59% Exposure Rate: How Legacy MFT Security Creates Risk

Your organization likely invests millions in cybersecurity. Firewalls, endpoint protection, security operations centers—all the standard defenses are in place. Compliance teams diligently check their boxes. Yet according to Kiteworks’ inaugural Data Security and Compliance Risk: MFT Survey Report, 59% of organizations experienced a managed file transfer security incident in the past year. With data breach costs averaging $4.44 million globally ($10.22 million in the U.S.) according to IBM’s 2025 Cost of a Data Breach Report, these aren’t just statistics—they’re potential business-ending events.

The uncomfortable reality: While organizations fortify their perimeters, attackers exploit their file transfer systems with alarming success. Government agencies encrypt only 8% of their stored file data. Healthcare organizations protect just 11%. Well-funded mid-market companies face the highest breach rates at 32%. These aren’t sophisticated nation-state attacks exploiting zero-day vulnerabilities. They’re basic security failures in the systems that move an organization’s most sensitive data every day.

Managed file transfer (MFT) systems aren’t peripheral IT infrastructure. They’re the highways carrying intellectual property, customer data, financial records, and competitive intelligence. When these systems fail, the consequences ripple through entire organizations. The survey data reveals that most companies operate these critical systems with minimal visibility, fragmented architecture, and inadequate controls.

MFT Blind Spot Nobody Talks About

The architecture reality facing most organizations would alarm any security professional. According to the survey, 62% of companies operate fragmented systems across email security, file sharing, and web forms. This isn’t merely an efficiency problem—each separate system introduces new attack vectors, credential management challenges, and logging gaps that attackers exploit.

Healthcare organizations exemplify this dangerous disconnect. While achieving 100% end-to-end encryption for data in transit—an admirable accomplishment—they protect only 11% of data at rest with proper encryption. This gap between visible security measures and actual protection creates a false sense of security that proves costly. Their 44% incident rate, including an 11% breach rate tied for highest across all sectors, demonstrates how compliance checkboxes don’t equal security.

The manual process problem compounds these architectural weaknesses. Despite decades of automation advancement, 87% of organizations have automated less than 90% of their file transfers through MFT systems. Critical workflows still depend on manual intervention, introducing human error at scale. Each manual transfer represents a potential policy violation, an audit gap, or a security incident waiting to happen.

Most concerning is the security monitoring disconnect. The survey reveals that 63% of organizations haven’t integrated their MFT systems with security information and event management (SIEM) or security operations center (SOC) platforms. These organizations maintain sophisticated security monitoring for networks, endpoints, and applications while file transfers—often containing the most sensitive data—operate in complete darkness. Security teams watch everything except the very systems moving their crown jewels.

This visibility gap creates correlation blindness. When attackers compromise credentials, they often test access through file transfers before launching broader attacks. Without MFT events in the security data lake, these early warning signs go unnoticed. The 27% of incidents involving insider threats become particularly dangerous when file transfer activities remain invisible to security teams.

Three Critical Gaps That Determine Security Outcomes

The survey data identifies three specific vulnerabilities that separate the 59% experiencing incidents from the 39% maintaining security. These aren’t complex technical challenges—they’re fundamental gaps that organizations can address with focused effort.

Gap 1: The Encryption Imbalance

The encryption data tells a story of misplaced priorities. While 76% of organizations implement end-to-end encryption for data in transit, only 42% use AES-256 encryption for data at rest. This 34 percentage point gap represents millions of files sitting vulnerable in storage systems, backups, and temporary directories.

Government agencies demonstrate the extreme end of this imbalance with only 8% implementing proper at-rest encryption—the lowest of any sector. Their 58% incident rate, with 42% experiencing unauthorized access attempts, directly correlates to this fundamental weakness. The irony? These same agencies often have the most stringent policy requirements and compliance frameworks.

