Here’s the Real Problem….

In two recent posts (here and here), I laid out the case for saying there will be no further development of the CIP standards in their present form, except for compliance with future FERC orders. But why is this a problem? Maybe NERC CIP is just fine as it is….No, I’m afraid that’s not the case.

In those two posts, I discussed one serious consequence of this situation: that NERC entities will never have definitive answers to any interpretation questions about CIP v5 and v6. And there are many of these!

This is of course a serious problem for NERC entities subject to the CIP standards, but it isn’t for the general public. The degree of protection against the consequences of a large-scale cyber attack that the CIP standards afford them (and I have said multiple times that CIP compliance has clearly made the industry much more secure than it would be otherwise; the problem is the huge and rising cost that goes along with the current prescriptive CIP compliance framework) is in no way diminished by the fact that there has been so much confusion over what the v5 and v6 standards mean. The lights will stay on, regardless of how many CIP compliance professionals spend long nights trying to figure out how to comply with ambiguously-worded requirements.

But there actually is another very serious problem that ultimately can and will affect the general public, due to the fact that CIP won’t ever be expanded: CIP will never be amended or expanded to address threats that the standards don’t currently address. CIP already doesn’t address some of the most important cyber threats today, and that problem will keep growing, since new threats are always appearing.

I’ll admit this is a problem that’s been around for a long time. Exhibit A is phishing – a threat that was probably recognized about 7 or 8 years ago (I don’t believe I’d ever heard this word until then, perhaps later than that). The current standards do nothing to address phishing (and don’t tell me that quarterly security awareness efforts are in any way adequate to mitigate any of the risk posed by phishing!); this isn’t surprising, given that the framework for CIP v5 and v6 was laid in 2008. That was when FERC issued Order 706, which approved CIP v1 but also ordered NERC to make a number of changes; CIP v5 was the culmination of the effort to address the directives in Order 706 (indeed, the drafting team that was put in place after 706, which drafted CIP versions 2 through 5, was called the CSO 706 drafting team, where CSO stands for “Cyber Security Order”).

A standard practice for NERC, in drafting a SAR for a new drafting team to address a FERC order, is to keep that SAR as narrow as possible – if possible, only including what is in the order itself. And with Order 706 – which weighed in at over 600 pages – NERC had all sorts of motivation not to go beyond the order. Even addressing what was in the order – or as much of it as NERC felt they could address – took five years! So, even though phishing quickly grew in importance as the years went on, NERC never even considered adding it to the threats addressed in CIP, since it wasn’t mentioned in Order 706. This means that now we have the situation in which at least one study found that 91% of cyberattacks start with a user clicking on a link or attachment in a phishing email (and both of the Ukraine attacks started that way!), yet CIP has absolutely nothing to say about phishing.

Of course, I’m not at all saying that utilities aren’t hyper-vigilant about phishing; in fact, the same study found that utilities had the third-lowest phishing success rate of the ten industries studied. I have heard of one large utility that has a “four strikes and you’re out” policy. Pursuant to that policy, regular test emails are sent to all employees. An employee who clicks for the first, second or third times is sent to increasingly serious training and given increasingly explicit warnings. On the fourth click, they’re fired, with no appeal possible (and in theory, the CEO isn’t exempt from this!). This may seem pretty harsh, but given the serious threat that phishing poses to any organization, in my opinion this is appropriate.

And phishing certainly isn’t the only threat not addressed by CIP. How about ransomware? How about purely destructive non-ransomware, exemplified by Not-Petya? How about the many possible threats that come with virtualization? How about the many threats attendant on storing BCSI in the cloud (which, as I discussed in a series of posts this year starting with this one, is allowed by CIP v5)? I’m sure there are a lot more that don’t come to mind at the moment.

None of these are new threats, yet not only are they not addressed by CIP now, none of them except virtualization have even been included in a NERC SAR (and as my recent post on virtualization asserted, the drafting team whose SAR this is included in will almost certainly never even submit the required new requirements and definitions to the NERC ballot body for approval). I think the last new threats that were addressed in CIP are the threats posed by Transient Electronic Devices and Removable Media; and these were only addressed because FERC ordered this (in Order 791 for Medium and High assets, and Order 822 for Lows).

And why aren’t these threats addressed in CIP v5 or v6, or at least set to be addressed by the CIP Modifications drafting team? Because addressing a new threat requires a tremendous multi-year effort: coming up with 3-4 major drafts of the new requirements and definitions, submitting these to the NERC ballot body, responding to the voluminous comments on each draft, submitting the final approved draft to the NERC Board, and finally to FERC for their approval. And should FERC decide they want some changes in the new requirements or definitions, a new drafting team (or perhaps the original one) will have to go through the same process again. It isn’t at all surprising that NERC practically has to have a gun at their head before they’ll propose that CIP be expanded to address a new threat.

Of course, NERC does have other ways of dealing with new threats, most notably the NERC Alerts, which have been used in the cases of the Aurora vulnerability and the Ukraine attacks, as well as in other cases. These aren’t mandatory standards, but they require NERC entities to report on what they are doing to address these threats – which is pretty close to mandatory, in my opinion. And as I said, probably all of the larger NERC entities are very attuned to new threats, and consider any new warning from the E-ISAC or other industry bodies as something that needs to be acted on.

