001-2024-0320 DLMCSITSDP01 Course Book

CYBER SECURITY AND DATA
PROTECTION
DLMCSITSDP01
CYBER SECURITY AND DATA
PROTECTION
MASTHEAD
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DLMCSITSDP01
Version No.: 001-2024-0320
Martin Macke; Jasmin Cosic
© 2024 IU Internationale Hochschule GmbH

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2
TABLE OF CONTENTS
CYBER SECURITY AND DATA PROTECTION
Introduction
Signposts Throughout the Course Book . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Suggested Readings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Required Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Learning Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Unit 1
Foundations of Data Protection and IT Security 13
1.1 Terminology and Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

1.2 Core Concepts of IT Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.3 Core Concepts of Data Protection and Privacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.4 Core Concepts of Cryptography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
1.5 Legal Aspects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Unit 2
Data Protection 27
2.1 Basic Concepts of Data Protection (ISO/IEC 29100, Privacy by Design) . . . . . . . . . . . . . 28

2.2 Data Protection in Europe: The GDPR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.3 Data Protection in the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.4 Data Protection in Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Unit 3
Applying Data Protection 43
3.1 Anonymity and Pseudonyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

3.2 Data Protection in Data Science and Big Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
3.3 User Tracking in Online Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
3.4 Cloud Computing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Unit 4
Building Blocks of Cyber Security 55
4.1 Authentication, Access Management, and Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

4.2 Endpoint Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
4.3 Cyber Security in Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
4.4 Developing Secure IT Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
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Unit 5
IT Security Management 71
5.1 Security Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

5.2 Security and Risk Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
5.3 The ISO 27K Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
5.4 IT Security and IT Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
5.5 Example: IT Security for Credit Cards (PCI DSS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Unit 6
Cryptography 87
6.1 Symmetric Cryptography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

6.2 Asymmetric Cryptography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
6.3 Elliptic-Curve Cryptography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
6.4 Hash Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
6.5 Secure Key Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Unit 7
Cryptographic Application 103
7.1 Digital Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104

7.2 Secure Internet Protocols . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
7.3 Blockchain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
7.4 Electronic Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Appendix
List of References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
List of Tables and Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
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INTRODUCTION
WELCOME
SIGNPOSTS THROUGHOUT THE COURSE BOOK
This course book contains the core content for this course. Additional learning materials
can be found on the learning platform, but this course book should form the basis for your
learning.
The content of this course book is divided into units, which are divided further into sec-
tions. Each section contains only one new key concept to allow you to quickly and effi-
ciently add new learning material to your existing knowledge.
At the end of each section of the digital course book, you will find self-check questions.
These questions are designed to help you check whether you have understood the con-
cepts in each section.
For all modules with a final exam, you must complete the knowledge tests on the learning
platform. You will pass the knowledge test for each unit when you answer at least 80% of
the questions correctly.
When you have passed the knowledge tests for all the units, the course is considered fin-
ished and you will be able to register for the final assessment. Please ensure that you com-
plete the evaluation prior to registering for the assessment.
Good luck!
6
SUGGESTED READINGS
GENERAL SUGGESTIONS
Walker, B. (2019). Cyber security comprehensive beginners guide to learn the basics and
effective methods of cyber security. Independently published.
Amoroso, E., & Amoroso, M. (2017). From CIA to APT: An introduction to cyber security. Inde-
pendently published.
National Institute of Standards and Technology. (2018). Framework for improving critical
infrastructure cybersecurity. Database: BASE
Paar, C., Pelzl, J. (2011). Understanding cryptography: A textbook for students and practi-
tioners. Springer. Database: SpringerLink
UNIT 1
Hintzbergen, J., Hintzbergen, K., Smulders, A., & Baars, H. (2015). Foundations of informa-
tion security (3rd ed.). Van Haren Publishing. Database: EBSCO
UNIT 2
International Organization for Standardization. (2011). Information technology — Security

