How does Dynamics 365 Business Central keep your data secure?

With cybersecurity incidents happening everywhere, we get why customers we meet often ask us:

"How secure is Microsoft Dynamics 365 Business Central, and how does it protect our business data?"

The Canadian Centre for Cyber Security, in their National Cyber Threat Assessment 2025-2026, noted that ransomware, critical infrastructure, and state-sponsored cyber threat activities are some of the trends that will continue to drive cyber threat activity to 2026.

Before diving into Business Central’s security, let’s make one thing clear: even the most secure system can be undermined without the right practices. Your organization still needs strong password hygiene, endpoint protection, network security, and strict controls over who can change your systems.

With that in place, let’s look at how Business Central is designed to keep your data safe.

A Layered Approach to Security

Microsoft applies a defense-in-depth model to Business Central that spans:

1. Authentication – verifying who is accessing the system.

2. Authorization – defining what each user is allowed to do.

3. Data encryption and isolation – protecting data at rest and in transit.

4. Operational monitoring and auditing – providing oversight and accountability.

5. Secure development practices – ensuring the application itself is built securely.

This layered approach ensures multiple safeguards protect your environment at all times.

Key Security Features in Business Central

Here’s an overview of the most important security capabilities in Business Central available today:

Microsoft Entra ID + Conditional Access

Business Central uses Microsoft Entra ID (formerly Azure AD) for authentication. With Conditional Access, you can enforce additional policies such as requiring compliant devices, blocking risky sign-ins, or restricting access by location.

Role-Based Access Control (RBAC)

Users are granted permissions based only on their role. Beyond high-level roles, Business Central allows table-level and record-level permissions through security filters, ensuring users only see and edit the data they truly need.

Encryption at Rest and In Transit (with Customer-Managed Keys)

All data at rest is encrypted using Transparent Data Encryption (TDE), while in-transit data is protected with SSL/TLS. By default, Microsoft manages encryption keys, but organizations can opt for Customer-Managed Keys (CMK) to rotate or revoke access themselves.

Tenant Isolation

Each Business Central environment has its own dedicated database, eliminating the risk of data mixing across customers in Microsoft’s cloud.

Audit Trails and Telemetry

Business Central logs user sign-ins, failed login attempts, permission changes, and data access events. Administrators can use Microsoft Purview audit logs for deeper visibility and compliance tracking.

Customer Lockbox

When Microsoft support engineers need access to your data, you stay in control. With Customer Lockbox, you must explicitly approve or deny access requests.

IP Filtering and Network Security

Access can be restricted by IP address, and Microsoft provides service tags for Business Central that help IT teams configure firewalls and security groups with precision.

Password Policies and Multi-Factor Authentication (MFA)

Administrators can enforce password complexity, expiration, and length requirements, while MFA adds another layer of defense against compromised credentials.

Compliance Certifications

Business Central is certified against industry standards such as GDPR, ISO 27001, and SOC 1 & SOC 2, ensuring global compliance requirements are met.

Recent and Upcoming Enhancements

Microsoft continuously improves Business Central, with major releases twice a year. Some of the latest security-related improvements include:

IPv6 Support 

Ensures secure and future-proof connectivity as businesses move toward modern networking.

Delegated Access Control 

Partners and external users can now be granted access at the individual environment level, reducing unnecessary exposure.

Flexible Upgrade Windows 

Administrators can better align updates with their internal security and compliance processes.

Governance for Low-Code Integrations 

With tighter integration to the Power Platform, Microsoft is enhancing security and governance for portals, apps, and automations connected to Business Central.

Final Thoughts

Microsoft Dynamics 365 Business Central combines enterprise-grade security with continuous improvements that keep pace with evolving threats. From encrypted data and conditional access to tenant isolation and audit trails, it provides SMBs with the tools to keep business data safe and compliant.

However, while the system delivers a robust security foundation, security is always a shared responsibility. Microsoft secures the platform, but it’s up to your organization to:

• Regularly review and adjust user permissions.

• Enforce MFA and strong password policies.

• Monitor logs and audit activity for unusual behavior.

• Train employees on cybersecurity best practices.

If you'd like more information or helpful tips to ensure the security of your Business Central environment, comment below or contact us here.