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NIS2 and the requirement for X.509 certificates

Insights to NIS2 and X.509, PKI topics

Feby 23, 2024

Introduction

The National Institute of Standards and Technology (NIST) recently proposed a new set of guidelines called NIST Special Publication 800-204B (NIST SP 800-204B) or NIS2 for short. NIST develops technology standards and guidelines for federal agencies and critical infrastructure operators in the United States.

NIS2 provides guidance on enterprise security configuration baselines to improve the cybersecurity posture of organizations. A key recommendation in NIS2 is to mandate the use of X.509 digital certificates for authentication and data encryption.

X.509 certificates are a common method for establishing secure communications and verifying identity online. They are used in technologies like HTTPS websites, VPNs, email encryption, and more. By requiring X.509 certificates, NIS2 aims to eliminate the use of weaker authentication methods and improve overall security.

However, mandating any new technology or process can be challenging to implement. NIS2 has generated discussion around the costs, technical hurdles, and policy implications of requiring X.509 certificates. Still, many believe the long-term security benefits will outweigh the growing pains of adopting this standard.

What are X.509 Certificates?

X.509 is a standard defining the format of public key certificates that are used to secure communications over networks and the internet. X.509 certificates are a crucial element of Transport Layer Security (TLS), the protocol that powers HTTPS secure web connections.

An X.509 certificate contains information identifying the owner of the certificate as well as their public key. This allows others to verify the identity of the certificate owner. X.509 certificates are digitally signed by a certificate authority (CA), which is a trusted third-party organization that validates and vouches for the certificate owner's identity.

When a web browser connects to a website secured with HTTPS, the website provides its X.509 certificate to the browser. The browser verifies the certificate signature against the CA's certificate, which it already trusts. This allows the browser to authenticate the website and establish an encrypted TLS connection.

X.509 certificates form a chain of trust that underpins secure internet communications. They provide authentication, integrity, and confidentiality when paired with asymmetric encryption between the certificate owner's public key and private key. Widely deployed on the internet, X.509 certificates are a crucial standard in public key infrastructure (PKI).

Why Mandate X.509 Certificates?

Digital certificates provide a proven method for strong authentication and securing communications and transactions. Mandating the use of X.509 certificates offers several key benefits:

  • Improved security - X.509 certificates utilize public key cryptography to provide robust authentication of identities and validation of digital signatures. This prevents man-in-the-middle attacks and ensures the integrity of data. Mandating certificates enhances defenses against hacking, data breaches, and fraud across networks and systems.

  • Better authentication - Certificates bind a public key to a specific entity through a trusted third party. This assures that an entity is who they claim to be when connecting to a system or service. Mandating certificate use enables proper access control and prevents impersonation or spoofing.

  • Enhanced trust - X.509 certificates are issued by certificate authorities, which validate identity and provide a chain of trust. Mandating certified keys enhances confidence in the authenticity of systems, devices, applications and even content.

  • Standardization - X.509 is a long-established global standard that provides interoperability across platforms and vendors. Mandating X.509 certificates provides a consistent security mechanism and policy, avoiding fragmentation.

  • Accountability - Certificates provide a traceable identity that can be revoked if compromised. This ensures accountability and the ability to blacklist bad actors. Mandated certificate use is essential for auditing and security forensics.

  • Scalability - The X.509 infrastructure readily scales to provide identity services for individuals, devices and systems. Mandated certificate use enables improved security even as networks grow.

Mandating verified digital certificates provides assurance that all participants and components in a system or network are authorized and validated under a uniform security policy. This results in a more trusted ecosystem.

Challenges of Mandating X.509

Implementing mandatory X.509 certificate usage across all devices and applications will not come without its difficulties. Here are some of the key challenges involved with requiring X.509 certificates:

Costs

  • Certificates must be issued by a trusted Certificate Authority (CA), which costs money. This includes the price paid to the CA for the actual certificates, which varies based on factors like type of certificate, validation level, and quantity purchased.

  • There are administrative costs involved with managing certificates at scale across an organization's IT infrastructure and all endpoints. This includes expenses related to purchasing certificate lifecycle management software, dedicated personnel to oversee the program, and integrating certificates into existing systems and processes.