Why does this gap persist? Organizations often view encryption as a checkbox item for compliance rather than a security control. They implement visible measures like TLS for transfers while ignoring the reality that attackers primarily target stored data. Breaking into active transfers requires sophisticated man-in-the-middle attacks. Accessing unencrypted stored files requires only basic system compromise.

The solution doesn’t require architectural overhaul. Most organizations with transit encryption can extend those capabilities to storage within weeks. Modern MFT platforms include at-rest encryption as a configuration option, not a complex implementation project. The primary barrier remains awareness and prioritization, not technical complexity.

Gap 2: The Integration Void

Only 37% of organizations have connected their MFT systems to broader security monitoring infrastructure. This means 63% operate with a massive blind spot in their security visibility. File transfers happen, sensitive data moves, potential breaches occur—all invisible to the SOC teams tasked with protecting the organization.

This integration gap proves particularly costly when considering incident patterns. The survey shows 27% of incidents involve unauthorized access—often from compromised insider credentials. These attacks typically start small, with attackers testing access through file downloads before escalating. Without MFT events flowing into SIEM platforms, security teams miss these crucial early indicators.

Modern MFT platforms include SIEM connectors as standard features. Integration typically requires hours, not months. Yet organizations continue operating in silos, treating MFT as an operational system rather than a security-critical component. The 63% without integration essentially operate their security programs with one eye closed.

The compound effect of this blindness extends beyond missed attacks. Compliance audits become manual exercises in log collection. Incident response teams lack crucial context during investigations. Security analysts can’t build behavioral baselines for normal file transfer activity. Each of these gaps increases both risk and operational cost.

Gap 3: The Complexity Burden

The 62% of organizations maintaining separate systems for email security, file sharing, and web forms pay a hidden complexity tax. Each additional system doesn’t just add cost—it multiplies risk through inconsistent policies, gaps between systems, and increased attack surface. The survey data clearly shows unified platforms achieving approximately 50% fewer incidents than their fragmented counterparts.

This fragmentation often results from organic growth rather than strategic decision-making. Organizations add point solutions for specific needs without considering the cumulative security impact. The email security system has one set of policies. The file sharing platform has another. Web forms have even another. Users navigate multiple interfaces with different credentials. IT teams maintain separate configurations. Security teams monitor disconnected systems.

The real cost appears in the incident data. Fragmented organizations struggle with consistent policy enforcement. A user blocked from emailing sensitive data might successfully upload it through the file sharing system. Access revoked in one system might persist in another. These inconsistencies create the gaps attackers exploit.

Platform consolidation typically requires 12-18 months but delivers ROI through both security improvement and operational efficiency. The 38% of organizations operating unified platforms report not just fewer incidents but lower total cost of ownership, simplified compliance, and improved user experience. The investment in consolidation pays back through avoided breaches and reduced operational overhead.

Industry Analysis: Patterns of Success and Failure

The survey data reveals distinct patterns across industries, destroying several common assumptions about security maturity. Size doesn’t guarantee security. Compliance frameworks don’t ensure protection. Even sophisticated organizations show fundamental gaps.

Government: Framework Without Foundation

Government agencies present the starkest example of policy-practice disconnect. These organizations typically operate under the most stringent frameworks—NIST, FedRAMP, and numerous federal mandates. They report 67% enforcement of data sovereignty requirements, the highest of any sector. Yet they achieve only 8% encryption for data at rest, the lowest across all industries.

This gap between framework adoption and technical implementation drives their 58% incident rate. The 42% experiencing unauthorized access attempts reflects the reality that attackers know where to look. They understand that government systems often have strong perimeter defenses but weak internal controls. The encrypted connection means nothing when the data sits unprotected at its destination.

The root causes run deep: procurement processes that emphasize features over outcomes, budget cycles that fund visible initiatives over foundational security, and organizational structures that separate policy from implementation. Until agencies close the gap between their strong frameworks and weak technical controls, they’ll continue facing elevated incident rates.