But this just means that, in today’s utility environment, cyber threats are addressed using a hodge-podge of mandatory requirements (the CIP requirements), non-mandatory “requirements” (the NERC Alerts), and all sorts of different best practices. Except for CIP compliance, there is very little uniformity in how NERC entities are dealing with these threats, and even with CIP there is lots of variation among entities in how they comply.

Just as importantly, the fact that there isn’t any uniformity in how NERC entities deal with threats – both old and new ones – means that entities will almost always spend most of their time and resources on the threats included in the CIP standards (malware, remote access, etc), and less time and resources on threats not included in CIP (phishing, ransomware, etc). This is frankly a mis-allocation of resources, since in an ideal world each entity would look at all the threats it faces, rank them based on their potential impact, and prioritize their spending accordingly. Prescriptive CIP requirements inevitably result in too many resources being spent on certain activities, compared to others that might be of equal benefit but aren’t included in CIP at all. My poster children for this are CIP-007 R2 Patch Management and CIP-010 R1 Configuration Management. Both of these are important activities, but both consume disproportionate amounts of resources (especially in large organizations) vs. addressing threats like ransomware and phishing (if you have some time on your hands, you can find a rather voluminous discussion of this problem in this post).

You might now ask how I would fix this misallocation problem, given that there have to be mandatory standards (which I totally agree with). As some of you may know, this spring I started advocating a new critical infrastructure compliance regime that includes six parts:

1.                   The process being protected needs to be clearly defined (the Bulk Electric System, the interstate gas transmission system, a safe water supply for City X, etc).

2.                   The compliance regime must be threat-based, meaning there needs to be a list of threats that each entity should address (or else demonstrate why a particular threat doesn’t apply to it).

3.                   The list of threats needs to be regularly updated, as new threats emerge and perhaps some old ones become less important. Ideally, there will be an industry body that meets regularly to assess new threats, as well as document new mitigations. They will add important new threats to the list, and potentially remove threats that are now of less importance.

4.                   While no particular steps will be prescribed to mitigate any threat, the entity will need to be able to show that what they have done to mitigate each threat has been effective.

5.                   Mitigations need to apply to all assets and cyber assets in the entity’s control, although the degree of mitigation required will depend on the risk that misuse or loss of the particular asset or cyber asset poses to the process being protected.

6.                   It should be up to the entity to determine how it will prioritize its expenditures (expenditures of money and of time) on these threats, although it will need to document how it determined its prioritization.

Let’s focus on parts 2 and 3, since these are the ones that are important for this post. Part 2 essentially means that all of the CIP requirements should be replaced with just one, which reads something like “On a risk-adjusted basis, take steps to mitigate all threats on the current threat list, or document why a particular threat doesn’t apply to your organization.” And part 3 calls for an industry body to make regular updates to the threat list.

In my opinion, this is the right approach because it requires the entity to do what they would normally do in the absence of CIP: identify all current threats, rank them by impact, and allocate resources to mitigate them according to that ranking (with the stipulation that some threats may pose so little risk, or they may not be relevant to the entity for some reason or another, that they may be left out altogether – although the reasons for this will need to be documented!). But this process will be mandatory, not just one of those nice-to-haves that we all never quite get around to.

I hope you see how the subject of this post – the fact that it’s very unlikely any further cyber threats will be incorporated into the current NERC CIP compliance regime – is addressed by my third point. New threats will be fairly easily incorporated into my proposed new CIP compliance regime because there will no longer be any need to develop new requirements, or modify existing ones. The single requirement that I sketched out two paragraphs ago doesn’t ever need to be changed, regardless of the new threats that come along. The industry body I’m suggesting will be able to update the threat list simply through a majority vote (or perhaps a super-majority vote) of its members.

So could all of the problems with CIP be fixed by throwing out all of the current standards and replacing them with my single requirement, as well as the six points? The problem is that what I’m suggesting requires fundamental changes to NERC’s Compliance Monitoring and Enforcement Plan (CMEP) and to its Rules of Procedure (RoP), not just to the CIP standards.

Why do these documents need to be changed? For one example, just consider my point 3. The industry body I’m calling for would essentially have authority to modify what my single CIP requirement covers, by updating the threat list. There is certainly no provision in the two documents that would allow such a body to be constituted, or to have this authority.

Even more fundamentally, the way auditing would occur under my new compliance regime would be radically different from the way it is described in CMEP and the RoP now. These two documents describe auditing of requirements that mandate very specific procedures (e.g. almost all the requirements in the NERC 693 or “O&P” standards, as well as prescriptive CIP requirements like CIP-007 R2). These requirements can be audited very simply: Did the entity do what was required? If so, they are compliant; if not, they aren’t.

