United States: Preparing For A Digital Armageddon

Last Updated: March 31 2014
Article by Kelly Frey

We are under attack. Whether it is cyber-theft, cyber-terrorism, or cyber-warfare, critical systems that generate and distribute electricity on the grid, control commercial aircraft in flight, process bank and credit card transactions, coordinate our traffic lights, authorize military action, and control emergency response are targets of daily assaults by hackers whose goal is to penetrate, disrupt, and/or exercise control over critical infra-structure in the United States. It is a battle we are losing.

Headlines have recently concentrated on cyber-security incidents that affect the consumer. Identify theft from cyber-security breaches now cost the victim over $500 and 30 hours of remediation work per incident. But the hacking one person is nothing compared to hacking into data systems that house information on millions of consumers. Most recently, financial data from millions of Target customers was stolen by hackers who targeted credit card (Point of Sale or POS) terminals in its stores (a massive data breach that compromised 40 million credit/debit card accounts between Nov. 27 and Dec. 15, 2013). As of the date of this article, Target's cyber-security breach has resulted in $17 million of net expenses (although total expenses were $61M, such losses were partially offset by $44 million in cyber-security insurance payments). The loss resulted in almost a 50% reduction in 2013 fourth-quarter profit for Target (and a 5.3% reduction in total revenue as the breach scared off customers).

And commercial systems are not the only digital assets we need to worry about. FBI director James Comey told the Senate homeland security and government affairs committee in September 2013 that cyber-attacks were likely to eclipse terrorism as a domestic danger over the next decade. "That's where the bad guys will go," Comey said. "There are no safe neighborhoods. All of us are neighbors [online]." In fact, a 2013 report by the Secretary of Defense noted that "In 2013, numerous computer systems around the world, including those owned by the U.S. government, continued to be targeted for intrusions, some of which appear to be attributable directly to the Chinese government and military".

We must now protect ourselves not only from the bored teenage hacker – we now have to worry about how to defend ourselves against organized international crime syndicates paying millions of dollars to expert information technology (IT) professionals and foreign governments tapping the best and brightest professional IT talent within their jurisdictions for nationalist purposes.

Protecting Critical National Infra-structure

Lacking a clear legislative process with respect to cyber-defense, the executive branch has stepped in to create an over-arching framework to assess current vulnerabilities of companies involved in owning or operating critical infra-structure and to effectively deal with inevitable cyber-security breaches.

A Framework for Improving Critical Infrastructure Cybersecurity (the "Framework") was developed by the National Institute of Standards and Technology (NIST) and the Department of Homeland Security (DHS) in response to an executive order by the President of the United States to assist (a) owners and (b) operators in 18 critical infrastructure industries (ranging from energy to transportation and communications) in preparing for, preventing, mitigating, and responding to cybersecurity threats. The Framework draws heavily on existing technical standards (such as NIST 800-53 Rev 4, ISO 27001:2013, ISA 62443-2-1:2009, and COBIT 5) and addresses management of cybersecurity risks "for those processes, information, and systems directly involved in the delivery of critical infrastructure services".

The Framework Core (Core) is a set of cybersecurity activities, desired outcomes, and applicable references that are common across all critical infra-structure sectors and business. The Core presents industry standards, guidelines, and practices in a manner that allows for communication of cybersecurity activities and outcomes within an organization and across organizations/with the government. The Core defines 5 cybersecurity "Functions" that provide a high-level, strategic view of the lifecycle of an organization's management of cybersecurity risks. The Identify function mandates that an organization develop an enterprise-wide understanding of risks to systems, assets, data, and capabilities. The Protect function mandates that organizations develop and implement safeguards to assure continuous operation and delivery of critical infra-structure services during and after a cyberintrusion. The Detect function mandates that organizations develop and implement activities to timely identify, communicate, and escalate cyber-security threats within the organization and with critical private/ public partners. The Respond function mandates that organizations develop and implement appropriate activities to take regarding any detected cybersecurity event or intrusion. The Recover function mandates that an organization develop and implement activities to maintain resilience and to restore any capabilities and services that are degraded as a result of the inevitable unauthorized intrusion.

Within each Function, the Core defines Categories (such as Asset Management, Access Control, and Detection Processes) and subcategories (for specific outcomes of technical and/or management activities) with appropriate annotations to Information References (standards, guidelines, policies, and practices). Using the Core an organization can map its assets and vulnerabilities, as well as its response and remediation plans and provide a resource guide to help inform everyone within the enterprise of the scale of attack and the remediation being done.