Healthcare: Compliance Without Security

Healthcare organizations achieved something remarkable—100% adoption of end-to-end encryption for data in transit. No other industry comes close to this universal implementation. Yet these same organizations protect only 11% of their data at rest, creating a dangerous security gap that contributes to their 44% incident rate.

This paradox stems partly from HIPAA‘s structure, which designates encryption as “addressable” rather than required. Organizations interpret this flexibility as permission to focus on visible measures while ignoring fundamental protections. The result? Patient data travels securely between systems but sits exposed in storage, where most breaches occur.

Healthcare’s fragmentation amplifies these vulnerabilities. Clinical systems, administrative platforms, research databases, and partner integrations create a complex ecosystem where consistent security proves challenging. Each system might meet compliance requirements individually while collectively creating massive vulnerabilities. The 11% breach rate—tied for highest across sectors—demonstrates the real cost of this checkbox approach to security.

Financial Services: Balanced Implementation Works

Financial Services offers a masterclass in pragmatic security. With a 25% incident rate—half the survey average—and only 8% experiencing breaches, the sector demonstrates what balanced implementation achieves. They don’t lead in any single control but maintain solid adoption across all critical areas.

The key differentiator? Consistency over excellence. Financial Services organizations show moderate to strong implementation across encryption (both in transit and at rest), access governance, vendor assessment, and monitoring integration. They avoid the trap of pursuing advanced capabilities while leaving fundamental gaps exposed.

This balanced approach likely stems from the sector’s mature risk management culture and experience with regulatory scrutiny. Rather than treating each compliance framework separately, leading financial institutions build unified control sets that address multiple requirements simultaneously. The result is security that works in practice, not just in audit reports.

Mid-Market Organizations: The Danger Zone

The survey’s most alarming finding concerns mid-market organizations with 5,001-10,000 employees. Despite 75% testing their incident response plans—among the highest rates—they suffer a 32% breach rate, the worst of any size category. This paradox reveals a dangerous transition zone where scale attracts sophisticated attackers before defenses can mature.

These organizations face unique challenges. They’re large enough to handle valuable data and attract determined attackers. They’re building formal security programs but lack the deep resources of larger enterprises. They’re implementing advanced capabilities while still closing basic gaps. This combination creates perfect conditions for security failures.

The high testing rates coupled with poor outcomes suggest a focus on process over effectiveness. These organizations test plans that don’t address their actual vulnerabilities. They simulate responses to attacks that exploit different weaknesses than their drills anticipate. Real security requires not just testing but testing the right scenarios and addressing the gaps those tests reveal.

Automation Reality Check

Automation represents one of the clearest correlations with positive security outcomes in the survey data. Organizations achieving 90-100% automation of file transfer—using MFT—show a 29% incident rate—less than half the 71% rate for those below 50% automation. Yet only 13% of organizations reach this high automation level, with most plateauing between 50-70%.

The 50-70% Plateau

The automation plateau reflects organizational dynamics more than technical limitations. At 50-70% automation, companies have typically addressed their easiest use cases—scheduled transfers, standard workflows, common integrations. The remaining 30-50% involves complex processes, exception handling, and workflows spanning multiple systems.

Many organizations declare victory at this plateau. They’ve automated “most” transfers and see diminishing returns from further investment. This perspective misses the security impact of those remaining manual processes. Each represents a policy exception, a potential audit finding, or a security gap. The 30% of transfers handled manually often include the most sensitive or complex scenarios—exactly where security matters most.

The survey shows clear security improvements with each automation increase. Moving from 50-69% to 70-89% automation correlates with a 9 percentage point reduction in incidents. The jump to 90-100% automation delivers another 23 percentage point improvement. These aren’t marginal gains—they’re transformative security improvements achieved through operational discipline.

Breaking the Automation Barrier

Organizations stuck at the automation plateau typically face cultural rather than technical barriers. Business users resist changing familiar manual processes. IT teams lack resources for complex integration projects. Security teams don’t recognize automation as a security control. These human factors prove harder to address than technical requirements.

Successful organizations treat automation as a security imperative, not just an efficiency measure. They start with high-risk manual processes—those handling sensitive data or prone to error. They build momentum through quick wins that demonstrate both security and operational benefits. They measure success through risk reduction, not just time savings.

The path beyond the plateau requires different approaches: orchestration platforms that connect disparate systems, infrastructure as code that ensures consistency, and cultural change that values automation. The 13% of organizations achieving 90-100% automation didn’t get there through technology alone—they built cultures that default to automation while treating manual processes as exceptions requiring justification.

Modern Threats Require Modern Defenses

Traditional security controls increasingly fail against modern file-based attacks. The survey reveals only 27% of organizations have deployed content disarm and reconstruction (CDR) technology, leaving the majority vulnerable to sophisticated threats that bypass conventional defenses.

Content Security Gap

Standard antivirus and data loss prevention (DLP) tools, deployed by 63% of organizations, catch known threats and obvious data exposures. They fail against zero-day exploits embedded in common file formats. Weaponized PDFs, malicious Office documents, and compromised images pass through traditional scanners undetected. These files don’t contain recognizable malware signatures—they exploit legitimate features in malicious ways.

CDR technology addresses this gap by assuming all files are potentially dangerous. Rather than trying to detect threats, it rebuilds files to remove any potentially malicious content while preserving the legitimate information users need. This approach proves particularly valuable for organizations handling files from external sources—vendors, customers, partners—where trust can’t be assumed.

The low 27% adoption rate reflects both awareness gaps and implementation challenges. CDR requires organizations to accept that some file features might be removed for security. Users accustomed to full-featured documents must understand why certain capabilities are stripped. These change management requirements, more than technical complexity, slow adoption of this critical protection.

Vendor Assessment Theater

Perhaps the survey’s most revealing disconnect concerns vendor security assessment. While 72% of organizations report “thoroughly” evaluating vendor security, the 59% incident rate suggests these evaluations miss critical vulnerabilities. The gap between assessment claims and security outcomes points to fundamental flaws in how organizations approach third-party risk.

Traditional vendor assessments focus on policies, certifications, and questionnaire responses. Vendors present their best face during sales cycles. They demonstrate features, provide references, and check compliance boxes. What they don’t reveal: architectural weaknesses, integration gaps, or operational security failures that only appear in production use.

Real vendor security assessment requires deeper investigation. How does the platform handle encryption keys? What happens to data during processing? How do integrations affect the security model? Can the vendor demonstrate actual security outcomes from current customers, not just feature compliance? These harder questions separate security theater from actual protection.

Implementation Reality: From Critical Gaps to Security

The survey data enables precise action planning based on proven impact. Rather than pursuing perfection, organizations can achieve meaningful security improvements by systematically addressing the gaps that matter most.

Starting With Your Biggest Vulnerability

For most organizations, the highest-impact action is implementing AES-256 encryption for data at rest. With 58% lacking proper storage encryption while 76% already have end-to-end encryption, this represents the most dangerous gap. Every day without at-rest encryption leaves years of accumulated files exposed. Modern MFT platforms make this a configuration change, not a complex project, with immediate impact—stored data becomes worthless to attackers lacking encryption keys.

Next, establish visibility by connecting MFT logs to SIEM platforms. The 63% operating without this integration miss critical attack indicators. Initial implementation doesn’t require complex correlation rules—simply getting file transfer events into the security data lake enables investigation and pattern recognition. Modern MFT platforms include SIEM connectors that activate in hours, not months.

Complete foundational security by auditing access. The survey shows 27% of incidents involve insider threats, often through credentials that should have been deactivated. Identify dormant accounts, excessive permissions, and shared credentials. Remove stale access aggressively. This administrative cleanup costs nothing but time while immediately reducing attack surface.

These aren’t transformative changes—they’re basic security hygiene that organizations skip while pursuing advanced capabilities. Yet they deliver immediate, measurable risk reduction.

Building Sustainable Security

Beyond quick wins, sustainable security requires automation and governance. Deploy automated deprovisioning to ensure departing employees immediately lose file transfer access. The 52% of organizations without this capability maintain standing vulnerabilities where former insiders retain system access indefinitely.

Establish quarterly access review cycles if you’re among the 42% not conducting regular reviews. Modern MFT platforms include access governance features that automate much of this process. The key is starting the habit and maintaining consistency. Each review surfaces accumulated privileges that create unnecessary risk.

For organizations with fragmented systems, begin consolidation planning. While migration takes 12-18 months, the planning process reveals immediate opportunities—policies to align, redundant systems to eliminate, integration points to establish. Map your current state honestly and design your target architecture based on security outcomes, not feature lists.

Success metrics go beyond compliance checkboxes. Track mean time to detection for file transfer anomalies. Monitor the percentage of automated versus manual transfers. Measure the time from employee departure to complete access revocation. These operational metrics demonstrate real security improvement.

Advanced Protection Strategies

Organizations ready for advanced capabilities should focus on two areas: CDR deployment and breaking past the automation plateau. Implement CDR for high-risk file transfers—those from external parties, containing executable content, or moving to critical systems. Start with pilot deployments to manage change effectively, then expand based on risk assessment.

Push automation beyond the typical 50-70% plateau by identifying workflows with security impact—compliance data collection, audit log aggregation, incident response triggers. Each automated process reduces human error while ensuring consistent policy application. The security benefits compound as coverage increases.

Complete advanced protection by building real correlation rules in your SIEM. With MFT data flowing into security monitoring, establish behavioral baselines and identify anomalies. Focus on high-impact scenarios: excessive downloads, unusual access patterns, transfers to suspicious destinations. These rules transform raw visibility into actionable intelligence.

When evaluating vendors, look beyond feature lists to architectural decisions. Unified platforms consistently outperform cobbled-together solutions. Modern architectures enable better integration, consistent policy enforcement, and simplified monitoring. Ask hard questions: How does the platform handle encryption keys? What happens to data during processing? Can the vendor demonstrate security outcomes, not just compliance? Choose based on proven results, not promised capabilities.

Breaking the Cycle: What Separates Winners from Victims

The Kiteworks MFT report delivers an unambiguous message: File transfer security failures stem from neglect, not complexity. The 39% of organizations avoiding incidents don’t possess unique resources or face easier challenges. They simply implement comprehensive controls while others chase advanced capabilities while leaving fundamental gaps exposed.

Three actions separate the secure minority from the vulnerable majority. First, encrypt data at rest. The 58% operating without proper storage encryption maintain their highest-risk vulnerability. Second, integrate security monitoring. The 63% without SIEM connectivity operate partially blind to attacks. Third, consolidate platforms. The 62% running fragmented systems multiply their risk through architectural complexity.

The cost of inaction compounds daily. Each unencrypted file adds to accumulated exposure. Each day without monitoring misses potential attack indicators. Each additional system increases complexity that attackers exploit. While organizations debate advanced security initiatives, basic file transfer vulnerabilities remain open doors for attackers.

The survey proves security transformation doesn’t require perfection or unlimited resources. It requires focus on the vulnerabilities that matter most. Organizations can achieve meaningful risk reduction through systematic gap closure. The question isn’t whether your organization can improve MFT security—the data proves it’s possible. The question is whether you’ll act before joining the 59% learning these lessons through incident response.

Start today. Download the complete survey report for detailed findings and industry-specific insights. Assess your organization against the benchmarks. Identify your critical gaps. Begin closing them systematically. The difference between the vulnerable majority and the secure minority isn’t capability—it’s action. Which group will you join?