The "Multifactor Authentication Denied" rule is designed to detect instances where multifactor authentication (MFA) attempts are denied under suspicious circumstances. When a user receives an MFA prompt yet claims not to have initiated it, this can indicate a potential security breach, where an attacker may have obtained the user's password and is attempting to gain access to their account through a credential access attack. The rule leverages Azure's Sign-In Logs to monitor for any denied MFA requests with specific selection criteria: it targets events where the authentication requirement is set to MFA and the status contains 'MFA Denied'. By following this rule, security teams can identify compromised accounts and take action before further unauthorized access occurs, thereby maintaining the integrity of organizational data.