Enterprise Password Management: 7 Best Practices to Protect Your Data

Between 2021 and 2023, the number of data breaches increased by a staggering 72%. Even more alarming is that more than 80% of these breaches can be traced back to weak or compromised passwords and the failure to implement multi-factor authentication (MFA). These lapses can lead to financial losses, reputational damage, and regulatory penalties for enterprises, underscoring the importance of robust password security measures.

Understanding and implementing best practices for enterprise password management is business-critical security; enterprises can protect their assets, ensure ongoing compliance, and build and maintain the trust of their customers and stakeholders.

Here are 7 best practices every enterprise should have built into their IT and security strategies.

Password management best practice #1: Implement strong password policies

Effective password policies help guarantee that passwords are sufficiently complex and unique across different accounts. These measures combined significantly reduce the risk of unauthorized access and data breaches.

Some of the best practices for password setting include:

Password complexity requirements. Passwords should include a mix of uppercase letters, lowercase letters, numbers, and special characters (i.e., @, #, $, etc.). Prohibit easily guessable passwords, such as “password123,” “admin,” or any password found on common password lists.

Password length requirements. To enhance security, set a minimum password length, typically at least 12 characters. The longer the password, the more difficult it is for a brute-force attacker to crack it successfully. 

Prohibit the use of known breached credentials. Oftentimes, users reuse passwords for professional and personal accounts, and sometimes these passwords get leaked in data breaches. Attackers will often search publicly disclosed breaches for credentials that they can use to log into corporate accounts. Most centralized identity and access management solutions have the capability of comparing user passwords to known breached credentials. Admins should utilize these capabilities to alert users who are using unsafe passwords and either force them to change the password or subject the account to increased monitoring or lower privileges.

Account lockout policies. Set limits on the number of failed login attempts before an account is temporarily locked. This helps ensure that unauthorized login attempts are limited by the number of failed logins you allow, lowering the chances of successful ingress. Define the duration of the lockout period and the steps required to unlock the account (e.g., contacting IT support), and clearly communicate this to your employees.

Password strength assessment: Automatically evaluate passwords when your employees set them up to ensure they adhere to the complexity requirements you’ve set, including password length, character variety, and the avoidance of common patterns such as sequential numbers or letters. 

Internal tooling. Make sure your internal tooling supports your password creation policies and recommendations, as many tools still limit password length or the use of special characters. 

Password management best practice #2: Use multi-factor authentication (MFA)

Multi-factor authentication (MFA) adds an extra layer of security to the authentication process by requiring users to provide two or more verification factors to access a system or application. The verification factors that are most commonly used:

Knowledge: Something that the user knows. This could be a password or a personal identification number (PIN).

Something the user possesses: Examples include a time-sensitive code sent to the user’s mobile device via SMS, email, or generated by an authentication app, or physical devices such as USB keys or smart cards that generate or store authentication codes.

Inherence: Something that the user is or inherently possesses. These can include fingerprint scans, facial recognition, or voice recognition.

Location:  Verifying the user’s location based on the IP address or GPS data from where the login attempt is made. 

Behavioral: Analyzing patterns of user behavior, such as typing style or speed, or mouse movements, to verify identity. 

Password management best practice #3: Centralized password managers

A centralized password manager provides a comprehensive solution for managing, storing, and securing passwords across an organization. It helps ensure that passwords are consistently strong, unique, and easily accessible to authorized users while providing robust security measures to prevent unauthorized access. The key features that you should look for when deciding on which password manager to deploy include:

Secure storage. The passwords should be stored in an encrypted format to ensure that they remain protected, even if the storage system is compromised. They should also be stored in centralized vaults that can only be accessed by authorized users.

Automated password generation. The tool should have a feature that allows users to automatically generate strong, complex passwords that meet the enterprise’s security policies. Administrators should be able to customize the tool so that the passwords generated by the tool adhere to specific organizational policies regarding length, complexity, and character requirements.

