United States: Electricity Sector Cybersecurity Risks Included In New Cybersecurity Executive Order

Norma Krayem is a Senior Policy Advisor in & Knight's Washington D.C. office

Directive focuses specifically on Cybersecurity Risks to the Electric Utility Industry and the "Most Critical of Critical Infrastructure"

On May 11, 2017, President Trump signed a long anticipated Cybersecurity Executive Order (EO), Strengthening the Cybersecurity of Federal Networks and Critical Infrastructure." It represents President Trump's first major cyber policy effort, aimed at addressing systemic cyber risks to the critical infrastructure and the Federal Government. Homeland Security Advisor Tom Bossert, during the press briefing announcing the signing of the EO stated: "I think the trend is going in the wrong direction in cyberspace, and it's time to stop that trend and reverse it on behalf of the American people. We've seen increasing attacks from allies, adversaries, primarily nation states but non-state actors, and sitting by and doing nothing is no longer an option."

The EO builds on and tracks concerns expressed by the White House, Congress as well as the U.S. Departments of Homeland Security (DHS) and Energy (DOE) over escalating cyber-attacks on utilities that could have operational impacts on delivery of service and resulting impacts on the rest of the economy. There are five immediate distinct policy and operational impacts on electric utilities, with potential regulatory and legal implications down the road as it is implemented. There will be a tremendous amount of work to achieve the deadlines listed throughout and it is critical for utilities to fully participate in the process.

I. Critical Infrastructure at Greatest Risk

Section 2 focuses on the sixteen designated Critical Infrastructure (CI) sectors of which the energy sector is one of the most important. The EO utilizes the underlying requirements of the February 2013 Executive Order 13636: "Improving Critical Infrastructure Cybersecurity" and Presidential Policy Directive (PPD 41), by focusing on the "most critical of critical sectors" also known as Section 9 companies. These are companies, and assets within companies, which have been designated by the Executive Branch as being at the greatest risk not only from a cyber-attack but one where an attack on the company, as defined by EO 13636, "could reasonably result in catastrophic regional or national effects on public health or safety, economic security, or national security."

The EO focuses on the national and homeland security implications of such an attack and directs DHS, in coordination with the U.S. Department of Defense (DOD), the Attorney General, the Director of National Intelligence (DNI), the FBI Director and the heads of appropriate sector-specific agencies to: "Identify authorities and capabilities that agencies could employ to support the cyber efforts" of the Section 9 companies and to engage these companies to see how these "authorities and capabilities" could help support the companies risk management efforts. A report is due to the President within 180 days with recommendations to "for better supporting the cybersecurity risk management efforts" of these companies.1 Certainly from there, we could see potential regulatory changes, other requirements and changes in expected preparedness.

II. Federal Evaluation of Electricity Sector Capabilities and Readiness

The EO singles out specific risks to the electricity sector and its ability to manage a sustained cyber-attack. The "Assessment of Electricity Disruption Incident Response Capabilities," section directs "the Secretaries of DOE and DHS, in consultation with DNI, State, local, tribal, and territorial governments, and with others as appropriate," to analyze:

  1. The potential scope and duration of a prolonged power outage associated with a significant cyber incident, (as defined in PPD 41) against the electric subsector;
  2. The readiness of the United States to manage the consequences of such an incident;
  3. Any gaps or shortcomings in assets or capabilities required to mitigate the consequences of such an incident.

There are continued and growing concerns over increased nation state attacks against the grid and how the attacks could have a ripple effect on the broader economy and other sectors. The EO requires a report to the President in 90 days to assess these risks, with the presumption that the Executive Branch will have to decide how to take some measure of corrective actions to address the risks that may have been identified.

III. Assessment of Risk Management Practices in Publicly Traded Companies

For those publicly traded utilities, EO cites potential concerns around the cyber risk management practices and requires DOC and DHS to review "the sufficiency of existing Federal policies and practices to promote appropriate market transparency of cybersecurity risk management practices by critical infrastructure entities" and report to the President within 90 days.2

IV. Resilience Against Botnets and Other Automated, Distributed Threats

The growth of the "Internet of Things" and the distributed threats from botnets brings shared risk across all critical infrastructure ecosystems. This is an area that is of concern to utilities as well and will be important to focus on. The process will be led by Commerce and DHS with a mandatory report due within 240 days.

V. Cybersecurity Workforce Development

The lack of qualified cybersecurity professionals is a challenge for all utilities and the EO focuses on the need and challenges that the public and private have in this area and could result in a more structured way to find, recruit and retain cyber professionals.


1. It is important to note that companies who may not be currently designated as a Section 9 entity are subject to that designation at any time. The designation is not "appealable" and once designated by the Federal government, it is more likely companies and additional assets would be added to the list, more unlikely for a company to come off the list.

2. As companies are aware, the Securities and Exchange Commission (SEC) made it clear several years ago that cyber is a "foreseeable risk" and is part of traditional disclosures of risk.

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.

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