How to Create an MSP Incident Response Plan

An MSP incident response plan is a documented set of procedures for detecting, containing, investigating, and recovering from cybersecurity incidents affecting a managed service provider or its customers. An effective plan defines technical responsibilities, escalation procedures, client notification requirements, and recovery priorities before an attack occurs.

For MSPs, incident response planning is especially important because compromised administrative credentials, remote management tools, or shared infrastructure can expose multiple customer environments.

This guide explains how MSPs can develop, test, and maintain incident response plans, including the steps to take during the first hour of an incident, the technologies needed to support recovery, and the responsibilities to define in customer agreements.

What is an MSP incident response plan?

An incident response plan is a documented strategy for identifying, managing, and resolving cybersecurity threats. Think of it like a fire drill: You don’t want to figure out how to evacuate during a fire, just as you don’t want to develop a response strategy in the middle of a cyber incident.

An IRP establishes the steps to take when an incident is detected, helping minimize damage, downtime, and costs while guiding efforts to prevent similar events.

An effective cybersecurity incident response plan typically includes:

1. Preparation: Training your team, setting up tools, and defining roles and responsibilities.
2. Identification: Detecting and confirming that an incident has occurred.
3. Containment: Limiting the incident’s impact before it spreads.
4. Eradication: Removing the threat from your environment.
5. Recovery: Restoring operations and making sure systems are secure.
6. Lessons learned: Reviewing what happened to improve future responses.
7. Retesting: Running exercises to ensure the plan works and remains up to date.

An MSP incident response plan should also support a broader business continuity and disaster recovery (BCDR) strategy. It should document breach procedures, key stakeholders, contingencies, and client communication processes, and remain accessible to those responsible for executing it.

Why do MSPs need an incident response plan?

A security incident response plan is crucial for businesses of all sizes, especially MSPs, because it provides a structured approach to managing cybersecurity incidents. Without a plan, organizations risk higher recovery costs, prolonged downtime, and reputational damage. For MSPs, the stakes are even higher because clients rely on them to safeguard their networks and data.

Key benefits of having an incident response plan include:

• Minimize downtime: Quickly identifying and containing security incidents reduces service interruptions and their impact on day-to-day operations.
• Limit financial damage: A swift response can reduce recovery expenses, potential fines, and lost revenue.
• Support compliance: Documented procedures help organizations address applicable regulatory and contractual responsibilities.
• Protect reputation: Prompt action and clear client communication can minimize the fallout from breaches and service disruptions.
• Improve security over time: Reviewing incidents helps organizations strengthen security measures and prevent future attacks.

By offering incident response services, MSPs can demonstrate a proactive approach to cybersecurity and differentiate themselves from competitors.

However, research shows that many organizations still have significant gaps in incident response readiness. A CYGNVS and Marsh Risk report found that 92% of surveyed organizations had documented incident response processes, but only 37% maintained ransomware-specific playbooks and 29% had plans addressing third-party or vendor incidents.

The report also found that 67% had never tested recovery under real incident conditions, while 17% conducted no tabletop exercises. Only 15% conducted fully cross-functional exercises involving legal, communications, and executive leadership.

These findings demonstrate that having a written plan isn’t enough. MSPs must ensure that procedures address different incident types, that employees understand their responsibilities, and that recovery processes work when needed.

What to do in the first hour of a security incident

The first hour after discovering a potential security incident is critical for MSPs. Predefined procedures help teams avoid confusion, begin containment, and establish clear ownership of the response.

Although every incident is different, MSPs can use the following initial response checklist:

1. Confirm and classify the incident: Determine what was detected, which systems or accounts may be affected, and whether the activity indicates a security incident.
2. Activate the incident response team: Notify designated response leaders and relevant technical, business, and client stakeholders.
3. Contain the threat: Isolate affected systems, accounts, and network connections to limit further access or damage.
4. Preserve evidence: Retain relevant logs and forensic artifacts, and avoid actions that could destroy information needed for the investigation.
5. Assess potential exposure: Identify affected systems, customer environments, and data, including additional accounts or connected services that may be at risk.
6. Begin client and stakeholder communication by following established notification and escalation procedures and sharing confirmed information.
7. Document response activities: Record the timeline, actions taken, individuals involved, and outstanding questions. 

MSPs should not assume an incident is contained simply because a vendor or technology provider has restored its service. The ConnectWise Cloud Backup breach demonstrates the importance of independently reviewing customer environments for unauthorized configuration changes and persistent access.

