Insider threats: Examples and prevention

What is an insider threat?

An insider threat comes from within (an insider) — someone operating within an organization who misuses their authorized access to cause harm to that organization. This insider could be an employee, contractor, vendor, or anybody else who has privileged access to information or other resources that someone outside the company does not.

Of course, not every insider is a threat. Employees, volunteers, and contractors all fall under this category simply because they have access to internal networks. However, when insiders become careless or even malicious, their actions can cause the company financial and reputational harm and put consumers and service users at risk. In the case of the insider employee selling sensitive data to an outsider, the leaked information could be used to launch cyberattacks against the company or its customers.

These threats are more common than you might think. The 2023 Verizon Data breach investigations report says that 19% of all data breaches involve internal actors. Insider threats vary widely because the term can really cover any behavior by a member of an organization that could cause harm. These types of threats include:

• Espionage. Leaking sensitive information to competitors or foreign entities, often for financial gain or strategic advantage.
• Terrorism. Disrupting business operations through intentional sabotage for ideological, political, or religious motives.
• Unauthorized disclosure of information. Sharing confidential data without permission, whether deliberately or accidentally.
• Corruption. Engaging in unethical practices for personal or organizational benefit, such as accepting bribes.
• Sabotage. Deliberately attempting to damage systems, data, or infrastructure.
• Workplace violence. Targeting employees or the organization itself with physical or verbal aggression.

Signs of an insider threat

It is vital to detect insider threats before they happen. While no definite way to predict insider attacks exists, some indicators can be treated as red flags. These warning signs fall into two main categories.

Behavioral

Be on the alert if an individual in your organization:

• Repeatedly asks for access to systems or databases that don’t relate to their job function.
• Regularly expresses resentment towards the organization, their superiors, and their peers.
• Fails to maintain good cybersecurity practices.
• Uses their work device for personal internet activity, or vice versa.
• Mentions that their device or operating system is acting strangely.
• Contacts other team members from a company account asking for unprecedented access or information.

Digital

It’s not always the behavior of individuals that gives away a potential threat. Keep a lookout for:

• Large file downloads, especially on devices that aren’t linked to the organization.
• Unexpected access requests for internal systems and networks.
• Activity outside of normal working hours.
• Devices and accounts operating from unusual locations or those with unfamiliar IPs.
• Unexplained periods of time when cybersecurity tools like firewalls or VPNs are switched off.
• Multiple failed password attempts, either from a recognized user or an unknown entity.

Again, it’s important to stress that none of these factors in isolation is a definitive indicator of an insider threat. Insider threat detection is not a perfect science, so if you notice some of these clues, you should follow them up with a more in-depth assessment to determine whether a risk factor is present.

Types of insider threats

Broadly speaking, an insider threat will fall into one of three categories.

1. Negligent insider threats

Sometimes, employees don’t mean to cause harm, but their mistakes can still lead to disaster. According to a 2020 study by the Ponemon Institute, the majority of insider threats are the result of human error and negligence. This kind of threat occurs when individuals forget to update their cybersecurity software, use weak passwords, or visit unsafe websites using their work devices.

Often, these incidents happen because of poor cybersecurity practices and a lack of training. An employee could accidentally infect their laptop with spyware, giving a hacker access to passwords and, ultimately, internal corporate networks. A government agency worker might connect to unsecure Wi-Fi on public transport, exposing their data. These people aren’t acting maliciously, but they’re still an insider threat.

2. Malicious insider threats

Some insiders aren’t careless — they're acting with intent. A malicious insider threat is an individual who knowingly does something to threaten their organization. Perhaps they’re working alone in the hopes of finding a buyer for stolen files later on. Alternatively, they might have been contacted by someone outside the company who has offered them money in exchange for access to sensitive data.

It’s not always about the money, though. Sometimes, an insider is motivated by revenge (perhaps they’re about to be laid off) or ethics (for example, if they’re acting as a whistleblower, leaking information about their employers’ bad practices).