Audit and reporting: Detailed logs of all password-related activities, including access attempts, changes, and sharing, should be maintained. Automated reports help to demonstrate compliance with regulatory requirements and internal security policies.

Password management best practice #4: Regular password audits and monitoring

Consistent auditing and monitoring of passwords helps guarantee that passwords remain secure over time and that potential vulnerabilities or breaches are identified and addressed promptly. 

Some of the key elements that should be incorporated into your password audits are:

Regularity. Password audits should be conducted at regular intervals to ensure that your employees’ passwords comply with security policies. A quarterly or semi-annual audit is a good cadence. The scope of the audit should include all user accounts, systems, and applications that require passwords.

Access controls and permissions. A vital part of the password audit is assessing whether users have appropriate access levels based on their roles and responsibilities. Practicing the principle of least privilege minimizes unnecessary permissions, which reduces the chances of critical systems being compromised. Another important part of the audit is checking that accounts for terminated employees and contractors are deactivated.

Audit logging and reporting. It’s essential to maintain detailed logs of password-related activities, such as changes, resets, and access attempts for future reference, and to assist in investigations if anything goes wrong. Generate reports to demonstrate compliance with regulatory requirements and internal security policies. 

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When it comes to password monitoring, these components should be a standard part of the practice: 

Continuous monitoring. Your organization should use systems that provide real-time alerts for suspicious activities such as multiple failed login attempts or logins from unusual locations. Using automated monitoring tools to track and analyze password-related activities across the enterprise continuously greatly enhances your ability to keep tabs on password-related anomalies.

Anomaly detection. A critical part of the monitoring process is detecting anomalous user behavior. These include unusual login times or locations, which may indicate compromised credentials. A response plan should be implemented to respond quickly to detected anomalies, including investigating potential breaches and taking corrective actions.

Credential exposure monitoring. An essential part of password monitoring is to look externally to detect compromised credentials. Regular scanning of the dark web and other sources to search for exposed credentials is vital to ensure that you can take the appropriate remediation steps if your enterprise passwords have been compromised. Set up notifications for known data breaches that could affect your organization and take immediate action to secure affected accounts. Most centralized identity and access management solutions have the capability to do this automatically, saving you the trouble of having to maintain a database of known breached credentials.

Access and usage patterns. Ongoing, deeper monitoring of access and usage behavior can uncover irregularities that signal malicious activity. Track login patterns to identify unusual behavior, such as access attempts from unfamiliar devices or IP addresses. Analyze password usage trends to identify potential security risks and areas for improvement.

Password management best practice #5: Employee training and awareness

Educating your employees about the importance of strong password practices and security protocols has two primary benefits. First, it enhances overall cybersecurity and second, it fosters a culture of accountability within the organization. Since almost a third of employees don’t think they play an active role in their companies’ cybersecurity, education becomes critical to any company’s security posture.  

Several topics should be fundamental in your security awareness education efforts:

Risk mitigation. All companies should educate their employees about phishing tactics, which will help them recognize and stave off malicious attempts to obtain passwords. Educating your employees about social engineering techniques will raise awareness of attackers' tactics to manipulate individuals to gain access to sensitive information. Your employees will have greater confidence in their ability to recognize these attempts and follow the protocol that you’ve set for these situations.

Password best practices. When creating passwords, the natural tendency is to create one that is easy to remember. After all, we don’t want to be locked out of our accounts because of a complex password that’s difficult to remember. However, for security purposes, you should teach your employees how to create strong, complex passwords that are difficult to guess or crack. Layer on education about the importance of securely storing passwords and using password management tools effectively to ensure more robust password security.

Compliance and security policies. All employees should understand and comply with password policies, including requirements for complexity, and usage. In addition to the natural benefits of employee education, training can help your organization maintain compliance with industry regulations and standards concerning password protection and data security.

Response to security incidents. Encourage employees to report suspicious activities promptly to the IT department or designated security team, and be sure to make it clear to whom they should report incidents and how they can do so. Almost 50% of employees have no idea who to report security incidents to. Train employees on the steps to take if they suspect their password has been compromised or if they detect unusual account activity.

Password management best practice #6: Password recovery and reset procedures

Security and user productivity will improve when you implement robust and user-friendly password recovery and reset procedures. Key components of a comprehensive procedure include:

Multiple verification factors. Sending one-time passwords (OTPs) or verification codes to registered email addresses or mobile phones or using OTPs generated by MFA app should be used to ensure that the request is from a legitimate person. If an OTP is not feasible, you may also query users for specific information known only to them, such as personal identification details or transaction history, so that you don’t inadvertently give away access to an unauthorized person. 

Self-service options. Password resets cost $70 for each reset attempt. While that number baffles the mind, the number doesn't seem as incredible when you consider the costs associated with both the help desk agent and the employee’s time and the opportunity costs associated with the employee not working. To combat these costs, provide self-service portals where users can initiate password resets by verifying their identity through predefined methods. Provide step-by-step guidance to guide users by leveraging automated workflows.

Secure communication channels. To prevent password theft in transit, send password reset links or temporary passwords via encrypted emails or secure messaging systems. Ensure that password reset web pages and portals use HTTPS to encrypt data transmitted between the user’s browser and the server.

Clear policies and procedures. To make it easier for all your employees to support your password security initiatives, document password recovery and reset procedures in a clear and accessible format for users and IT support teams. Provide guidelines on when and how users should request password resets, including acceptable reasons and security precautions, and make it easy for them to report security incidents by clearly stating who to contact and how to contact them.

Password management best practice #7: Use of password vaults for shared accounts

Password vaults enhance security by automatically incorporating many of the aforementioned best practices across teams or departments. Passwords stored in password vaults are encrypted and accessible only to authorized users, thereby mitigating risks associated with password sharing and maintaining accountability. Some key practices to incorporate into your processes when using password vaults include revoking access to the vault, changing passwords when an employee leaves your business, and rotating secrets when employees or contractors leave.

End-to-end password management and more with an enterprise browser

In addition to improving remote work productivity through its robust security, streamlining workflows, and enhancing user experiences, Island, the Enterprise Browser, also takes care of the password-related best practices that standalone password managers do. They include:

• Enabling corporate password usage only in trusted environments. Corporate passwords are only allowed in the appropriate context by using attributes such as user/groups, device posture, geolocation, network, and destination application.
• Policy-driven password management to keep things secure, with precision.‍
• Providing seamless user experience with passwordless authentication through native browser integration or standalone application. Integrate with enterprise identity management platforms to authenticate users and utilize MFA, passkeys, or other passwordless techniques.
• Manage any secret information, including passwords, API keys, secure notes, or other secrets.
• Password generation that complies with your company’s policies, including complexity and length requirements.
• Secure storage and handling of all passwords through Island’s Self-Protecting Browser architecture, which provides robust defense against attacks, such as phishing attempts, spoofed websites, stealing cookies, session hijacking, and man-in-the-middle attacks. ‍
• Real-time device posture assessment and response to detect changes in device posture in real-time, right in the middle of a session. This is a capability that extensions don’t have.
• SSO, SCIM, or SIEM integrations that are natively built into the enterprise browser.‍
• Freedom to customize the security and user experience. This can be realized because Island is not bound to the UX and technical limitations of traditional extensions.
• Zero-knowledge architecture means only the user can access passwords stored in their vault. Island never has access to the passwords, which means they could not be exfiltrated from the Island Cloud during a security event.

Password managers offer many benefits that greatly enhance a company’s security posture. However, adding another standalone security product introduces complexity and increases costs. Island helps eliminate these negatives by incorporating the password manager into a platform that users are already familiar with and use daily, and that also provides a host of other security benefits that extend the security coverage and greatly simplify security for organizations. Learn how Island raises the bar for password management in this article.