  • End users may need to purchase certificates for their personal devices to connect to certain networks and applications. This imposes a cost on individuals.

  • Upgrading existing systems and applications to support mandatory X.509 certificates will require investments of time, money, and effort in many cases. Legacy systems not designed for certificate-based authentication may be particularly challenging.

Compatibility Issues

  • Requiring certificates could cause compatibility problems with older systems and IoT devices that are not equipped to support X.509 certificates. Complete ecosystem uniformity is difficult.

  • Similarly, certificates may not work smoothly across all applications, networks, operating systems, and web browsers. There are often compatibility issues to resolve.

  • Mandating certificate use for consumer applications and websites could cause usability issues or lack of access for some users on older devices or those without technical expertise to install certificates.

  • If certificates are not implemented properly across the board, users could encounter confusing errors, lack of connectivity, or inability to access resources.

  • Deprecating existing forms of authentication too quickly in favor of certificates risks compatibility problems if the transition is not smooth.

Overcoming these challenges takes careful planning, cross-industry collaboration, and phased rollouts focused on interoperability. For mandatory X.509 certificates to work at scale, costs must be kept reasonable and technical hurdles must be identified and smoothly addressed over time.

Implementing Mandatory X.509

Implementing mandatory X.509 certificate use will require changes for both industry and individual users. There will likely be a multi-year timeline to allow organizations and people to comply with the new requirements.

Industry compliance will require certificate authorities to issue standard X.509 certificates to companies and organizations. Companies will need to install these certificates on their websites and services to enable encrypted HTTPS connections. Strict protocol enforcement and audits may be necessary to ensure universal compliance.

For individuals, their devices, browsers and apps will need to be updated to exclusively trust and use X.509 certificates for secure connections. There may be provisions to assist low income individuals or those with older devices transition to compliant tools. Some legacy apps may stop working unless they are updated to support mandatory certificates.

A public education campaign will be needed to inform citizens of the timeline and requirements. Resources should be provided to help individuals understand what X.509 certificates are, why they are important, and how to use them properly. Support channels and personnel should be made available in case users have issues installing certificates or encounter problems.

The transition period will likely take 2-5 years to allow enough time for organizations and individuals to comply. During this period, warnings and incentives can help urge adoption before hard cutoff dates when non-compliant connections could be blocked. With careful planning and execution, mandating X.509 certificates can improve baseline security without being overly disruptive.

Industry Reaction

The proposal to mandate X.509 certificates has received a mixed reaction from the tech industry. Many companies recognize the potential security benefits but also have concerns about implementation.

Support

Some major technology companies like Microsoft and Apple have expressed support for mandatory certificates. They argue it will help improve security for all internet users and prevent cyberattacks and fraud through stronger identity verification. Proponents say the change is long overdue as the internet has evolved rapidly while identity systems remained stagnant.

Enterprises handling sensitive customer data are also eager for mandatory certificates to reduce phishing and enhance trust. The financial industry in particular has urged regulators to mandate certificates to combat growing online fraud.

Concerns

However, parts of the tech industry have raised objections about the burden and costs of implementing mandatory certificates across all websites and services. Internet infrastructure providers worry about the technical challenge of scaling a complex PKI system globally. Startups and smaller companies argue the transition costs may stifle innovation.

Open source advocates caution that restricting anonymous internet access could infringe on privacy and freedom of speech. They argue identities must remain optional in some cases. Civil liberties groups have also raised concerns about building a universal identity system that could be exploited for surveillance.

The debate highlights how increased security often collides with the openness ethos of the early internet. Tech companies agree universal X.509 certificates offer major security upgrades but disagree on how they should be implemented and enforced. Striking the right balance will be crucial as regulators push forward.

User Impact

End users will experience some changes when mandatory X.509 certificate use becomes commonplace. While the security benefits are substantial, it will require some adjustment from users.

The most significant impact will be during the login process. With X.509 certificates, users will need to enter a PIN or use a smart card in addition to memorized credentials. This adds an extra step, though many feel it is warranted for the enhanced security.