Think about how an auditor would have to determine whether the entity had complied with my single CIP requirement. Some of the components of that audit would include:

1. Has the entity truly taken steps to address all of the threats on the current list, eliminating only those that aren’t applicable to it? And do I agree with the criteria the entity used to determine applicability of the threats?
2. Since the entity is required to address threats based on the risk that each poses, have they developed a reasonable methodology for determining risk? And is the “risk” addressed in that methodology the risk to the Bulk Electric System, not to something else like the entity’s finances (of course, the whole point of CIP is to protect the BES, nothing more, nothing less)?
3. Looking at each threat addressed by the entity, have they deployed effective means to address it? In other words, they may believe that a certain chant, repeated daily, will prevent malware infection of their BES Cyber Systems, but this isn’t an effective means of preventing malware.

I’m sure there’s more to auditing my single CIP requirement, but I think you can see that none of the three audit steps I’ve just listed would fit into the current NERC CMEP and RoP, although in fact I contend that CIP auditors are already partly moving in this direction. This is because some of the CIP requirements, like CIP-007 R3 Anti-Malware and CIP-010 R4 Transient Electronic Devices, are already non-prescriptive, objectives-based requirements. The only way to effectively audit these requirements is to take an approach something like this. But this situation – in which a few non-prescriptive CIP requirements are audited using a very prescriptive auditing framework – simply can’t last. And it would definitely not last if the current CIP regime were replaced with my single requirement and my six points.

Of course, we all know that the likelihood of CMEP and the RoP being so radically revised by NERC is pretty small. Does this mean I’m wasting my time by proposing a new compliance regime that will never be enacted? I don’t think so at all, and the reason I don’t is that I think there will be steadily growing pressure – mostly from Congress – on NERC and FERC to either a) make the necessary changes to the NERC compliance regime so that new cyber threats can be easily incorporated into CIP; or b) turn over cyber regulation of the electric power industry to another government body that isn’t constrained by CMEP and RoP. Consider this Congressional hearing sometime in the not-so-distant future.

Senate Committee Chairwoman: Thank you for coming before us, Mr. High NERC Official. We’ve asked you to come here today because we were disturbed to learn recently that the NERC CIP cyber security standards still haven’t been updated to include such important threats as phishing and ransomware. Can you explain to us why this is the case?

High NERC Official: I am pleased to explain that to you, Madame Chairwoman. This isn’t due to our not considering these threats to be of the highest importance. It is due to the fact that NERC’s Rules of Procedure require a deliberate, democratic process for drafting and approving proposed changes to the NERC CIP standards. We do intend to address all of these threats in the future, but we are currently working on some other changes to the CIP standards, such as new standards (ordered by FERC) addressing supply chain security and protecting communications between control centers. Once we have been able to draft and approve these and other new standards and requirements, we will be pleased to turn our attention to other threats like phishing and ransomware.

Senate Committee Chairwoman: Thank you for your honest answer. How long do you think it will be before we have new CIP requirements addressing these two threats, as well as other emerging threats that we don’t even know about today?

High NERC Official: We have already drafted the supply chain security standard and sent it to FERC for approval. We still have a number of other new standards and requirements – including some very important requirements regulating virtualization – that will take maybe three years to draft and approve. But at that point, I think we might very well be able to take up new threats like phishing.

Senate Committee Chairwoman: Excuse me, but I don’t consider phishing a “new” threat. But let’s go on. You say in three years you’ll be able to start addressing phishing. How long will it take, after that point, for a new NERC CIP anti-phishing requirement to be in effect?

High NERC Official: I would think we would have one in place in 2-3 years after we started drafting it.

Senate Committee Chairwoman: So it will be 5-6 years before there will be a requirement addressing phishing, is that correct? (HNO assents). And let’s suppose you could address ransomware on the same timetable, so an anti-ransomware requirement would also be in place 5-6 years from now? (HNO assents) Of course, I also have to assume that a new type of threat that appears say in 2018 will take much longer to address. Is that the case? (HNO assents) Mr. High NERC Official, I have to ask you: Do you agree that the North American Bulk Electric System is a critical national asset, whose substantial impairment would have a huge negative effect on the entire nation? (HNO assents) And do you agree that, while other methods are important, there needs to be a mandatory compliance regime, backed by substantial penalties, that will address all major threats to the security of the BES? And that the BES isn’t well protected until CIP addresses all major threats? (HNO assents, although he starts to look around nervously) Then how can you say that NERC is protecting the BES, when there are such gaping holes in the CIP standards – and there always will be such holes?

High NERC Official: (rising from his seat) I’m sorry, Madame Chairwoman. I need a short break to confer with some of my colleagues. Can we resume in half an hour?

Senate Committee Chairwoman: I’m afraid we don’t have time to do that. I want to thank you for your honest testimony today. I’m sure we will want to have further conversations with you in the future. This session is adjourned.

Senate Committee Chairwoman (aside to aide): Please contact the Secretaries of Homeland Security and Energy and ask them to come before this committee to let us know if they might possibly be able to address phishing and ransomware in something less than six years, if they were given responsibility for cyber regulation of the BES.

The views and opinions expressed here are my own and don’t necessarily represent the views or opinions of Deloitte.