The first-hour checklist should be customized to the MSP’s environment and customer agreements. It establishes an organized initial response, but does not replace a complete investigation or recovery process.

How MSPs can develop a plan for their clients

Developing an effective incident response plan for clients as an MSP involves careful planning, organization, and ongoing communication. The plan should establish what happens during an incident, who is responsible for each action, and how operations will be restored.

The following phases can help MSPs build a reliable response process.

Phase 1: Organizing the incident response procedures

The first step in creating an incident response plan is to organize clear procedures that define exactly what needs to happen during a cybersecurity event. This includes identifying roles and responsibilities, classifying incidents, establishing escalation procedures, and documenting step-by-step response actions.

Define roles, responsibilities, and escalation

MSPs should identify the individuals responsible for managing incidents, including:

• Technical response teams: Employees responsible for identifying threats, investigating incidents, and containing affected systems.
• Incident response leaders: Individuals responsible for coordinating response activities and ensuring established procedures are followed.
• Business leadership: Executives responsible for business decisions, resource allocation, and the approval of major response actions.
• Legal counsel: Representatives who can help address legal and regulatory responsibilities.
• Client contacts: Customer representatives who need to be informed about incidents and involved in recovery decisions.
• External partners: Insurance carriers, incident response consultants, and relevant technology vendors.

MSPs should also establish an escalation process that explains when an incident requires senior leadership, legal counsel, or outside specialists. Every plan should include an initial contact list and contingencies in case primary response personnel are unavailable.

Identify incident types and critical assets

MSPs should identify the types of cybersecurity incidents their organizations and customers could experience and determine which systems and assets need the most protection.

Common incident types include:

• Malware infections
• Ransomware attacks
• Phishing and social engineering
• Unauthorized account access
• Data breaches and data theft
• Network intrusions
• Third-party and vendor compromises
• Service disruptions and outages

MSPs should pay particular attention to incidents involving remote monitoring and management (RMM) tools, professional services automation (PSA) platforms, identity systems, and other technologies used to manage customer environments.

Because these tools often have elevated privileges, attackers who compromise a management platform or credential may gain access to multiple customer environments.

MSPs should also maintain an inventory of critical assets, including customer data, applications, servers, network infrastructure, cloud environments, administrative accounts, and backup systems. Understanding which assets are most important to business operations helps prioritize response activities and determine which systems should be isolated or restored first.

Establish containment and recovery procedures

Once an incident has been identified, MSPs need clear procedures for containing the threat, removing it, and restoring normal operations.

The incident response plan should outline:

• Containment: Identify and isolate affected systems, accounts, and network connections to prevent further spread.
• Eradication: Determine the incident’s source and remove malicious software, unauthorized access, and other threats.
• Recovery: Restore affected systems and data using available backups and recovery procedures.
• Validation: Confirm systems are secure and operating properly before returning them to normal use.
• Documentation: Maintain records of response activities, system changes, and findings.

Backup and recovery procedures should be tested regularly. MSPs should verify that critical systems and customer data can be restored and determine how long restoration takes rather than assuming available backups will work.

Incident response planning should also account for backup restoration speeds and whether cloud service provider contracts address incident response and access to forensic images of remotely stored assets.

Define client communication protocols

Communication is essential during incident response. MSPs should establish how and when customers will be notified if an incident affects their systems or data.

Key considerations include:

• Establish notification procedures: Identify who is responsible for notifying clients and which communication channels to use.
• Define escalation requirements: Determine which incidents require immediate notification and which can be addressed through routine reporting.
• Maintain transparency: Update customers about the incident, its potential impact, and response activities.
• Coordinate recovery: Keep customers informed about restoration efforts and any actions they need to take.
• Document communications: Maintain records of notifications, customer decisions, and response updates.

MSPs should not wait for a technology vendor to complete its investigation before communicating with potentially affected customers. Internal processes should separate technical incident ownership from vendor communications.

Technical leads should focus on preserving evidence and investigating the incident, while account managers provide regular customer updates about confirmed information, outstanding questions, and continuity measures.