techniques — Privacy framework (ISO/IEC 29100:2011).Available online.
UNIT 3
Information Commissioner’s Office. (2017). Big data, artificial intelligence, machine learn-
ing and data protection. Available online.
Cloud Security Alliance. (2017). Security guidance for critical areas of focus in cloud comput-
ing v4.0. Available online.
UNIT 4
Bartsch, M., & Frey, S. H. (2018). Cybersecurity best practices. Springer. Database: Springer-
Link
Nieles, M., Dempsey, K., & Pillitteri, V. (2017). An introduction to information security.
National Institute of Standards and Technology. Available online.
7
National Institute of Standards and Technology. (2018). Framework for improving critical
infrastructure cybersecurity. Available online.
UNIT 5
Cole, E., Krutz, R., & Conley, J. W. (2005). Network security bible. Wiley. Database: BASE
Payment Card Industry Security Standards Council. (2019). Secure software lifecycle
(secure SLC) requirements and assessment procedures, version 1.0.Available online.
UNIT 6
Boneh, D., & Shoup, V. (2015). A graduate course in applied cryptography. Stanford Univer-
sity Available online.
UNIT 7
Schneider, B. (1995). Applied cryptography: Protocols, algorithms and source code in C.

Wiley. Database: ProQuest
8
REQUIRED READING
UNIT 1
Open Web Application Security Project. (2017). OWASP Top ten 2017. Available online.
UNIT 2
European Union. (2016). Regulation (EU) 2016/679 of the European Parliament and of the
Council of 27 April 2016 on the protection of natural persons with regard to the pro-
cessing of personal data and on the free movement of such data, and repealing Direc-
tive 95/46/EC (General Data Protection Regulation) (Text with EEA relevance). Official
Journal of the European Union, 59, 1—88. Available online.
California Legislative Information. (2018). SB-456 California consumer privacy act of 2018.
Available online.
UNIT 3
Bowman, C., Gesher, A., Grant, J., & Slate, D. (2015). The architecture of privacy: On engi-
neering technologies that can deliver trustworthy safeguards. O'Reilly. Chapter
11.Database: Internationale Hochschule Bad Honnef Bonn
UNIT 4
National Institute of Standards and Technology. (n.d.). An introduction to computer secur-

ity: The NIST handbook, special publication 800-12. Available online.
Meucci, M., & Muller, A., (2019). OWASP testing guide V4.0, OWASP project. Open Web Appli-
cation Security Project.Available online.
Hintzbergen, J., Hintzbergen, K., Smulders, A., & Baars, H. (2015). Foundations of informa-
tion security (3rd ed.). Van Haren Publishing. Database: EBSCO
UNIT 5
Microsoft. (2009). The STRIDE threat model. Available online.
UNIT 6
PGP. (2002). An introduction to cryptography. Available online.
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UNIT 7
Kessler, G. C. (2019). An overview of cryptography. Database: BASE
Menezes, J. A., Van Oorschot, P. C., & Vanstone, S. A. (1996). Handbook of applied cryptog-
raphy. CRC Press.Database: Internationale Hochschule Bad Honnef Bonn
10
LEARNING OBJECTIVES
For companies working in information and communication technologies (ICT), the biggest
challenge and top priority is protecting data and information. In Cyber Security and Data
Protection, we will explain how to protect the most important assets in a company—you
will learn which methodology, resources, and tools to use.
You will learn about the needs of companies, as well as how to develop a sound cyber
security framework that protects digital information, data, and other equipment (ICT
assets) in cyber space. Furthermore, you will gain insight into different cyber security
models and learn how to determine which one is best for the situation at hand.
Today, applied cryptography is a very important part of any IT system, as it results in one
of the hardest building blocks in the cyber security domain. The reason for this is simple—
the most important thing in any company today is the protection of data, information, and
knowledge. They should be kept safe throughout their creation, use, transfer, and storage,
which would be much more difficult without applied cryptography.
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UNIT 1
FOUNDATIONS OF DATA PROTECTION AND
IT SECURITY
STUDY GOALS
On completion of this unit, you will have learned …
– the basic terms of security and risk management.

– the basic terms and concepts of data protection and privacy.
– some examples of legal aspects of cyber security.
1. FOUNDATIONS OF DATA PROTECTION
AND IT SECURITY
Introduction
Nearly every organization that exists today relies on data and information—they enable
organizations to survive in the business space. The loss of this information has tremen-
dous consequences and can lead to a business being forced to exit the market. Impairing
the security of personal data does not only affect the organization, but also the individual
to whom the data belongs. Therefore, protecting this information has become more and
more important.
This unit will introduce a few basic concepts that will help you to understand security and
data protection holistically. The explanations concerning legality will not only cover data
protection and privacy, but also other legal aspects that play a role in cyber security. It is a
field that is regulated more intensively over time and, in recent years, has seen an
increased amount of legal regulation and discussion.
1.1 Terminology and Risk Management

During this course, the term “cyber security” is used frequently. