Cyberside Chats: Cybersecurity Insights from the Experts

No password was guessed, no MFA prompt fired, no vulnerability was exploited — and an attacker still walked into hundreds of Microsoft 365 tenants as the ConnectWise Cloud Backup application. One vendor credential, most likely a stolen certificate, worked against every customer that had ever consented to the app. Inside, the attacker made ConnectWise’s own apps Global Administrator, planted backdoor keys on unrelated applications, and pulled directory data that leaves no audit trail. Microsoft attributes the campaign to China-aligned Storm-0940, running the open-source AI pentest framework ARTEX. Ten days after ConnectWise shut the service down, every customer was still without backups.

Sherri Davidoff and Matt Durrin break down how one key unlocked everyone, why planted credentials outlive the vendor’s reset, what “AI agents” really means here, and the 2019 ConnectWise flashbacks that show the same master-key problem at supply-chain scale. Plus LMG’s new report, Patched and Still Breached: only 5% of domain takeovers used a vulnerability. This attack used none.

Key Takeaways

1. Before you buy software that connects to your tenant, understand the security architecture of its authentication — and treat “one credential for all customers” as a disqualifier. Ask whether the credential to your environment is unique to you, where the vendor’s key lives and whether it can be exported, and whether App Instance Property Lock is on so no one can add a key to the vendor’s app inside your tenant. If they can’t answer, that is your answer.
2. Inventory every vendor application in your Microsoft 365 tenant, and give each one a named owner, a permission review and an expiration date. These are standing identities consented once, often years ago, and never revisited — one administrator learned of this attack from an alert on an app his organization hadn’t used in years. AI can help with exactly this kind of hygiene.
3. Lock down your encryption keys. ConnectWise’s app was most likely signed in with a certificate, and ConnectWise revoked certificates — so a key was taken. A private key stored as a file or a secret-store blob is just a really long password, and it copies like one. Hardware-backed, non-exportable keys can’t be stolen. Encryption is only as secure as the keys you are using.
4. Make sure your logs can answer “what did that vendor’s app do in our tenant?” — and keep them long enough to ask. Graph directory reads leave no audit record by default, and where backups were running the attacker and the backup service were the same identity. “No evidence of data access” is a statement about visibility, not safety.
5. Fund identity and trust controls at the same level as patching. Our own data shows only 5% of domain takeovers leveraged a vulnerability; shared local admin accounts and weak credentials were how our testers moved through networks. This attack moved through the supply chain the same way, on one shared credential. Budget, staffing and board reporting should reflect what actually gets attackers in.

Resources:

1. Microsoft Threat Intelligence — Storm-0940 uses ARTEX agentic AI in ConnectWise supply chain compromise: https://www.microsoft.com/en-us/security/blog/2026/10/21/storm-0940-uses-artex-agentic-ai-connectwise-supply-chain-compromise/
2. Huntress — ConnectWise (SkyKick) vendor credentials abused in M365 attacks: https://www.huntress.com/blog/vendor-credential-enables-unauthorized-access
3. ConnectWise status page — Cloud Backup incident updates: https://status.connectwise.com/
4. LMG Security — Patched and Still Breached: 2026 Annual Penetration Test Report: https://www.lmgsecurity.com/patched-and-still-breached-lmg-2026-pen-test-report/
5. Wall Street Journal — AI Hacks Are Coming Thick and Fast and Overwhelming the Internet: https://www.wsj.com/tech/ai/ai-hacks-are-coming-thick-and-fast-and-overwhelming-the-internet-4529c26c