3. Compromised insider threats

Other times the threat doesn’t come from the insider directly but from a hacker who takes over the insider’s account. A compromised insider threat is an employee device or account that has been hijacked or in some way accessed by a malicious entity outside the organization. Phishing attacks and social engineering are different tactics cybercriminals may use to hijack employee credentials and gain access to internal systems. Many negligent insider threats later grow into compromised insider threats. 

In the case of an employee with a spyware-infected laptop, their company email account could be used by a hacker to launch spear phishing attacks on their co-workers or to gain access to private internal databases. A negligent insider threat would give the hacker access to an employee account, which  would become a compromised insider threat.

These cyber threats are dangerous because attackers blend in as legitimate users. It’s why vulnerability detection and continuous monitoring are necessary to spot suspicious activity behavior before it leads to a data breach.

Why insider threats matter

While many companies focus on external threats, insider threats shouldn’t be overlooked. They can have horrible consequences for a company.

Data leaks

Employees with access to sensitive client information can take advantage of their position and share it without the client’s consent. This information sharing can happen by accident (sending an email to the wrong person) or out of ignorance (mentioning a high-profile client to a friend). However, sometimes it can be malicious — an employee could share intellectual property with a competitor, sell user details to hackers, or share classified documents with journalists. 

Regardless of the motive, data leaks and breaches can be dire. According to IBM, organizations spent an average of $4.88 million per data breach incident in 2024. 

As we discussed previously, however, people don’t always leak data intentionally. An employee could send data to the wrong email address or make sensitive information (details of secret projects, for example, or customer information) public on a company website. These situations are examples of accidental insider threats where no malicious intent exists.

Financial loss

Insider threats are incredibly expensive. The Ponemon Institute’s 2023 report found that the average annual cost of insider risk is $16.2 million per organization. These expenses include investigating the breach, recovering lost data, legal fees, regulatory fines, and lost business. 

If an insider launches ransomware, the price tag gets even higher — companies may have to pay millions in ransom while also suffering downtime that stops all operations. Whether it’s fraud, theft, or leaked financial information, insider threats hit businesses where it hurts the most.

Reputational damage

Trust is hard to earn and easy to lose. When a company suffers an insider attack or data breach, customers, partners, and investors begin to doubt its ability to protect sensitive information. The damage to the company’s reputation can be lasting, like in Facebook’s Cambridge Analytica scandal.

Sometimes rather than causing a data breach, an insider with the right access privileges might even alter the information or visuals of a company’s website, posting their own messages for the public to see. This action is called “defacement,” and it’s a popular strategy with hacktivists and politically motivated attackers. Nation-state actors can even target the government websites of rival countries to post propaganda messages.

Operational disruption

Rather than selling intellectual property or promoting political messages, an insider might just want to disrupt and damage the organization’s operations. For example, a disgruntled employee might delete essential data, take webpages offline, or use malware and viruses to make company systems or devices unusable.

It’s the main problem with insider threats — by their nature, they come from people who already have legitimate access to the organization’s network, internal systems, and trade secrets. By the time they reveal themselves to be a threat, they might have already caused enormous damage.

Insider risk management

When it comes to insider threats, solid management is your organization’s best defense. With the right strategies in place, you can stay one step ahead and prevent trouble before it starts.

Establishing clear policies

The road to preventing insider threats starts by establishing necessary security policies. Clear guidelines set expectations for workers about what is acceptable workplace behavior, how data should be handled, and what happens if these rules are broken:

• Define who has permission to what data, how it should be handled, and what actions should be taken for policy violations.
• Ensure your policies follow industry regulations like the GDPR, HIPAA, or SOC 2.
• Regularly check for security gaps so you can fix them before insiders can exploit them.

Conducting background checks

Hiring the wrong person can lead to serious security risks. Running background checks before hiring employees or vendors, especially those handling sensitive information, can help identify potential red flags:

• Screen employees and contractors for prior security violations, criminal activity, or conflicts of interest.
• Conduct periodic re-evaluations to assess risks posed by long-term employees.

