.

Remediation action

Guest access is limited to approved tenants

Limiting guest access to a known and approved list of tenants helps to prevent threat actors from exploiting unrestricted guest access to establish initial access through compromised external accounts or by creating accounts in untrusted tenants. Threat actors who gain access through an unrestricted ___domain can discover internal resources, users, and applications to perform additional attacks.

Organizations should take inventory and configure an allowlist or blocklist to control B2B collaboration invitations from specific organizations. Without these controls, threat actors might use social engineering techniques to obtain invitations from legitimate internal users.

Remediation action

Guests are not assigned high privileged directory roles

When guest users are assigned highly privileged directory roles such as Global Administrator or Privileged Role Administrator, organizations create significant security vulnerabilities that threat actors can exploit for initial access through compromised external accounts or business partner environments. Since guest users originate from external organizations without direct control of security policies, threat actors who compromise these external identities can gain privileged access to the target organization's Microsoft Entra tenant.

When threat actors obtain access through compromised guest accounts with elevated privileges, they can escalate their own privilege to create other backdoor accounts, modify security policies, or assign themselves permanent roles within the organization. The compromised privileged guest accounts enable threat actors to establish persistence and then make all the changes they need to remain undetected. For example they could create cloud-only accounts, bypass Conditional Access policies applied to internal users, and maintain access even after the guest's home organization detects the compromise. Threat actors can then conduct lateral movement using administrative privileges to access sensitive resources, modify audit settings, or disable security monitoring across the entire tenant. Threat actors can reach complete compromise of the organization's identity infrastructure while maintaining plausible deniability through the external guest account origin.

Remediation action

Guests can't invite other guests

External user accounts are often used to provide access to business partners who belong to organizations that have a business relationship with your enterprise. If these accounts are compromised in their organization, attackers can use the valid credentials to gain initial access to your environment, often bypassing traditional defenses due to their legitimacy.

Allowing external users to onboard other external users increases the risk of unauthorized access. If an attacker compromises an external user's account, they can use it to create more external accounts, multiplying their access points and making it harder to detect the intrusion.

Remediation action

Guests have restricted access to directory objects

External user accounts are often used to provide access to business partners who belong to organizations that have a business relationship with your enterprise. If these accounts are compromised in their organization, attackers can use the valid credentials to gain initial access to your environment, often bypassing traditional defenses due to their legitimacy.

External accounts with permissions to read directory object permissions provide attackers with broader initial access if compromised. These accounts allow attackers to gather additional information from the directory for reconnaissance.

Remediation action

App instance property lock is configured for all multitenant applications

App instance property lock prevents changes to sensitive properties of a multitenant application after the application is provisioned in another tenant. Without a lock, critical properties such as application credentials can be maliciously or unintentionally modified, causing disruptions, increased risk, unauthorized access, or privilege escalations.

Remediation action Enable the app instance property lock for all multitenant applications and specify the properties to lock.

Guests don't have long lived sign-in sessions

Guest accounts with extended sign-in sessions increase the risk surface area that threat actors can exploit. When guest sessions persist beyond necessary timeframes, threat actors often attempt to gain initial access through credential stuffing, password spraying, or social engineering attacks. Once they gain access, they can maintain unauthorized access for extended periods without reauthentication challenges. These compromised and extended sessions:

  • Allow unauthorized access to Microsoft Entra artifacts, enabling threat actors to identify sensitive resources and map organizational structures.
  • Allow threat actors to persist within the network by using legitimate authentication tokens, making detection more challenging as the activity appears as typical user behavior.
  • Provides threat actors with a longer window of time to escalate privileges through techniques like accessing shared resources, discovering more credentials, or exploiting trust relationships between systems.

Without proper session controls, threat actors can achieve lateral movement across the organization's infrastructure, accessing critical data and systems that extend far beyond the original guest account's intended scope of access.

Remediation action

Guest access is protected by strong authentication methods

External user accounts are often used to provide access to business partners who belong to organizations that have a business relationship with your organization. If these accounts are compromised in their organization, attackers can use the valid credentials to gain initial access to your environment, often bypassing traditional defenses due to their legitimacy.

Attackers might gain access with external user accounts, if multifactor authentication (MFA) isn't universally enforced or if there are exceptions in place. They might also gain access by exploiting the vulnerabilities of weaker MFA methods like SMS and phone calls using social engineering techniques, such as SIM swapping or phishing, to intercept the authentication codes.

Once an attacker gains access to an account without MFA or a session with weak MFA methods, they might attempt to manipulate MFA settings (for example, registering attacker controlled methods) to establish persistence to plan and execute further attacks based on the privileges of the compromised accounts.

Remediation action

Guest self-service sign-up via user flow is disabled

When guest self-service sign-up is enabled, threat actors can exploit it to establish unauthorized access by creating legitimate guest accounts without requiring approval from authorized personnel. These accounts can be scoped to specific services to reduce detection and effectively bypass invitation-based controls that validate external user legitimacy.

