By Chris Skipworth, CEO, Passpack
Every MSP knows what it means to hold the keys. Admin credentials for client networks, access to line-of-business applications, remote management tools, cloud environments — all of it is part of the job. That concentration of access is what makes managed services work. It also makes MSPs one of the most attractive targets to cybercriminals in the SMB ecosystem.
That’s no secret. The 2025 Verizon Data Breach Investigations Report found that credential abuse remains the single most common initial access vector, present in 22 percent of all breaches. For MSPs, the exposure is compounded by the nature of how they operate: a successful credential compromise doesn’t risk one organization; it risks every client in the portfolio simultaneously. That’s the force-multiplier problem that threat actors have clearly figured out, even if many MSPs haven’t fully reckoned with it yet.
The Structural Problem No One Likes to Talk About
An MSP managing 50 clients doesn’t just hold 50 sets of credentials. It holds credentials for the platforms those clients use, the applications running on their infrastructure, the admin consoles for remote monitoring and management, and in many cases, the credentials for cloud accounts, backup systems, and third-party integrations. Multiply the number of technicians who need access across all of that, and what you have is a very large attack surface.
This is the structural reality of the MSP business model: efficiency requires shared access, and shared access creates risk. The access is necessary. How it gets managed is where things break down. Credentials get stored in spreadsheets, saved in email threads, or kept by a senior technician who holds everything in their head. That might work for a while. But there’s no audit trail, no accountability for who accessed what, and no way to cleanly off-board a technician or terminate a client relationship without wondering whether old credentials are still floating around somewhere.
And there’s usually no shortage of awareness that this is a problem. What’s missing is ownership. Someone has to decide that credential management is an organizational policy issue — not an individual one — and build a coherent system around it. In a lot of MSPs, particularly smaller ones, that decision keeps getting deferred.
One Compromised Credential Becomes Everybody’s Problem
The attack path is fairly standard. If an MSP is using the same credential across multiple client environments, or if credentials are stored somewhere that can be accessed and exfiltrated, a single breach can open lateral access across the entire client base. Attackers don’t need to hit every client individually. They just need to find one weak point in the MSP’s environment.
What makes this worse is that the human element remains the most reliable way in. The Verizon 2024 DBIR found that 60 percent of breaches involved the human element, whether through phishing, misconfiguration, or a social engineering attack. For an MSP, where credentials are distributed across multiple people with varying levels of security awareness, that statistic describes everyday operational risk.
The common failure modes tend to cluster around the same themes: credentials shared across multiple clients with no segmentation, no formal offboarding process when a technician leaves, or a client relationship ends, and no visibility into who is logging into what. The absence of audit trails is particularly troubling. Without them, MSPs can’t detect suspicious access patterns, can’t prove to clients or insurers that access was managed appropriately, and — if something does go wrong — can’t contain the damage quickly.
There’s a liability dimension as well. When a credential breach cascades across multiple clients, responsibility tends to land on the organization that was supposed to be keeping those environments secure. That’s the MSP. Terms of service provide some protection, but they don’t eliminate exposure, and the reputational cost of a multi-client breach is hard to recover from, regardless of the contractual fine print.
What Getting This Right Looks Like
The good news is that mature credential management isn’t a complicated program to implement. It doesn’t require a large security team or a major capital investment. It requires intention, a clear policy, and the right tools applied consistently.
The starting point is to centralize credential storage in a secure, purpose-built system and eliminate the spreadsheets and ad hoc repositories. From there, apply least-privilege access. Not everyone needs access to everything, and credentials should be segmented by client and by role so that a compromise in one area doesn’t automatically become exposure everywhere. A consistent password policy matters too: strong passwords, regular rotation, enforced across all client environments rather than left to individual discretion.
Audit trails aren’t optional at this point. They’re what allow MSPs to monitor how credentials are being used, identify anomalies before they become incidents, and demonstrate to clients and insurers that access is both available and governed. On the offboarding side, having a defined process for when a technician leaves, or a client contract ends, is one of the simplest risk-reduction measures available.
The cyber insurance angle is worth taking seriously. The 2025 CyberSmart survey found that 69 percent of MSPs suffered multiple breaches last year, a figure that underwriters have taken note of. Multi-factor authentication (MFA) has been table stakes for some time, but insurers are now looking for evidence of a layered approach: privileged access controls, zero trust principles, documented audit activity, and demonstrable offboarding protocols. Companies that can’t prove they were doing what they claimed they were doing risk having claims denied, not just premiums raised. The shift is from point-in-time attestation to ongoing, verifiable control.
What’s also changing is how this plays in client conversations. Clients in regulated industries — financial services, healthcare, legal — are increasingly asking for proof that their service providers are managing access securely. That’s not going away. MSPs that have their credential governance in order can answer that question directly. Those that don’t are left hoping the question doesn’t come up.
The Competitive Case for Getting Ahead of This
The MSPs that will differentiate themselves in the next few years are the ones that can demonstrate they’ve built their operations on a foundation clients can trust.
Clients in regulated industries are already asking for proof of how access is managed. That expectation is moving downstream. Credential hygiene now comes up in proposals, in RFPs, in renewal conversations. MSPs that can answer those questions directly, with audit trails and documented controls to back them up, are simply easier to do business with.
The privileged access that makes MSPs valuable to their clients is also what makes them a target. Those two things are the same. Securely managing that access is the business, or at least a core part of what clients are paying for when they hand over the keys.
Insurance requirements are tightening. Regulatory expectations are rising. Clients are paying closer attention. None of that is reversing. The MSPs that have credential governance locked down are better positioned on every front — security, insurability, compliance, retention — and they’ll be able to prove it when asked.
Which is exactly the question MSP leaders need to sit with. If a client asked you today to show them how you manage their credentials, what would you put in front of them?
Chris Skipworth is CEO of Passpack, a zero-knowledge password management platform designed for small to medium-sized businesses, serving professional services firms including real estate brokerages, financial services companies, and MSPs.
