What is Identity Security? A Complete Guide for Enterprises

Table of Contents

Identity security is a combination of tools, technologies and processes that secure digital and personal identities from fraud, theft and misuse. It ensures that people are who they say they are and that only authorized users can access systems and information.

The rise in remote work, cloud technologies and third-party applications has significantly expanded attack surfaces, making identity one of the most targeted and vulnerable areas for organizations.

Moreover, artificial intelligence is increasingly being leveraged by cybercriminals to make identity threats even more effective. So it’s hardly surprising that nearly 78% of organizations experienced an identity-related cyberattack in the last 12 months.

Historically, the identity field was more focused on identity and access management (IAM) — managing user identities and ensuring the right users were able to access the right systems, resources and data. Today, identity is the new security perimeter, and organizations need to put robust security measures in place to protect their IAM infrastructure.

A comprehensive identity security approach should include several key components:

Identify verification. Also referred to as identity proofing, identity verification ensures that someone is who they say they are through document verification (e.g passport), biometric verification (e.g. fingerprints) and other measures to prove that the identity is legitimate and belongs to the individual.

Authentication. Validating user credentials in order to grant access to an account, device or location. Common authentication factors include something you know (e.g., password), something you have (e.g., device), or something you are (e.g., biometrics).

Access controls. Once a user has been authenticated, the systems they can access depend on their authorization levels and defined policies. Access controls include role-based access controls (RBAC), privileged access management (PAM), time-based access controls, and adaptive authentication, which adjusts the level of authentication according to risk-based assessments.

Identity governance. The set of processes and policies an organization employs to manage different identities and their access to resources. These could be different types of access controls, adherence to compliance, audits or user lifecycle management, or any combination of each.

Risk monitoring and mitigation. This component continually assesses risk associated with identities and their access to resources. It might include tools such as real-time alerts, risk scoring and anomaly detection.

As the digital landscape has evolved to demand more identities, cybercriminals have exploited any security gaps to gain access to user credentials and other sensitive data through social engineering, phishing, credential stuffing and other attacks.

Single sign-on (SSO) and other common IAM technologies have brought enormous efficiencies but also open up new avenues of attack. Effective identity security enables businesses to manage these identities and keep business data, customer data, and your network and systems safe from the hands of malicious actors.

Use cases include:

Identity Fraud Prevention

Identity security helps defend against malicious threat actors that may impersonate an identity or fabricate one to gain unauthorized access to a user’s account and make fraudulent payments. One report found a 700% increase in deepfake attacks on the financial sector in 2023 from the year before, attributed to the ability of artificial intelligence to make realistic voice and images to impersonate legitimate users.

Fake Passport Used to Bypass Crypto Exchange IDV System. Image Source: 404 Media

Protect Your Business Data

Personally identifiable information (PII) and confidential data – including payment card data and user credentials – must be protected from cybercriminals who can sell it on dark web marketplaces, leverage it to execute ransomware attacks, and cause customers to lack trust in your brand.

In addition, malicious external and internal threat actors such as disgruntled or former employees can steal valuable IP information or other company secrets that can put your company’s competitive edge at risk.

Enable Secure Access

Identity security ensures that only authorized users gain access to your systems and network. It does this with different methods such as adaptive multi-factor authentication, privileged access management, role-based access control and single sign-on. This is increasingly important as businesses have moved to hybrid work and migrated to the cloud, expanding the attack surface and the number of identities for them to manage.

Comply With Data and Privacy Regulations

Many regulations and standards, especially those related to customer financial data such as PCI DSS and NYDFS and data privacy regulations such as GDPR require the implementation of access controls such as MFA and PAM. Others such as HIPAA require strict access controls for confidential and PII patient data. Identity security helps organizations meet these different compliance requirements.

Prevent Cyberattacks and Account Takeover

According to Google's Threat Horizons Report, over 60% of data compromises are related to user credentials, and that number will only rise as the number of identities continues to climb.Robust identity security protects against the stealing of these credentials through a variety of attack techniques, including AI-driven phishing, impersonation and social engineering attacks, where generative AI adds unprecedented scale and tailored targeting.

Maintain Business Trust and Reputation

Businesses across industries, particularly those in customer-facing industries such as financial services, hospitality and retail, need to ensure that sensitive data is safe from the hands of malicious attackers. Data breaches, ransomware shutdowns and other security incidents caused by identity-based attacks cause a loss of trust in your business and harm your reputation.

