What is multi-factor authentication (MFA)?
Multi-factor authentication (MFA) is a security process that requires users to provide two or more proofs of identity before accessing an account. A single password is no longer enough. With MFA, access is only granted when multiple factors are confirmed.
The factors fall into three main categories:
- Something you know, such as a password or PIN.
- Something you have, like a mobile device, an authenticator app, or a hardware token.
- Something you are, such as a fingerprint or face scan.
Compared to single-factor logins, MFA makes it significantly harder for attackers to gain unauthorised access. Even if they steal a password, they still need the second or third factor to gain access. This is why regulators, insurers, and security frameworks now treat MFA as a baseline requirement.
How does multi-factor authentication work?
When a user logs in, the system verifies multiple types of credentials before granting access. The process combines two or more independent factors. For example, you might type your password, then approve a push notification on your phone or enter a one-time code.
This layered check makes account takeovers far harder. If attackers steal or guess a password, they still cannot get in without the second factor. MFA blocks most credential-stuffing attacks, phishing attempts, and brute-force logins. It also reduces the impact of data breaches, where millions of usernames and passwords are often exposed.
In practice, MFA shifts the odds back in your favour. Instead of relying on a single secret, it forces criminals to break through multiple barriers at once – something most will not be able to do.
The main types of multi-factor authentication factors
Multi-factor authentication combines different types of verification to confirm a user’s identity. Each factor comes from a separate category, so even if one is compromised, the others still hold. This layered approach makes it significantly more difficult for attackers to gain access.
Something you know
This is the traditional first step of authentication. It includes passwords, PINs, and answers to security questions. These are easy to set up and familiar to everyone, but they are also the most vulnerable. Passwords can be guessed, reused across accounts, or stolen in data breaches.
For this reason, relying only on “something you know” is no longer considered safe. MFA reduces that risk by adding further checks.
Something you have
This factor relies on a physical or digital item that is intended to be possessed only by the user. Common examples are mobile phones receiving SMS codes, authenticator apps that generate time-limited codes, or hardware tokens such as YubiKeys or smart cards. These prove possession and add friction for attackers, especially those working remotely.
While stronger than passwords alone, some methods, such as SMS, can be intercepted or spoofed; therefore, security experts often recommend using hardware or app-based tokens instead.
Something you are
Biometrics fall into this category, using the physical characteristics of the user to verify identity. Fingerprint scanners, facial recognition systems, and voice recognition tools are now common on smartphones and laptops. Biometrics are convenient because you don’t have to remember or carry anything. They are also very difficult to replicate. However, privacy concerns and the risk of biometric data being stolen or misused mean they should be combined with other factors, not used on their own.
Somewhere you are
This factor uses location to verify a login attempt. For example, a login from your office or home network may pass, while a login from an unfamiliar country could be challenged or blocked. IP address, GPS signals, or device settings can determine location.
This type of control is common in larger organisations that use conditional access systems. It helps spot unusual patterns, such as multiple logins from different countries within a short time.
Something you do
Behavioural analysis is an emerging field that examines how users interact with systems. It can include typing speed and rhythm, mouse movement, or the way a mobile device is held.
These patterns are more challenging for attackers to replicate, but they necessitate advanced monitoring systems and are less prevalent in everyday business setups. Over time, this factor is expected to play a bigger role in high-security environments.
Why is multi-factor authentication important?
Multi-factor authentication is one of the simplest and most effective security measures a business can implement.
Most cyber breaches begin with stolen or weak passwords, which remain the easiest way for attackers to gain access to business systems. MFA blocks that route by adding extra checks that are far harder to bypass. Microsoft research shows that MFA can stop 99% of automated account takeover attempts.
For businesses, the impact is direct. MFA reduces the success of phishing attacks, prevents unauthorised access to cloud tools, and makes insider fraud more difficult. It protects email accounts, online banking, payroll systems, and customer data, the areas attackers target most.
It is also becoming a compliance expectation. Frameworks such as Cyber Essentials and ISO 27001 list MFA as a core control. Regulators, including the FCA, expect financial firms to apply it to critical systems. Cyber insurers now often make MFA a condition of coverage, and claims may be denied if it is not present.
Put simply, MFA is not optional for modern businesses. It is a low-cost, high-impact defence that builds trust with clients, regulators, and insurers while keeping daily operations secure.
Read our expert guide for more information on how this will affect your cyber insurance costs.
Multi-factor authentication for businesses
MFA should be applied wherever an account holds sensitive data or provides access to critical systems. These are the areas where it matters most.
Email and cloud accounts
Email is often the entry point for attackers. A single compromised inbox can expose sensitive conversations, reset other accounts, or be used to send convincing phishing emails to clients and staff.
Cloud platforms, such as Office 365, Google Workspace, and Dropbox, also store large volumes of business-critical information. Enforcing MFA here is essential because it stops stolen or guessed passwords from being enough to gain access.
Remote access and VPNs
With more staff working remotely, attackers increasingly target login portals and VPN gateways to gain access to internal networks. If MFA is in place, stolen credentials alone are useless. Requiring MFA on all remote access systems significantly reduces the chance of an external attacker gaining a foothold in your environment.
