When WDigest authentication is enabled, Lsass.exe retains a copy of the user's plaintext password in memory, where it can be at risk of theft. If this setting is not configured, WDigest authentication is disabled in Windows 8.1 and in Windows Server 2012 R2; it is enabled by default in earlier versions of Windows and Windows Server. For more information about local accounts and credential theft, review the 'Mitigating Pass-the-Hash (PtH) Attacks and Other Credential Theft Techniques' documents. For more information about UseLogonCredential, see Microsoft Knowledge Base article 2871997: Microsoft Security Advisory Update to improve credentials protection and management May 13, 2014. The recommended state for this setting is: Disabled. Rationale: Preventing the plaintext storage of credentials in memory may reduce opportunity for credential theft. Impact: None - this is also the default configuration for Server 2012 R2 and newer.
To establish the recommended configuration via GP, set the following UI path to Disabled: Computer Configuration\Policies\Administrative Templates\MS Security Guide\WDigest Authentication (disabling may require KB2871997) Note: This Group Policy path does not exist by default. An additional Group Policy template (SecGuide.admx/adml) is required - it is available from Microsoft at this link. Default Value: On Server 2012 (non-R2) and older: Enabled. (Lsass.exe retains a copy of the user's plaintext password in memory, where it is at risk of theft.) On Server 2012 R2 and newer: Disabled. (Lsass.exe does not retain a copy of the user's plaintext password in memory.)