Sep 24, 2024

What is SaaS Risk Management?

What is SaaS Risk Management?

Table of contents

Software-as-a-service (SaaS) apps are cost-effective and scalable — providing businesses with many benefits, including support for remote working. As a result, SaaS app usage has proliferated. Data from 2022 shows that organizations used, on average, around 130 SaaS apps. However, the benefits of SaaS are increasingly offset by the complexity of managing a sprawling app ecosystem. Each new application introduces potential vulnerabilities, licensing confusion, compliance obligations, and access control issues. Without centralized visibility and automated governance, security teams fall behind and risk exposure increases.

This article outlines why SaaS risk management is more important than ever and provides best practices to implement a secure and scalable strategy.

What is SaaS risk management?

SaaS risk management is the structured process of identifying, evaluating, and mitigating risks tied to the usage of cloud-based applications. These risks span multiple domains, including data security, identity access, compliance, software licensing, vendor management, and operational continuity. The modern SaaS stack is no longer used solely by internal employees. Contractors, external partners, freelancers, and temporary staff often require access to tools and data. This expanded user base increases the likelihood of mismanaged permissions, unsanctioned tools, and untracked data sharing.

Many people who aren’t employees use an organization's SaaS stack —  including contractors, freelancers, supply chain vendors, and temporary or remote workers.. Security configurations and identity and access management are at the forefront of securing these data.

To manage SaaS risks effectively, organizations should integrate controls across:

  • IT security and identity management

  • Procurement and vendor onboarding

  • Access provisioning and deprovisioning

  • Data governance and compliance

  • Finance and license usage tracking

Why is SaaS risk management needed?

The average company uses dozens or even hundreds of SaaS apps to run operations. These tools are powerful but they introduce risk if not governed properly. Below are the primary risks that organizations face in 2025.

Sensitive data exposure

Unmonitored SaaS usage often leads to sensitive or confidential data being stored in unsecure systems. This includes customer records, employee files, source code, financial projections, and proprietary assets. When these apps are unsanctioned or misconfigured, sensitive data can be publicly exposed or inadvertently shared with unauthorized parties.

With data privacy regulations becoming more stringent worldwide, failing to control data sprawl can lead to audits, fines, and reputational damage.

Unauthorized access

In 2022, the dark web had almost 25 billion sets of usernames and passwords available on fraudulent marketplaces. Unmanaged SaaS apps lead to risks like unauthorized access, which can lead to data breach or exposure. Cloud-based apps are at increased risk of external attacks, brute force entry, and account takeovers (ATO). Phishing and social engineering are used to steal login credentials — including from privileged account holders — which are then sold on the dark web.

Licensing risks and cost

Without central oversight, SaaS spending can quickly spiral out of control. Teams often sign up for duplicate tools or forget to cancel subscriptions for former employees. Some tools may be under-licensed, which creates compliance risks. Others may be over-provisioned, wasting budget.

Organizations need accurate insights into who is using which apps, how often, and under which license model. This allows finance and IT teams to rightsize usage, consolidate vendors, and negotiate smarter contracts.

Ransomware risks

Ransomware attacks are increasingly targeting SaaS platforms and cloud-hosted environments. Attackers exploit poor access controls, unsecured integrations, and excessive privileges to gain a foothold. Once inside, they can exfiltrate data or encrypt files and demand payment in exchange for restoring access.

Unlike traditional infrastructure, SaaS environments can be difficult to monitor without the right tools. Risk management requires strong identity controls, event logging, and continuous auditing of app configurations.

Governance risks

Regulatory compliance frameworks such as SOC 2, ISO 27001, HIPAA, and GDPR all require organizations to maintain strict control over third-party software, user access, and data processing. When employees adopt tools without approval or bypass official channels, IT loses visibility and cannot enforce policies.

SaaS tools can place your data governance and access management at risk. Shadow IT and unsanctioned apps that creep into your organization are challenging to manage without utilizing modern identity and governance administration (IGA).

Shadow IT also makes it difficult to audit systems, generate compliance reports, or ensure access follows the principle of least privilege. Organizations without strong governance are more likely to fall out of compliance and face legal consequences.

Best practices to manage the risk of SaaS apps

A modern SaaS risk strategy should focus on prevention, visibility, and automation. The following best practices help organizations balance productivity with protection.

Carry out a SaaS vendor risk assessment

Before purchasing or integrating a new SaaS tool, perform a security and compliance review of the vendor. Look for evidence of:

  • SOC 2 Type II, ISO 27001, or other relevant certifications

  • Secure data handling practices and data residency controls

  • Breach history and incident response capabilities

  • Encryption protocols and authentication standards

  • Ongoing audit support and transparency

Maintain a standardized process for evaluating and re-evaluating vendors over time. For higher-risk apps, request third-party assessments or penetration test reports.

For details on what must be covered in a SaaS vendor risk management process, check out NIST’s “Software Security in Supply Chains: Enhanced Vendor Risk Assessments.

Create a clear security policy encompassing SaaS apps

An effective security policy must include how SaaS apps are approved, provisioned, monitored, and retired. The policy should be simple enough for users to understand and broad enough to cover diverse use cases across departments.

Include specific requirements for:

Enforce these policies through automation whenever possible to avoid manual errors or delays.Cybercriminals target the weakest part of a system, which is often the entry point — user login. Robust access control management is an essential aspect of SaaS risk management. A modern IGA platform provides the functionality needed to ensure you can enforce the principle of least privilege. That is, privileged users should have access that reflects only what they need to do their job, and no more. IGA platforms also allow users to be easily deprovisioned as they leave an organization, ensuring that access to company apps is no longer available.

Eliminate shadow IT and make apps visible

Shadow IT occurs when employees adopt apps without approval or visibility from IT. These apps may duplicate existing tools, create compliance risks, or introduce vulnerabilities. Use a discovery platform like AccessOwl to automatically identify and categorize SaaS usage across your environment. This includes browser-based apps, subscription tools, and shared integrations.

Once discovered, apps can be evaluated, sanctioned, and governed under your existing policies.

Automate access request workflows

Manual access requests are inefficient and often lack proper approval trails. Automated workflows reduce friction while improving compliance. Choose an identity governance platform that allows you to:

  • Assign access based on roles or departments

  • Route requests to designated approvers

  • Grant temporary access with expiration rules

  • Track access logs and generate reports

  • Automatically deprovision users when they leave

This reduces over-privileged users and ensures that all access is justifiable and documented.

Carry out internal risk assessments

Risk assessments should happen quarterly or in response to major organizational changes such as mergers, new vendors, or staffing shifts. These assessments should evaluate:

  • Permissions and role assignments

  • MFA and SSO adoption

  • Configuration of critical SaaS apps

  • Account activity for former employees or inactive users

  • Vendor performance and incident response capabilities

Track your assessments over time and align findings with ongoing remediation and policy updates.

SaaS risk management and compliance

Modern compliance is increasingly centered on cloud environments. Regulators expect companies to know which SaaS apps are in use, how access is controlled, and what data is stored or processed.

SaaS risk management directly supports compliance efforts by:

  • Demonstrating control over user permissions

  • Maintaining audit logs for regulators

  • Enforcing encryption and identity controls

  • Proving vendor due diligence

  • Minimizing data exposure through policy-based access

As global compliance standards evolve, SaaS governance must evolve with them. Staying proactive reduces audit fatigue and protects customer trust.

Ready to take control of your SaaS environment? Start your free scan with AccessOwl to uncover hidden apps, automate access control, and simplify compliance across your entire stack.