Unregulated Industries Face Major API Security Risks as Sensitive Data Remains Exposed

A new report reveals that 84% of companies are exposing sensitive data through insecure APIs, with unregulated sectors being the most at risk due to inconsistent and self-managed security protocols. The API Security Report by Raidiam warns that the surge in API usage across industries has outpaced the development of proper security frameworks—leaving critical data vulnerable.

While APIs serve as vital access points in modern digital operations—enabling automation, analytics, and enhanced user experiences—most organizations lack the robust protections required to secure them. The report analyzed businesses outside of regulated frameworks like open banking, focusing instead on environments where API security is governed internally without mandatory oversight.

Key findings paint a concerning picture:

• 84% of organizations fall into the “Act Urgently” category, meaning their current API protections are significantly below acceptable levels.
• 15% are only beginning to address their vulnerabilities.
• Just 1.5% meet the standard for “robust API security,” with most of these operating under strict regulatory frameworks.

One of the most widespread weaknesses is the reliance on outdated or weak authentication, with most firms still using API keys or basic OAuth credentials without enhanced safeguards. Only a small percentage have adopted more secure methods like PKCE or mutual TLS, and virtually none have voluntarily implemented modern frameworks like Full FAPI, which links client identity to robust cryptographic standards.

This lack of advanced security is especially troubling considering that 85% of surveyed organizations handle highly sensitive personal data, including payment details or biometric information—classified as top-tier in sensitivity. Despite this, protections such as client certificate-based authentication or fine-grained access scopes remain rare.

The report highlights three critical areas where unregulated sectors fall short:

1. Authentication and Credential Weaknesses: Static API keys and secrets are often poorly managed, rarely rotated, and easily compromised.
2. Insufficient Access Controls: Fewer than half of organizations apply granular access rules, increasing the risk of data exposure in case of credential theft or insider threats.
3. Lack of Monitoring and Testing: API-specific security checks such as penetration testing or code composition analysis are not routinely performed. Without visibility, abnormal patterns go undetected—until it’s too late.

Notably, recent breaches like the Dell incident in 2023, where a vulnerable partner API led to the exposure of 49 million records, underscore the urgent need for stronger API security.

To address the rising threat, Raidiam offers several best practices:

• Elevate API security to a board-level concern, treating it on par with network or endpoint security.
• Invest in talent and internal education, training teams in OAuth, cryptography, and secure coding principles.
• Collaborate with specialized external partners, particularly those providing digital trust frameworks and certificate-based ecosystems.
• Establish a prioritized roadmap to fix critical weaknesses—like unauthenticated endpoints or missing rate limits—while setting longer-term goals for standardization and governance.

The report concludes with a clear message: API security must become a strategic priority in 2025 and beyond. As companies race to digitize, APIs are not only gateways for innovation—but also for attack. Organizations that ignore their exposure risk reputational damage, financial loss, and regulatory fallout. Those that act now can build a stronger, more trusted foundation for the API-driven future.

‍