Monitoring and auditing

Keeping an eye on employee activity can help detect insider threats early. Cyber threat monitoring allows organizations to track patterns, flag unusual behaviors, and take action on time: 

• Employ user behavior analytics (UBA) to detect unusual activity patterns.
• Implement security information and event management (SIEM) tools to monitor access logs.

Training and awareness

Many insider threats, especially negligent insider threats, stem from a lack of cybersecurity awareness. Regular training can help employees understand what safe behavior is and what their role is in protecting the organization:  

• Hold regular cybersecurity awareness training sessions to teach safe online habits.
• Run phishing tests to show employees how to spot scams and social engineering attacks.

How to prevent insider threats

Mitigating insider threats before they cause damage to a company or organization is essential. Here are the security measures that can lower (though not eliminate) the risks.

Least privilege principle

Not everyone in a company needs access to all data. The least privilege principle ensures employees only have the permissions necessary to do their jobs. The fewer people with access to sensitive information, the lower the chances of it being misused.

Multi-factor authentication (MFA)

Passwords alone aren’t enough. Multi-factor authentication (MFA) adds an extra security layer to prevent unauthorized account access. Even if an insider’s credentials are compromised, MFA requires an additional verification step, such as a biometric scan or one-time passcode, which makes it significantly harder for attackers to get in.

Data encryption

Encrypting sensitive information ensures that it is unreadable even if it falls into the wrong hands, which adds more protection in the event of a data breach.

A VPN, or virtual private network, adds a layer of encryption to a person’s browsing activity, even when they’re using unsecure public Wi-Fi. Rolling out VPNs across all of an organization’s devices will lower the risks posed by negligence and compromised devices. With services like NordLayer, you can improve your security and make it safer for employees to access company resources.

Incident response plan

No system is foolproof, so every company should have a prepared incident response plan in case of a threat. This plan should describe how to detect insider threats and what steps every employee should take in case of one. Regular drills also help companies be more prepared when the time comes.

Real-world examples of insider threats

Insider threats may seem like something out of a spy-fiction movie, but actually, they are very real and happen more often than you might think. Some of the biggest data breaches in history have been caused by an insider. These real-world examples are just some of the most widespread or dire cases, but they show just how damaging insider threats can be.

1. Capital One

In 2019, Capital One suffered a data breach that affected over 100 million customers. Paige Thompson, a former employee of Amazon Web Services (AWS), took advantage of a misconfigured web application firewall (WAF) that was protecting Capital One’s AWS-hosted resources. This vulnerability allowed her to access and steal sensitive data from customer accounts and credit card applications, some of which date back to 2005. While Thompson had worked at AWS, the breach was caused by Capital One’s configuration mistake, not a direct hack on AWS. For this reason, Capital One faced serious reputational damage and had to settle a class action lawsuit for $190 million in 2021.

2. Tesla

In 2023, two former Tesla employees leaked over 75,000 employee records to German media outlet Handelsblatt. The records included significant personally identifiable information — names, addresses, phone numbers, and even Social Security numbers. In response, Tesla took legal action against the employees and strengthened its internal data protection measures to prevent future leaks.

3. Twitter

In 2019, two former Twitter employees were accused of spying for the Saudi government by using their internal access to gather private data on Saudi dissidents and critics. They accessed personal details, including email addresses, phone numbers, and IP addresses, which could reveal users’ locations. In exchange, they reportedly received cash payments and luxury gifts from Saudi officials. Both employees were charged in the U.S., with one being convicted and sentenced to over three years in prison.

4. Google 

In one of the best-known cases of cyber espionage, former Google engineer Anthony Levandowski stole thousands of confidential files related to the company’s self-driving car technology before resigning to start his own company, Otto, which was later acquired by Uber. The stolen files contained sensitive designs, proprietary sensor technology, and trade secrets critical to Google’s autonomous vehicle development.

Google’s parent company, Alphabet, sued Uber for using the stolen technology, leading to a high-profile legal battle. Levandowski was eventually found guilty of trade secret theft, sentenced to 18 months in prison, and ordered to pay $179 million in damages.