Phase 2: Identifying the right technology for incident response

To make incident response procedures as efficient as possible, MSPs need the right technology in place. Key tools include:

• Monitoring and detection systems: Intrusion detection systems (IDS) and security information and event management (SIEM) software can help identify threats.
• Endpoint detection and response (EDR): These solutions help security teams identify and investigate suspicious endpoint activity.
• Backup and recovery solutions: Ensure secure backups are readily available to minimize data loss and downtime.
• Incident management platforms: Systems that centralize incident tracking and resolution can make it easier to manage responses across multiple clients.
• Identity and access management (IAM): These capabilities help MSPs manage access to customer environments and protect privileged accounts.

MSPs should also evaluate how their tools monitor trusted identities, application permissions, and third-party access. This includes monitoring service principal sign-ins, enforcing least-privilege access for integrated applications, and regularly reviewing third-party application permissions.

Selecting the right technology is only part of the process. MSPs should ensure their tools are properly configured, consistently monitored, and included in incident response testing.

Phase 3: Testing the plan

An incident response plan is only effective if employees can execute it properly. Regular testing helps confirm that everyone understands their responsibilities and that procedures work in practice.

MSPs can test their plans through:

• Simulated attack exercises: Conduct mock incidents to evaluate response speed and effectiveness.
• Tabletop exercises: Bring stakeholders together to discuss how they would respond to a potential incident.
• Recovery testing: Verify that critical systems and data can be restored using available backup and recovery processes.
• Post-exercise evaluations: Review what worked, identify gaps, and adjust the plan.

Testing should extend beyond IT and security teams to include business leadership, legal representatives, and communications stakeholders.

The CYGNVS and Marsh Risk research found that only 15% of surveyed organizations conducted fully cross-functional exercises involving legal, communications, and executive leadership. This reinforces the importance of including those responsible for business decisions in incident response exercises.

Phase 4: Updating the plan

Your incident response plan should be a living document, regularly updated to reflect new threats, technologies, and business requirements. A designated incident response team (IRT), often led by the MSP’s security manager or cybersecurity specialist, should be responsible for reviewing and updating the plan.

MSPs should revisit their plans whenever customer environments, vendor relationships, management platforms, or access requirements change. They should also incorporate lessons learned from previous incidents and exercises.

Phase 5: Talking to clients about the plan

Finally, it’s important to communicate the value of the incident response plan to clients. MSPs can do this through:

• Education: Explain the importance of having a plan in place and how it protects the business from costly downtime and data loss.
• Transparency: Walk clients through the plan’s key elements so they understand what will happen during an incident.
• Collaboration: Encourage client involvement by discussing specific concerns and incorporating them into the response plan.

By organizing clear incident response procedures, regularly testing the plan, using the right technology, and keeping clients informed, MSPs can build strong, reliable incident response capabilities.

MSP Incident Response: Who makes which decisions?

Clearly assigned decision-making responsibilities help MSPs avoid delays and confusion during an incident. Technical teams typically investigate and contain threats, while business leaders and customers make decisions involving operations, communications, and recovery.

A basic division of responsibilities can look like this:

Stakeholder	Primary responsibilities
MSP incident response leader	Coordinates the response, assigns tasks, and manages escalation
MSP technical team	Detects threats, investigates affected systems, contains incidents, and supports recovery
MSP executive leadership	Makes business decisions, allocates resources, and approves major operational actions
Customer leadership	Makes customer-side business decisions and coordinates internal stakeholders
Customer IT team	Supports investigation, system access, and restoration activities
Legal counsel	Advises on legal responsibilities, contractual obligations, and notification requirements
Cyber insurance provider	Provides guidance on applicable policy requirements and covered response resources
External incident response specialists	Provide additional investigation, forensic, and remediation support when needed

MSPs should establish these responsibilities before an incident and document which actions require customer approval. 

For example, technical teams may identify and isolate affected systems, while customer leadership approves operational changes that affect business functions.

Vendor-related incidents require additional clarity. MSPs should maintain their own technical response processes rather than relying exclusively on vendors for investigation updates. They should also designate customer-facing representatives to communicate incident status.

What incident response services should an MSP contract cover?

MSPs should clearly define incident response responsibilities and service expectations in customer contracts and service-level agreements (SLAs). This establishes which services the provider is responsible for delivering and which responsibilities remain with the customer.

Contracts and related agreements should address:

• Incident response responsibilities: Identify which detection, investigation, containment and recovery services the MSP provides.
• Notification requirements: Establish how and when customers will be notified about suspected or confirmed incidents.
• Response availability: Clarify support hours, escalation procedures and response expectations.
• Backup and recovery: Define backup responsibilities, restoration expectations and covered recovery services.
• Evidence and forensic access: Address access to relevant logs, forensic images and customer data during investigations.
• Third-party dependencies: Establish how incidents involving cloud providers, software vendors and other external partners will be handled.
• Customer responsibilities: Document obligations involving access, approvals, communication and cooperation.
• Insurance and legal requirements: Identify applicable insurance requirements and review responsibilities with legal counsel.

