Risk-Based V. Compliance-Based Utility Cybersecurity - a False Dichotomy?

By Lin, Wei Chen; Saebeler, Dominic | Energy Law Journal, July 1, 2019 | Go to article overview

Risk-Based V. Compliance-Based Utility Cybersecurity - a False Dichotomy?


Lin, Wei Chen, Saebeler, Dominic, Energy Law Journal


I. Introduction

There is overwhelming consensus regarding the need for continuously improving critical infrastructure security.1 However, how we maintain an appropriate level of security remains subject to a variety of interpretations.

The crucial question is often presented in a way that seeks to select the better of the two approaches-risk-based or compliance-based.2 Both seek to increase overall security, albeit using very different decision-making lenses.3 Instead of selecting one approach over the other, we propose viewing these two approaches as complementary, rather than diametrically opposed to each other. The result is the retention of generally agreed upon minimum levels of security combined with the flexibility to dynamically allocate resources toward preventing the most significant risk at any given time.

The authors of this article have participated in many stakeholder conversations that frame risk-based and compliance-based approaches as conflicting and mutually exclusive. It is more likely that these different approaches will continue coexisting as both approaches seek to improve overall security, albeit in different ways, and because of overlapping jurisdictional and organizational requirements that will continue for the foreseeable future.

However, an opportunity exists for a multipronged approach to be considered that views risk-based and compliance-based approaches as complementary, with one setting a floor of assurance while the other promotes flexible specific actions that rapidly improve overall security.

Economist Alfred E. Kahn, who chaired the New York Public Service Commission from 1974-1977, is generally attributed with saying "[a]ll regulation is incentive regulation."4 Consistent with this concept, regulators are generally expected to create measurable, compliance driven frameworks.5 Such requirements are necessary to prevent corners from being cut by entities willing to accept certain risks regulators deem unacceptable.6 While acknowledging the need for some level of regulation, utilities will typically also argue for the freedom to implement a more dynamic risk-based framework focused on flexible al location of resources toward addressing the most important and immediate emerging risk.7

Both approaches are designed to ensure that security protocols are consistently operating as intended, progress towards increased security is measurable, and risk is actually reduced.8 Many security professionals are concerned that actual risk is often not reduced through many "check box" compliance steps that can quickly become obsolete as threats continuously change and mature.9 Further, meeting compliance requirements arguably consumes money and resources that might otherwise be allocated by the company to risk-based activities, some of which might help achieve increased security by responding to evolving threats instead of legacy threats some regulations target.10

Many challenges exist, including proper resource allocation and timely solution implementations that relate directly to assurance activities for compliancebased frameworks, such as internal and external assessments, investigation, evaluation, self-certification, self-auditing, self-reporting/disclosure, and thirdparty auditing.11 Appropriate security investments should be seamlessly integrated into the business process to achieve continuous assessment and mitigation of risks.12 Implementing metrics that support optimal levels of investment is also critical to determining the effectiveness of cybersecurity defense measures.13

This article will define key concepts such as risk, threat, and vulnerability. It will then discuss how the merger of Information Technology (IT) and Operational Technology (OT) is leading to the recent increased focus on cybersecurity of energy systems. This article will also discuss the ever-increasing role of the consumer in energy resiliency due to the increasing potential for bi-directional flow of energy. …

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