Secure Financial Transactions

Banks and financial services must ensure their employees and customers can securely conduct transactions, without exposing sensitive data. Customer-facing businesses that handle payment transactions must also be able to ensure their data will not be stolen or that they will become victims of identity theft. At the same time, however, identity security should facilitate frictionless transactions to enhance the customer experience.

Identity processes have been compromised in many recent cybersecurity attacks mentioned in the headlines. Stronger identity security — especially techniques that cannot be bypassed by expert cybercriminals — is necessary to prevent these types of attacks.

These attacks include:

MGM: The attack on MGM resorts occurred when attackers successfully impersonated an employee, enabling them to gain access to the IT help desk, reset credentials and raise their identity access to super user level to further infiltrate the MGM system. The attack ended up costing MGM $100 million in ransomware.

Anatomy of the attack on MGM Resorts

LastPass: The password vault company suffered a data breach in 2022 that experts have traced to $35 million stolen in crypto wallets of 150 users. After the data breach, hackers succeeded in copying backups of customer password vaults, some of which included encryption keys.

Okta: Ironically, the identity management and access provider suffered an attack where one of its third-party service provider employees, a customer support engineer, was accessed by a malicious actor. The actor used it to expose information about Okta’s applications and systems.

Organizations across every industry should deliver strong identity security. Cyberattacks in certain industries, however, are more exposed to sensitive data and present specific security threats.

Financial Services

Cybercriminals target banks, insurance companies and financial organizations with the intent of executing identity theft, financial fraud and authentication attacks that steal passwords and gain access to accounts. At the same time, they also must meet various security regulations and controls, although they must do this while minimizing customer friction.

Critical Infrastructure

Oil and gas, water, healthcare, utilities and transportation companies provide services that people depend on. Many rely on legacy applications with insecure authentication processes. This is even more challenging in an environment where employees are accessing the services remotely in distributed environments.

Attacks in this industry not only result in the operational disruption of services people use daily but also can lead to misuse, safety hazards, and even threaten national security.

Manufacturing

The manufacturing industry faces its own unique set of IAM security challenges. It also often depends on poorly secured legacy applications. Moreover, an extensive network of connected partners, suppliers, and the entire supply chain system create a large attack surface. A security flaw in their network could compromise the manufacturing company as well. Remote access and distributed environments add another level of risk.

Retail

Businesses in the retail industry have access to massive volumes of PII and confidential data. This data can be used by malicious actors to execute phishing and social engineering attacks on scale, as well as in the abuse of promotional offers and incentives. Identity security is even more challenging in this environment with the increased pressure to streamline the user experience. Any identity security for this sector must be robust yet frictionless.

Hospitality

The seasonality of this sector and high turnover rate lends itself to different users sharing privileged accounts. At the same time, these accounts and their identities can be challenging for businesses to manage. The turnover in staff also offers more people exposure to sensitive data and fails to properly train them about security best practices, raising the risk of data breaches and cyberattacks from insider threats.

Even though identity security is essential across industries, it remains one of the less mature areas of cybersecurity. IAM processes are more interdependent than ever, yet most organizations lack centralized visibility and control over their identity systems. These identity security trends allow cybercriminals to exploit security gaps within your organization.

A Tradeoff Between User Experience and Security

Many of the components of IAM security, such as traditional MFA, enhance security at the expense of the user experience. This can be especially challenging for customer-facing industries such as finance, hospitality and retail where the customer experience is tied to loyalty and repeat revenue.

Complex Integrations

Identity security solutions can be especially difficult to integrate into businesses that have a combination of multi-cloud and hybrid-cloud solutions, each with their protocols and standards, compliance requirements, APIs and interoperability issues. As a result, identity security integration can become time-consuming and costly.

Lack of Scalability

Many identity security solutions cannot keep up as business identities increase exponentially. Or they may be unable to provide security uniformly across the entire IT infrastructure, causing delays in verification and authentication, a poor user experience and a frustrated IT staff.

Complying With Regulations

Regulations and standards such as PCI DSS, NYDFS and NIST 800-63B require companies to adhere to different aspects of identity security. For example, PCI DSS requires that only authorized personnel have access to payment card data, while NYDFS requires financial organizations that deal with any New York resident’s data implement a risk-based approach to authentication.

NIST 800-63B requires different levels of authentication according to different levels of risk. Other regional regulatory agencies such as the UK National Cyber Security Centre (NCSC) and the Australian Cyber Security Centre (ACSC) strongly recommend that organizations adopt MFA to protect sensitive data.

At the same time, organizations must make sure the identity security solution doesn’t violate data privacy laws such as GDPR, BDSG and other similar regional data privacy regulations.

Vendor Lock In

Vendor lock-in, or dependence on a specific vendor, can make identity security more challenging as it can be less flexible and unable to integrate with other systems. At the same time, migration to new vendors can be complex and costly, leading to the retraining of staff, reconfiguration of systems and even downtime.

While many organizations struggle to find an IAM solution that delivers a comprehensive identity strategy to address these challenges, several best practices in identity security stand out.

Phishing-Resistant MFA

As new identity security tools and technologies have evolved, however, malicious actors have found ways to circumvent them, such as brute force attacks, MFA prompt bombing, exploiting generated tokens and session hijacking.

To better defend against these types of attacks, the U.S government developed a cybersecurity framework, the Federal Zero Trust Strategy, that requires organizations to implement phishing-resistant MFA by 2024. CISA in particular acknowledged the enormous challenge organizations face in enforcing phishing-resistant MFA, citing SMS-based MFA to be one of the least secure options.

How FIDO phishing-resistant MFA works

Privileged Access Management (PAM)

Privileged Access Management (PAM) can complement identity security best practices such as role-based access controls (RBAC) by allowing employees access only to accounts necessary to do their job, rather than according to their job title. Limiting the number of privileged accounts reduces the potential for identity-based attacks on users with elevated privileges who have greater access to sensitive data and systems.

Identity Risk Monitoring and Mitigation

A robust identity security solution delivers identity assurance throughout the employee lifecycle. This optimized approach assures identity by monitoring for risky behavior based on a risk and policy engine. This enables it to generate granular user risk profiles to drive individualized adaptive authentication and automatically respond to potential risks with appropriate adaptive measures.

Automated and Continuous Identity Verification

The majority of companies spend more than two hours verifying identity when an employee needs to replace a device, when a risk is flagged by security systems or when an employee changes their role within the company. Automated identity verification processes, that are employed not just at onboarding, but at all high-risk or high-impact events, are critical to stopping modern identity threats.

Zero Trust Identity Framework

The Zero Trust principle takes the approach that your organization has already been breached, since so many cyber threats lie outside the digital perimeter. Instead of granting access to users based on trusting their user identity, organizations should employ continuous monitoring and real-time verification of user requests for access.

Strong enterprise identity security streamlines the verification process across your IT departments, increasing productivity of team members and reducing costs. For example, you’ll eliminate the need to constantly reset passwords, greatly reduce password reset costs, which account for up to 40% of support desk spend.

Passwordless identity security also significantly reduces any vulnerabilities associated with passwords and encourages a faster authentication process that leads to greater end-user productivity.

Stronger identity security posture also manages your workforce identities more efficiently, whether in-office, remote, on the desktop or cloud. Other less quantifiable benefits include an ability to avoid costs associated with responses to phishing attacks or account takeover.

In traditional identity security, authentication and verification are focused on identifying a user at a specific point in time. In contrast, identity assurance offers a comprehensive, integrated approach to identity verification throughout the user lifecycle.

HYPR’s Identity Assurance Platform applies this new approach by combining modern passkey-based authentication with adaptive risk mitigation, automated identity verification and a simple, intuitive user experience. Its platform offers the strongest end-to-end identity security on the market, allowing organizations to detect, prevent, and eliminate identity-related risks at every point in the identity lifecycle.

What is the fastest growing form of identity theft?

Synthetic identity theft is the fastest-growing type of financial theft today. It occurs when cybercriminals use a single element of an individual’s personal data (such as a name or address) or different elements from several individuals and combine it with fabricated data, resulting in a new identity. Generative AI enables cybercriminals to craft these synthetic identities at scale and elude traditional identity authentication and fraud detection solutions.

What is identity-centric security?

Identity-centric security shifts the focus of security to user identity, focusing on it as the new perimeter rather than the traditional approach of securing the network or system perimeter. Instead of preventing attacks, it assumes that the perimeter has already been breached and concentrates on controlling access to sensitive data using tools such as identity-based access controls, phishing-resistant MFA, and continuous verification.

What is KYE?

KYE, or Know Your Employee, is a process of verifying identities and thorough background checks to discover potential risk to minimize the risk of employee fraud and theft. Similar to KYC, or Know Your Customer, which focuses on identity verification and compliance with anti-money laundering regulations, it is a critical process for compliance and risk management. KYE has developed in response to the rise of identity fraud and theft and new tactics such as deepfakes across organizations of all industries.

What Is Identity Security?

Introduction to Identity Security

Key Components of IAM Security

Why Is Identity Security Needed?