Users will also need to become accustomed to managing their personal X.509 certificates. Certificates have expiration dates, so users will need to proactively renew them to avoid losing access. This may require interacting with a certificate authority and paying renewal fees on occasion.

Additionally, the loss or theft of a smart card or cryptographic token that contains the certificate will require users to obtain replacements. This has monetary costs and can mean downtime without access. Users will need to be increasingly vigilant about the physical security of their certificates.

The learning curve for users may be steep at first. But over time, certificate use should become second nature. And users stand to benefit significantly from reduced identity theft and fraud. With proper education and preparation, organizations can successfully guide users through this transition.

Security Benefits

Mandating X.509 certificates for security regulation provides several key security benefits for users and organizations.

X.509 certificates utilize strong encryption algorithms like RSA or ECC to encrypt and digitally sign communications and data. This protects the confidentiality and integrity of sensitive information against eavesdropping or tampering. Certificates also enable authentication, allowing verification of identities and preventing impersonation.

By mandating X.509, regulators aim to harden security across entire industries. All regulated entities must implement proper encryption, authentication, and identity management per best practices. This raises the baseline security posture across the board.

Certificates also facilitate automation and policy enforcement. Organizations can configure systems to automatically verify certificates before allowing access or transactions. Strict certificate vetting procedures like Certificate Authority Browser Forum standards can prevent fraudulent or expired certificates from being trusted.

Finally, mandated certificate use discourages organizations from using self-signed certificates which are vulnerable to man-in-the-middle attacks. It pushes adoption of certificates signed by trusted certificate authorities using proper validation. This shores up trust in digital identities and cryptographic infrastructure.

Overall, mandatory X.509 certificate use represents a major step forward for security, putting strong encryption and authentication into widespread practice. Users and regulated entities gain substantial protection against contemporary threats.

Looking Ahead

Security standards and regulations will continue to evolve as technology changes. While mandating X.509 certificates represents an important step forward for NIS2 security, it is unlikely to be the final word.

As new vulnerabilities emerge, we can expect revisions and updates to these certificate requirements. For example, future versions of NIS2 may mandate larger key sizes, different cryptographic algorithms, or additional identity proofing steps. Standards bodies will need to balance security against compatibility and ease of implementation.

Beyond the technical specifications, the legal and compliance side could see adjustments too. Policymakers may expand mandatory certificates to more devices and use cases. We may see tweaks to revocation checking rules or certificate lifetimes. Auditing and enforcement mechanisms will probably mature over time.

Perhaps farther in the future, different technologies like quantum-resistant encryption or decentralized identity management may necessitate a whole new certificate infrastructure. But for now, mandatory X.509 represents a major upgrade. Implemented thoughtfully, it will provide immediate security and privacy benefits to users. While the road ahead will require continued vigilance, widespread certificate-based authentication is a milestone worth celebrating.

Conclusion

Mandatory security standards like NIS2 and required use of X.509 certificates will mark an important milestone in protecting devices and data from attacks. As digital systems become more interconnected, requiring strong identity and authentication measures through public key infrastructure will greatly reduce vulnerabilities.

While any regulation faces challenges in implementation, the long-term benefits for security are clear. Users may need to adjust to new requirements, but broad adoption of X.509 certificates will make the internet ecosystem more secure. Companies developing connected products will need to build in support during design phases.

In an age of rampant data breaches and device hacking, governments are right to exercise their authority to mandate baseline security protocols. The impacts should far outweigh any temporary growing pains. With proactive efforts by both regulators and technology companies, NIS2 and X.509 certificates can usher in a new era of trust and integrity for digital services and platforms. The need for security transcends any singular technology, business model or national border.

References

NIS2 Umsetzungsgesetz

NIS2 wer ist betroffen

NIS2 Richtlinie

NIS2 Anforderungen

NIS2 Deutschland

NIS2 Richtlinie

Regulierte Unternehmen

Umsetzungsgesetz

NIS2, Zertifikate und PKI

Introduction to NIS2

What companies need to know about NIS2

Jany 18, 2024

NIS2

The Network and Information Systems (NIS2) Directive is a new set of cybersecurity rules that will replace the current NIS Directive in the European Union. It was proposed by the European Commission in 2020 to update and strengthen the EU's cybersecurity regulations.