Financial systems and CRM tools
Finance and customer systems are prime targets because they hold payment details, client records, and sensitive commercial data. MFA should be active on accounting software, ERP platforms, invoicing tools, and CRM systems. Criminals use compromised accounts to divert funds, change bank details, or steal customer databases. MFA makes these attacks much harder to carry out.
Admin accounts and privileged access
Administrator and privileged accounts control your core systems. If attackers gain access, they can disable security controls, steal data, or lock you out. MFA is non-negotiable for system admins, IT managers, and anyone with elevated rights. It adds an extra barrier that reduces the risk of a full compromise if an admin password is leaked.
Vendor and third-party access
Suppliers and partners often need temporary or permanent access to your systems. These accounts can be weak links if not protected properly. MFA should be mandatory for any external access, ensuring that a vendor’s compromised password cannot be used to breach your environment.
Personal devices used for work
Bring Your Own Device (BYOD) policies increase risk because personal laptops and phones may not have the same level of protection as corporate devices. If employees use personal devices to access email or cloud apps, MFA provides a strong safeguard that helps keep company data secure even if the device itself is stolen or compromised.
MFA best practices for implementation
Strong MFA relies on both the technology and its introduction method. Expanding its use across the business in a structured manner ensures that the controls are reliable and staff understand their roles.
- Prioritise admin and high-risk accounts first: Start by applying MFA to accounts that control critical systems, financial platforms, or customer data. These accounts are the highest-value targets, and protecting them first closes the biggest gaps. Once secured, roll MFA out across the wider workforce.
- Favour authenticator apps or hardware tokens over SMS codes: SMS-based MFA can be intercepted through SIM-swapping or spoofing. Authenticator apps generate unique, time-limited codes directly on the user’s device. Hardware tokens, such as YubiKeys, add an extra layer of security by requiring physical possession. Both methods are much more resistant to attack.
- Train staff to recognise phishing and fake MFA prompts: Attackers now attempt to deceive users into approving fraudulent login requests or entering MFA codes on counterfeit websites. Training employees to pause, question, and verify unusual requests helps stop these attempts from succeeding. Practical awareness sessions and phishing simulations can reinforce this.
- Apply MFA to core services without exception: Email systems, cloud platforms, and financial applications should all have MFA enforced as standard. Leaving even one of these services unprotected creates an easy entry point for attackers. Apply consistent policies across every platform used by the business.
- Use conditional access policies where available: Modern systems, such as Microsoft 365, enable the combination of MFA with conditional access. This means you can restrict logins by location, device type, or time of day. It provides context-aware security that blocks suspicious attempts, even when the correct credentials are used.
- Test recovery options regularly: If an employee loses their phone or token, they still need a way back into their account. Provide backup codes, secondary authentication methods, or recovery contacts. Test these processes in advance to avoid delays during real incidents.
- Monitor and audit MFA use: Enable logging to track MFA usage across accounts. Regular audits can highlight gaps where MFA is not enforced or where employees may be bypassing controls. Reviewing these reports helps maintain consistent protection and demonstrates cyber compliance to insurers or regulators.
Does MFA affect cyber insurance or compliance?
Yes. Multi-factor authentication is now a baseline requirement for both cyber insurance and regulators. Many cyber insurers will not issue a policy unless MFA is active on email, cloud services, and admin accounts. Others may increase premiums or limit the cover if it is missing. Failing to use MFA can also put claims at risk if a breach is linked to weak access controls.
MFA also plays a central role in compliance. Cyber Essentials lists it as one of the five mandatory controls, ISO 27001 requires strong access management, and the FCA expects regulated firms to protect critical systems with MFA. Meeting these standards shows insurers, regulators, and clients that your business takes security seriously.
See our guides on cyber insurance requirements for businesses and Cyber Essentials for more details on how MFA fits into wider compliance and cover.
CyberSure insight: make MFA your first line of defence
Multi-factor authentication is one of the simplest and most effective steps a business can take to enhance security. It blocks the majority of account takeover attempts, protects sensitive data, and gives clients confidence that you take security seriously. Insurers and regulators now expect it as standard, which makes MFA not just a smart move but a necessary one.
CyberSure helps businesses put the proper protections in place and connect with insurers that recognise strong security. By making MFA a baseline control, you reduce risk, improve compliance, and strengthen your position when applying for cover.
Multi-factor authentication FAQs
Businesses often ask the same core questions about MFA. These answers explain why it matters, how it works, and where it connects to insurance and compliance.
Why is MFA important for businesses?
MFA protects accounts even if passwords are stolen. It reduces the risk of phishing, account takeovers, and fraud, making it a critical defence for any business.
Is MFA required for cyber insurance?
Yes, in most cases. Insurers often demand MFA for email, admin accounts, and cloud services before issuing cover. Missing it can increase premiums or render claims invalid.
What are examples of MFA?
Common examples include a password combined with an authenticator app code, a hardware token, or biometric checks such as a fingerprint or facial scan.
What’s the difference between 2FA and MFA?
Two-factor authentication (2FA) uses exactly two factors, such as a password and a code. Multi-factor authentication (MFA) utilises two or more factors, providing enhanced protection.