MSPs should pay particular attention to the distinction between included and excluded services. Customers may assume their MSP handles every aspect of cybersecurity and incident response, even when the contract defines a narrower scope.

MSPs can face contractual, negligence, vicarious, and data breach liability. Clearly defining responsibilities, disclaimers, and service expectations in customer contracts and SLAs can help limit liability, although such contracts do not guarantee protection against legal action.

MSPs should review agreements with legal counsel and insurance providers to ensure incident response services, limitations, and responsibilities are clearly documented.

How to protect your own MSP business

Developing an incident response plan for internal operations is just as important as creating plans for customers. MSPs are attractive targets because of their access to multiple clients’ systems and sensitive data. A successful attack can disrupt the provider’s operations and put the businesses it supports at risk.

Reasons MSPs should prioritize internal incident response planning include:

• Protecting internal assets: An IRP helps MSPs address threats to their own infrastructure and data, which could otherwise expose multiple customer environments.
• Reducing financial impact: A prompt, organized response can help manage downtime, recovery costs, and reputational damage.
• Improving internal processes: Regularly updating the plan helps refine detection capabilities, response times, and security practices.
• Maintaining service continuity: An IRP helps providers manage disruptions and maintain business continuity for customers.

To strengthen their internal security posture, MSPs should prioritize:

• Regularly patching internal systems and management platforms.
• Limiting privileged access across tools and customer environments.
• Strengthening identity and access controls.
• Monitoring internal infrastructure and management platforms.
• Reviewing remote access tools and third-party application permissions.
• Providing employees with security awareness training.
• Regularly testing backup and recovery procedures.

MSPs should also maintain visibility into internet-facing assets, establish vulnerability management programs, and monitor access to remote connectivity infrastructure.

Bottom Line: Test your plan before an incident

Businesses need an incident response plan before something goes wrong. Having a well-structured plan in place ensures that organizations are prepared to handle cyberthreats efficiently, minimize damage, maintain service continuity, and protect their assets and reputation.

For MSPs, that preparation must extend to both customer environments and internal operations. Clear procedures, defined responsibilities, appropriate technology, tested recovery processes and effective client communication can help providers respond more consistently when incidents occur.

By planning ahead, MSPs can strengthen their own security posture, support customer trust and improve their ability to maintain operations during a disruption.

MSP incident response FAQs

What are the five basic steps of an incident response plan?

The five basic steps are preparation (establishing procedures and training), identification (detecting and confirming incidents), containment (limiting the spread), eradication (removing the cause) and recovery (restoring systems).

What should an MSP incident response plan include?

An MSP incident response plan should document response procedures, incident classification, roles and responsibilities, escalation contacts, detection tools, containment and recovery procedures, client communication protocols and testing requirements. It should also identify external resources, such as legal counsel and insurance providers.

How often should an MSP incident response plan be tested?

MSPs should test their plans regularly through simulated attacks, tabletop exercises and recovery testing. These exercises help identify procedural gaps, confirm employees understand their responsibilities and verify that systems and data can be restored.

Can MSPs be held liable for client data breaches?

Yes. MSPs can face contractual, negligence, vicarious and data breach liability following security incidents. Clearly defining responsibilities, disclaimers and service expectations in customer contracts and SLAs can help limit liability, but does not guarantee protection from legal action.

Should MSPs have separate incident response plans for their customers and their own businesses?

Yes. MSPs should maintain documented incident response procedures for their own organizations and develop customer-specific plans. A breach affecting an MSP’s internal infrastructure can create risks across multiple customer environments, while individual customers may have different systems, responsibilities and recovery requirements.

What is the difference between an incident response plan and a disaster recovery plan?

An incident response plan outlines how an organization identifies, manages and contains cybersecurity incidents. A disaster recovery plan focuses on restoring systems, applications and data following a disruption. MSPs should incorporate both into a broader business continuity and disaster recovery strategy.

What is an IR report?

An IR report is a document that provides a detailed account of a security incident, including its detection, impact, response actions and resolution. It typically includes an analysis of the incident, steps taken to mitigate it, and recommendations for improving future response efforts.