Not to mention insiders that are bad actors.
And as long as employees are warned in advance, they should be aware of the risk of re-using passwords, which already exists today. If anything, this highlights the fact that if employees are using their company password for some other service, they’re placing their employer at risk.
I generally use unique passwords for everything, but I worked many years at a company with a 3-month password rotation policy, and coming up with high-entropy yet memorable passwords was sufficient work that many accounts on machines on my home network used some retired passwords from there.
"Verifiers SHOULD NOT impose other composition rules (e.g., requiring mixtures of different character types or prohibiting consecutively repeated characters) for memorized secrets. Verifiers SHOULD NOT require memorized secrets to be changed arbitrarily (e.g., periodically). However, verifiers SHALL force a change if there is evidence of compromise of the authenticator."
- NIST SP-800-63B Digital Identity Guidelines - Authentication and Lifecycle Management
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A large part of me wishes they made this a SHALL NOT. It would have caused chaos with other standards, but it would have been the right thing to do.