Once created, self-provisioned guest accounts provide persistent access to organizational resources and applications. Threat actors can use them to conduct reconnaissance activities to map internal systems, identify sensitive data repositories, and plan further attack vectors. This persistence allows adversaries to maintain access across restarts, credential changes, and other interruptions, while the guest account itself offers a seemingly legitimate identity that might evade security monitoring focused on external threats.

Additionally, compromised guest identities can be used to establish credential persistence and potentially escalate privileges. Attackers can exploit trust relationships between guest accounts and internal resources, or use the guest account as a staging ground for lateral movement toward more privileged organizational assets.

Remediation action

Outbound cross-tenant access settings are configured

Allowing unrestricted external collaboration with unverified organizations can increase the risk surface area of the tenant because it allows guest accounts that might not have proper security controls. Threat actors can attempt to gain access by compromising identities in these loosely governed external tenants. Once granted guest access, they can then use legitimate collaboration pathways to infiltrate resources in your tenant and attempt to gain sensitive information. Threat actors can also exploit misconfigured permissions to escalate privileges and try different types of attacks.

Without vetting the security of organizations you collaborate with, malicious external accounts can persist undetected, exfiltrate confidential data, and inject malicious payloads. This type of exposure can weaken organizational control and enable cross-tenant attacks that bypass traditional perimeter defenses and undermine both data integrity and operational resilience. Cross-tenant settings for outbound access in Microsoft Entra provide the ability to block collaboration with unknown organizations by default, reducing the attack surface.

Remediation action

Guests don't own apps in the tenant

Without restrictions preventing guest users from registering and owning applications, threat actors can exploit external user accounts to establish persistent backdoor access to organizational resources through application registrations that might evade traditional security monitoring. When guest users own applications, compromised guest accounts can be used to exploit guest-owned applications that might have broad permissions. This vulnerability enables threat actors to request access to sensitive organizational data such as emails, files, and user information without the same level of scrutiny for internal user-owned applications.

This attack vector is dangerous because guest-owned applications can be configured to request high-privilege permissions and, once granted consent, provide threat actors with legitimate OAuth tokens. Furthermore, guest-owned applications can serve as command and control infrastructure, so threat actors can maintain access even after the compromised guest account is detected and remediated. Application credentials and permissions might persist independently of the original guest user account, so threat actors can retain access. Guest-owned applications also complicate security auditing and governance efforts, as organizations might have limited visibility into the purpose and security posture of applications registered by external users. These hidden weaknesses in the application lifecycle management make it difficult to assess the true scope of data access granted to non-Microsoft entities through seemingly legitimate application registrations.

Remediation action

All guests have a sponsor

Inviting external guests is beneficial for organizational collaboration. However, in the absence of an assigned internal sponsor for each guest, these accounts might persist within the directory without clear accountability. This oversight creates a risk: threat actors could potentially compromise an unused or unmonitored guest account, and then establish an initial foothold within the tenant. Once granted access as an apparent "legitimate" user, an attacker might explore accessible resources and attempt privilege escalation, which could ultimately expose sensitive information or critical systems. An unmonitored guest account might therefore become the vector for unauthorized data access or a significant security breach. A typical attack sequence might use the following pattern, all achieved under the guise of a standard external collaborator:

  1. Initial access gained through compromised guest credentials
  2. Persistence due to a lack of oversight.
  3. Further escalation or lateral movement if the guest account possesses group memberships or elevated permissions.
  4. Execution of malicious objectives.

Mandating that every guest account is assigned to a sponsor directly mitigates this risk. Such a requirement ensures that each external user is linked to a responsible internal party who is expected to regularly monitor and attest to the guest's ongoing need for access. The sponsor feature within Microsoft Entra ID supports accountability by tracking the inviter and preventing the proliferation of "orphaned" guest accounts. When a sponsor manages the guest account lifecycle, such as removing access when collaboration concludes, the opportunity for threat actors to exploit neglected accounts is substantially reduced. This best practice is consistent with Microsoft’s guidance to require sponsorship for business guests as part of an effective guest access governance strategy. It strikes a balance between enabling collaboration and enforcing security, as it guarantees that each guest user's presence and permissions remain under ongoing internal oversight.

Remediation action

Inactive guest identities are disabled or removed from the tenant

When guest identities remain active but unused for extended periods, threat actors can exploit these dormant accounts as entry vectors into the organization. Inactive guest accounts represent a significant attack surface because they often maintain persistent access permissions to resources, applications, and data while remaining unmonitored by security teams. Threat actors frequently target these accounts through credential stuffing, password spraying, or by compromising the guest's home organization to gain lateral access. Once an inactive guest account is compromised, attackers can utilize existing access grants to:

  • Move laterally within the tenant
  • Escalate privileges through group memberships or application permissions
  • Establish persistence through techniques like creating more service principals or modifying existing permissions

The prolonged dormancy of these accounts provides attackers with extended dwell time to conduct reconnaissance, exfiltrate sensitive data, and establish backdoors without detection, as organizations typically focus monitoring efforts on active internal users rather than external guest accounts.

Remediation action