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HSM in the New Digital Economy

Cryptography, in its simplest definition, generates code that allows data to be kept secret. And at the core of cryptographic operations is the creation of a key that is used to encrypt and decrypt that data. The challenge of both generating cryptographic algorithms and protecting the resulting keys led to the rise and popularity of specialized computers called hardware security modules (HSM). However, as the internet and cloud computing has driven the creation of a digital economy, where goods and services are transacted over mobile devices, the physical security afforded by HSMs has created challenges in the development of flexible, scalable and agile business applications. So the dilemma businesses find themselves in, is how to reap the security benefits of HSMs yet innovate at cloud scale in a digital economy where transactions occur everywhere and anywhere, across untrusted environments.

In this blog we take a brief look at HSMs, their role  in security and the challenges that lie ahead. 

What is an HSM? 

A hardware security module (HSM) is a physical computing device purpose-built for performing cryptographic processes (e.g., generating keys, encrypting and decrypting data, creating and verifying digital signatures) and managing the encryption keys associated with those processes. They can also be used to strongly enforce security policies and access controls.  

HSMs are produced in different form factors that can include plug-in cards, USB devices and external network connected appliances. 

Why Are HSMs Trusted by Businesses? 

To mitigate the possibility of misuse and improve security, the HSM usually has a hardened OS (operating system) which means it can only perform specific functions, vis-a-vis a general computing device with a standard OS. 

Built to be tamper resistant, the HSM may have limited network access, that is managed by security policies and can even be “air-gapped” which means it is not connected to unsecured systems and networks.  

A true air gapped computer is also physically isolated, meaning data can only be passed to it physically (via USB, removable media or a firewire with another machine). 

What Is the Security Level of HSMs? 

While HSMs are a trusted environment to protect against external threats, the software on the HSM for encrypting or tokenizing data can vary by manufacturer as there is no single standard way to encrypt information.  

Various encryption schemes can use different algorithms which have different corresponding effectiveness in protecting data. The U.S. federal government, however, has set an encryption standard for its non-military agencies that has been widely adopted in the commercial sector.  

FIPS (Federal Information Processing Standards) is a set of standards that describe document processing, encryption algorithms and other information technology processes for use within non-military federal government agencies and by government contractors and vendors who work with these agencies.  

How Are HSMs Used For Protecting Your Critical Data? 

HSMs are often considered a “root of trust,” or “trust anchors” designed to protect highly critical and sensitive keys and assets.  

This means the infrastructure of applications, people and systems that have access to the HSM can trust the keys and other cryptographic information it receives from the HSM to be of high integrity. 

HSMs as a root of trust assures the security of data and applications and helps to build confidence in the overall ecosystem. 

Can HSMs Meet the New Requirements of the Mobile Digital Economy 

As modern networks expand, they are increasingly borderless in a mobile, digital driven economy. In this environment, devices and applications at the edge of the network are not protected by the proverbial corporate firewall and must communicate over untrusted networks 

While HSMs have been established as a root of trust in the datacenter, modern applications and the digital economy have created new requirements around flexibility, customization, scalability and ease of use.  

More sensitive data is being stored in public clouds, as a result of the acceleration to digital business models. Modern development approaches to create applications that drive digital services are now consumed mostly on mobile devices. However, the acceleration to cloud business models has also increased complexity as organizations must manage hybrid datacenters, that have legacy infrastructures, and orchestrate workload and data cloud migrations. 

Part of this reality is that data, transactions, identities and digital assets are operating in untrusted environments on mobile devices, and on public clouds in containers where the customer is responsible for data security. 

And as advanced threats continue to escalate, rendering traditional enterprise security unable to prevent breaches, the ability to encrypt everywhere and anywhere the organization operates becomes critical to business success. 

 Watch our Webinar On Demand to learn more about how enterprises mitigate the risks associated with a digitized economy. 

Taking “Hardware” Out of the Hardware Security Module 

To meet these requirements a new category of cryptography software, that is FIPS 140-2 certified, has emerged that provides hardware type protection without the hardware.  

Utilizing technologies like multiparty computation (MPC) which splits encryption keys into shares, so the key never exists in complete form at any point in time, businesses can now get the security and assurance of data integrity in a flexible, scalable, modern software solution. These software systems can perform all the required cryptographic processes and can also integrate with physical HSMs when requirements mandate key storage on a hardware device.