The key drivers behind NIS2 are the growing cybersecurity threats and risks faced by organizations and the need for improved cyber resilience. High-profile cyber attacks like WannaCry and NotPetya exposed vulnerabilities in critical infrastructure and essential services across Europe. There was a clear need to upgrade security requirements and reporting obligations.

The main goals of NIS2 are to:

  • Expand the scope of companies covered by cybersecurity rules. The current NIS Directive only applies to operators of essential services, whereas NIS2 will cover a much broader range of sectors.

  • Introduce more prescriptive security requirements and controls that organizations must implement. This aims to improve baseline cybersecurity across the EU.

  • Require more extensive cybersecurity incident reporting so authorities can respond to threats.

  • Ensure closer regulatory oversight over cyber risk management in key industries.

  • Harmonize cybersecurity rules and supervision across the EU's single market.

NIS2 will replace the current NIS Directive which came into force in 2016. The new cybersecurity rules aim to modernize and strengthen the EU's defenses against rapidly evolving cyber threats.

Who Does NIS2 Apply To?

The NIS2 regulation applies to organizations across all sectors that meet certain criteria related to their size and type of service. Key factors that determine if an organization falls under NIS2 include:

  • Public administration entities - All public administration entities that provide services essential to the maintenance of critical societal and economic activities are covered under NIS2 regardless of their size. This includes government bodies at the national, regional, and local levels.

  • Financial institutions - Credit institutions, insurance companies, investment firms, and crypto-asset service providers are covered by NIS2 if they have 250 or more employees.

  • Energy sector - Electricity and gas suppliers, electricity and gas transmission system operators, distribution system operators, and thermal energy suppliers are included under NIS2 if they serve over 100,000 customers.

  • Transport sector - Air, rail, water, and road transport companies are subject to NIS2 regulations if they transport over 10 million passengers annually in the EU.

  • Health sector - Healthcare providers (hospitals, private clinics, care homes, etc.) are covered by NIS2 if they have over 500 employees. Additionally, manufacturers, suppliers, and distributors of medicinal products and medical devices fall under NIS2 if they have over 250 employees.

  • Drinking water supply and distribution - Companies involved in supplying and distributing drinking water are included if they serve over 500,000 individuals.

  • Digital infrastructure - Digital providers like cloud computing services, data center services, DNS services, TLD name registries, and content delivery network providers are subject to NIS2 if they have over 10 million users in the EU.

So in summary, NIS2 applies broadly to both public and private entities across sectors like energy, transport, health and digital infrastructure if they meet employee count or service population size thresholds. All public administration bodies are covered regardless of size.

New Security Requirements

The NIS2 regulation introduces several new mandatory security requirements for companies in scope:

Security Risk Management

NIS2 requires organizations to implement a comprehensive security risk management framework. This includes regularly conducting risk assessments, implementing appropriate controls to mitigate identified risks, and documenting the risk assessment process. Risk assessments must consider risks to network and information systems as well as data.

Organizations will need to devote more resources to continuously managing cybersecurity risks under NIS2. Formal risk management policies and procedures will likely need to be implemented by companies that have not already done so.

Supply Chain Security

Under NIS2, companies will be required to carefully evaluate cyber risk within their supply chains and from third-party providers. Organizations must establish minimum cybersecurity requirements for suppliers and regularly audit third-party compliance.

Supply chain security practices like vendor risk assessments, security questionnaires, and on-site supplier audits will become mandatory for companies in scope. More rigorous screening and monitoring of service providers will be needed.

Encryption Standards

NIS2 mandates state-of-the-art encryption for personal data both in transit and at rest. Pseudonymization and key management procedures will also need to be implemented.

Companies will have to examine their existing data security controls and upgrade encryption technologies where needed to comply with the new standards. Investments in encryption tools and staff training will be required.

Incident Reporting

Companies need to be aware of the requirements for reporting security incidents and breaches under NIS2. The regulation expands the types of incidents that entities need to report compared to the current NIS Directive.

NIS2 requires reporting on incidents having a “substantial impact” on the services you provide. This includes incidents affecting the security of:

  • Network and information systems
  • User data
  • Core functions delivered

Incidents must be reported within 24 hours of the company becoming aware of it. This timeframe is reduced compared to the previous NIS Directive that allowed 72 hours for reporting.

The specific incidents that require reporting under NIS2 include:

  • Cyber attacks
  • System failures or outages
  • Data leaks or breaches
  • Loss of data or ability to control systems

Reporting applies not just to successful incidents but also unsuccessful cybersecurity attacks and threats.

Companies will need to implement internal processes and teams responsible for monitoring systems, detecting incidents, determining if they are reportable, and submitting the report within 24 hours as required. Dedicated staff and training will be key to timely and effective incident reporting.

Failing to report qualifying incidents under the regulation can result in significant penalties. However, the reporting is intended to improve collaboration and transparency around cyber risks, not solely for punitive enforcement.

Penalties for Non-Compliance

Companies that fail to comply with NIS2 face significant penalties in the form of fines as well as reputational damage.

Financial Penalties

Under NIS2, financial penalties for non-compliance can amount to as much as 10 million euros or 2% of a company's total worldwide annual revenue from the preceding financial year, whichever is higher.

Fines will be imposed based on factors such as the nature, gravity and duration of the infringement, whether it was intentional or negligent, previous infringements, and the financial strength of the entity.

Reputational Damage

In addition to financial penalties, companies that fail to comply with NIS2 also risk significant reputational damage.

Customers, business partners and investors are likely to lose trust in companies that demonstrate weak cybersecurity and an inability to detect, respond to and recover from cyberattacks.

Non-compliance can also damage a company's reputation with regulators and policymakers, hurting their ability to influence future regulations.

The stigma of non-compliance, penalties and enforcement actions can also harm an organization's ability to win new business, retain talent and attract investment.

In today's data-driven world, reputational damage from poor cybersecurity and non-compliance with regulations like NIS2 can have long-lasting impacts that resonate across many aspects of an organization.

Implementation Timeline

The NIS2 directive sets out a phased implementation schedule for organizations to achieve compliance. Here are some key dates for the timeline:

  • May 2023 - NIS2 directive finalized and adopted into law across EU member states.

  • November 2023 - Identification of essential and important entities that fall under NIS2. This is based on sector/subsector criteria outlined in the directive.

  • May 2024 - Essential entities must comply with NIS2 requirements like risk management, reporting obligations, and security standards.

  • November 2024 - Important entities (excluding small and micro enterprises) also need to comply.

  • May 2025 - Small and micro important entities required to comply.

  • May 2026 - First review of NIS2 implementation by EU Commission. Future reviews will occur every 2 years after.

  • May 2028 - Potential scope expansion to cover additional sectors/subsectors.

The deadlines aim to phase-in compliance obligations first for essential entities on critical infrastructure like energy, transport, and banking. The obligations then extend to important entities over the next 1-2 years.

Key tasks like risk assessments, incident reporting processes, and security policies will need to be in place before the deadlines to avoid penalties. With the timeline now clear, affected companies should start preparing as soon as possible.

Steps to Prepare

Preparing for NIS2 compliance will take planning and resources. Here are some key steps organizations should take:

Conduct a Gap Analysis

  • Review your current security policies, procedures, and controls to identify gaps where you may fall short of NIS2 requirements. Look at areas like access controls, encryption, vulnerability management, logging/monitoring, and incident response.

  • Document where you will need to implement new controls or improve existing ones to meet the new standards. Prioritize the highest risk gaps.

Update Policies

  • Revise information security, cybersecurity, and related policies to address NIS2 requirements. Ensure senior management approves the updated policies.

  • Key policies to review are information security management, access controls, encryption, supplier security, security monitoring, vulnerability management, and incident response.

Evaluate and Deploy New Tooling

  • Assess existing security tools and determine if new solutions are required to meet NIS2 mandates around logging, monitoring, vulnerability scanning, and automated incident response.

  • Budget for any necessary new software, services, or hardware to improve security capabilities. Leverage solutions that integrate well for efficient operations.

  • Implement and test new tooling in time to meet NIS2 deadlines. Train staff on proper utilization of new systems.

Cost of Compliance

With any new regulation comes costs for implementation and ongoing compliance. Companies will need to budget for NIS2 preparation and make the required investments. While the costs will vary based on the size and complexity of an organization's operations, some estimates put the average initial compliance costs between €300,000-€600,000 for a medium-sized company. Larger enterprises could spend over €1 million.

These costs include:

  • Consulting fees to interpret the regulation and provide guidance for implementation
  • Technical costs like new systems, network upgrades, and security tools
  • Increased staffing and training for security teams
  • Administrative expenses for new documentation, policies, and procedures
  • Audit and certification fees

The good news is that many of the required security practices represent sound cyber hygiene that organizations should be doing anyway. While NIS2 mandates a higher level of rigor and reporting, the investment pays off in improved security and reduced risk overall. Proactive organizations may already have 70-80% of required measures in place.

The return on investment comes from avoided costs of security incidents, fines, legal liabilities, and reputation damage. A serious cyber attack could cost a company millions in recovery efforts alone. Compared to that, the costs of compliance are modest. Furthermore, customers and business partners will have more trust working with certified secure organizations.

Overall, NIS2 compliance costs should be viewed as an investment in a company's long-term security posture and resilience. With proper planning and strategic implementation, organizations can contain costs while positioning themselves for success in the expanding digital economy.

Certification Requirements

NIS2 introduces mandatory cybersecurity certifications for companies in critical sectors like energy, transport, and banking. Organizations will need to undergo comprehensive audits by accredited conformity assessment bodies to certify their compliance with the new cybersecurity requirements.

The specific certification will depend on the sector and size of the company. Larger organizations are expected to obtain the highest level of certification, which involves a detailed audit of their policies, processes, and technical controls. Smaller companies may opt for a lighter-touch self-assessment and certification process.

The certification audits will evaluate aspects such as:

  • Security policies and governance
  • Risk management practices
  • Staff training and awareness
  • Incident response capabilities
  • Encryption and access controls
  • Network security monitoring
  • Supply chain risk management

Obtaining certification will likely be a significant undertaking for most companies. They will need to devote resources to prepare for the audits, implement any missing controls, and maintain certification over time through periodic re-audits.

Using certified cybersecurity auditors can help companies identify gaps, meet the certification criteria, and demonstrate due diligence. But the audits may also reveal vulnerabilities that need to be addressed.

Overall, mandatory cybersecurity certifications will provide third-party validation of companies' security postures. But they also represent a considerable compliance burden that organizations should start preparing for now.

Looking Ahead

The cybersecurity landscape is continuously evolving as new threats emerge and the scale and sophistication of attacks increase. While NIS2 represents the current standard for critical service providers, it's likely that regulations will continue to adapt to meet future challenges.

Some developments we're likely to see following NIS2 include:

  • Expanded scope: As more sectors digitize critical services, the range of entities considered essential service operators could expand. For example, manufacturing, transportation, and healthcare may eventually fall under NIS2 mandates.

  • Stricter requirements:Thresholds for compliance may be lowered over time or new security controls added as risks increase. For instance, the frequency of audits and penetration testing could increase.

  • Greater harmonization: NIS2 aims to harmonize cybersecurity standards across the EU. But requirements still vary between member states. Further alignment of national cybersecurity laws is likely.

  • New attack vectors: Emerging technologies like IoT, AI, and quantum computing could introduce new cyber risks not addressed under NIS2. New guidelines around data security, software security, and supply chain integrity may emerge.

  • Closer public-private cooperation: Information sharing and coordinated responses between government agencies and critical service operators will likely expand. Developing cyber threat intelligence capabilities will be key.

  • Comprehensive resilience strategies: There will likely be greater emphasis on holistic resilience to cyberattacks, like improved continuity planning, backup systems, and crisis management.

While the specific changes are unpredictable, one thing is clear: cybersecurity regulations will continue advancing to address new complex threats. NIS2 compliant companies will be better positioned to adapt to the evolving regulatory landscape. But continued vigilance and proactive security will be essential to withstand the challenges ahead.