Protecting Workload Identities: Mitigating Risks in Microsoft Entra ID

Introduction: The New Frontier of Cloud Security 

The rapid adoption of cloud services has transformed how organizations build, deploy, and manage applications. While this shift has unlocked unprecedented agility and scalability, it has also introduced new risks, particularly in the areas of identity and access management. Among the most overlooked yet critical components of cloud security are workload identities, which include service principals and managed identities that enable automated, non-human access to cloud resources. 

Workload identities are the backbone of automation, DevOps pipelines, and application-to-application communication in Microsoft Entra ID (formerly Azure Active Directory). They operate quietly in the background, orchestrating everything from code deployments to database backups. However, their very invisibility and elevated privileges make them a prime target for attackers. Recent studies indicate that over 60% of cloud breaches now involve compromised workload identities, not human user accounts. 

In this blog post, we’ll explore the unique risks associated with workload identities, examine real-world attack methods, and provide a comprehensive, actionable roadmap to secure these essential assets in your Microsoft Entra ID environment. 

Disclaimer: Microsoft Entra Workload ID, a product from Microsoft that allows you to manage certain components, comes at a cost if you want to use premium features, such as Conditional Access Policies for Workload Identities. There are, however, things that you can do with the “freemium” features. Find out more here.  

What are Workload ID Premium features, and which are free?

Figure 1. Free vs Premium features 

Understanding Workload Identities: Service Principals and Managed Identities

What Are Workload Identities?

Figure 2. Identities in Entra ID 

Workload identities are non-human identities used by applications, services, and automation tools to authenticate to Azure resources and APIs. They are essential for enabling secure, programmatic access without embedding user credentials in code or configuration files.

There are two main types of workload identities in Microsoft Entra ID:

• Service Principals:
  These are identities created for applications, scripts, or services. Service principals are registered in Entra ID and can be granted granular permissions to Azure resources. They require manual management of credentials such as secrets or certificates.
• Managed Identities:
  These are Azure-managed service principals assigned to Azure resources like Virtual Machines, App Services, or Azure Functions. Managed identities eliminate the need for developers to manage credentials, as Azure handles credential rotation and lifecycle automatically.

Figure 3. Service Principals vs Managed Identities 

The Unique Risks of Workload Identities

1. Elevated and Persistent Privileges

Workload identities are frequently granted broad permissions—sometimes more than necessary for their function. For example, a service principal used for deployment automation might have "Owner" or "Contributor" rights on a subscription, enabling it to create, modify, or delete any resource.

2. Lack of Oversight and Monitoring

Unlike user accounts, workload identities don't have a human owner regularly monitoring their activity. This lack of oversight means that suspicious activity can go unnoticed for weeks or months.

3. Credential Management Challenges

Service principals require manual management of secrets or certificates. If these credentials are leaked, forgotten, or not rotated regularly, attackers can exploit them to gain persistent access.

4. Bypassing Standard Security Controls

Historically, security controls such as Conditional Access and Multi-Factor Authentication (MFA) were designed primarily for interactive user accounts. Workload identities often bypass these controls, creating a blind spot in your security posture.

Real-World Attack Methods Targeting Workload Identities

Understanding how attackers exploit workload identities helps inform your defense strategy. Here are some of the most common attack vectors:

Credential Theft and Misuse

Example 1:

• A developer accidentally commits a service principal's client secret to a public GitHub repository. Attackers scan public repositories for secrets, use the leaked credentials to authenticate as the service principal, and gain access to sensitive Azure resources.

Figure 4. A deployment token used in a DevOps pipeline, living in a DevOps Repo

• Example 2:
  An attacker gains access to a backup of a configuration file containing a managed identity’s certificate. They use this certificate to impersonate the managed identity and extract secrets from Azure Key Vault.

Excessive Permissions and Privilege Escalation

• Example 1:
  A service principal with "ReadWrite.All" permissions is compromised. The attacker uses it to modify user roles, create new privileged accounts, and escalate their access across the environment.
• Example 2:
  A stale service principal, originally created for a now-defunct application, still has "Owner" rights on a resource group. Attackers exploit this to create new resources or exfiltrate data.

Token Forgery and Abuse

• Example 1:
  Attackers leverage stolen Microsoft signing keys (as seen in the 2023 Midnight Blizzard breach) to forge tokens for workload identities, granting themselves unauthorized access to cloud resources.
• Example 2:
  OAuth consent phishing tricks users into granting a malicious app permissions, which then operates as a workload identity to access mailboxes or files.

Conditional Access Bypass

• Example 1:
  An attacker disables Conditional Access policies for a service principal, allowing it to authenticate from any location or device.
• Example 2:
  Misconfigured policies allow a service principal to access resources from untrusted or foreign IP ranges, facilitating data exfiltration.

API Abuse and Reconnaissance

• Example 1:
  A compromised service principal with "Read.All" permission uses Microsoft Graph API to enumerate users, groups, and sensitive directory data.
• Example 2:
  Attackers exploit legacy protocols (like Exchange Web Services) using a service principal to access mailboxes, bypassing modern authentication controls.

 Consequences: Why Workload Identity Breaches Are So Damaging

1. Broad and Rapid Impact

Because workload identities often have access to multiple resources and environments, a single compromise can have a cascading effect, impacting production systems, data stores, and even other identities.

2. Stealth and Persistence

Attackers can operate under the radar by mimicking legitimate automation activity. Many breaches involving workload identities go undetected for weeks or months.

3. Complex Remediation

Revoking or rotating credentials for a compromised workload identity can break critical automation or applications, requiring careful coordination and testing.

4. Business Disruption

A breach can halt production workflows, cause outages, or lead to large-scale data loss. Regulatory penalties and reputational damage often follow.

Stay tuned for part 2 where we outline a practical and actionable approach on securing workload identities. Watch the full webinar here.