The Framework also defines Implementation Tiers to classify organizations based upon their cyber-security readiness. The Tiers range from Partial (Tier 1 - where risk management practices are not formalized, there is limited awareness within the organization with respect to threats/responses, there are only ad hoc response systems and protocols, and there is no coordination outside of the organization) to Adaptive (Tier 4 - where continuous process improvements are integrated in an organization-wide manner with clearly defined channels of communication to critical infra-structure partners and governmental authorities). The clear intent is that organizations owning or operating critical infra-structure capabilities will progress over time from Tier 1 to Tier 4 status.

With respect to implementation, the Framework provides directions with respect to organizations creating a "Profile". The Profile is designed to map the Functions to current organizational capabilities. The result should be essentially a gap analysis that outlines deficiencies with respect to cyber-preparedness. The organization would use this gap analysis to develop a strategy to remediate cybersecurity deficiencies and improve responsiveness to cyber-intrusions.

Legal and Governance Implications of the Framework

Beyond the technological aspects, perhaps the most significant, and underappreciated, aspect of the Framework relates to the new oversight responsibilities with respect to cyber-security required from the Executive Level within an organization. The Framework makes it clear that cybersecurity is not just a technical problem to be addressed by information technology specialists. Instead, the Framework articulates cybersecurity as a core responsibility of the Executive Level (a defined term within the Framework).

This emphasis is consistent with the increasing focus on cybersecurity by board members and C-suite executives of US companies. In the Framework, the Executive Level is charged with communicating mission priorities, making appropriate resources available, and developing an overall risk tolerance within the organization as part of an integrated cybersecurity program. The Executive Level is also charged with monitoring outcomes. The implication is that board members and C-suite executives must exercise reasonable care and due diligence with respect to the cybersecurity of their companies as an integral part of their fiduciary duties (and may be charged with a breach of this fiduciary duty if they fail to be adequately informed or take commercially reasonable actions to remediate cyber-security issues). Such mandate would seem to anticipate a higher level of civil and potential shareholder liability at the board and C-suite level for cybersecurity breaches than currently exists under US law.

There may also be international implications with respect to the Framework. While designed to address US cyber-vulnerabilities, the Framework is clear that it is not country specific and was developed to create "a common language for international cooperation on infrastructure cybersecurity". This may be especially important for multi-nationals that either own or operate "critical infra-structure" within the US and create extra-territorial mandates for companies with facilities outside of the US that may be portals of entry for US cyber-intrusions. The Framework may also help inform the proposed Directive on Network and Information Security (the Directive) and Cybersecurity Strategy of the European Union, providing a technical framework and lexicon for articulating, and confirming compliance with, such Directive and Strategy. But there also appear to be substantial differences between the Framework and the Directive/ Strategy that will need to be rationalized, particularly with respect to privacy and civil liberties. The Framework does not contain controls for protecting privacy or civil liberties, instead noting that "not all activities in a cybersecurity program may give rise to [privacy and civil liberties] considerations". Such approach seems to create an inconsistency between the expansive (and mandatory) data-sharing arrangements anticipated under the Framework and the data protection schemas preferred under the EU Directive/Strategy. This disjunction is particularly troubling given the current state of Data Protection and Safe Harbor discussions between the US and the EU (especially where the Framework creates data sharing arrangements that are specifically prohibited in the EU).

On a national level, it is not clear whether the Framework will be generally adopted outside of the designated critical infrastructure industries. There is currently no governmental regulation mandating adoption even within even the critical industries for which the Framework was designed. Instead, the DHS has merely created a Critical Infrastructure Cyber Community (C3) Voluntary Program to offer technical assistance to organizations that want to implement the Framework. However, the Framework does seem to articulate "best practices" and may create an "industry standard" for all companies in the US against which cybersecurity failures may be judged in civil/commercial litigation. In this regard the "best practice" and "commercially reasonable" threshold set out in the Framework may represent a new basis for shareholder derivative suits against companies and C-level executives that fail to take steps as articulated in the Framework.

Summary and Conclusion

The Framework is clearly required reading for the nerds and geeks within an organization that deal with IT infra-structure on a daily basis. But indications are that the Framework must be reviewed at the highest level of a company, including at the board of director and C-suite level. Board members and C-level executives (who are legally charged with the fiduciary duty of due diligence and inquiry) cannot just assume that their IT professionals will be adequately dealing with the risks presented by digital intrusions. While board members and C-level executives can reasonably rely upon experts in this area to assist them, the Framework makes it clear that the strategy for protecting against cyber-intrusions (and the requirement to apply appropriate corporate resources against such cyber-intrusions) must come from the top of the enterprise. That being the case, it will be incumbent upon board members and C-level executives (and the lawyers and IT professionals providing board and C-level advice) to consider a process for adequately (and regularly) addressing cybersecurity during board meetings and C-level executive briefings, especially with reference to the new Framework.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Kelly Frey
Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions