Network policies are managed based at least in-part on user/entity identity information with: a state monitor operable to monitor for state change events in user/entity state and related, network state or in traffic pattern and traffic flow state; an identity manager operable to obtain and validate user credentials; and a policy manager operable in response to a state change event detected by the state monitor (either the identity manager or a defense center) to select a policy based in-part on the user identity obtained by the identity manager or security context obtained by the defense center, and to prompt application of the selected policy. The policies are indicative of user/device authorization entitlements and restrictions to utilization of certain network resources, network services or applications. Dynamic policy selection and targeted responses can be used, for example, against a user who gains network access with stolen user ID and password, and subsequently attempts malicious behavior. In particular, the malicious behavior is detected and identified, and the malicious user can then be restricted from abusing network resources without adversely affecting other users, groups, network devices, and other network services.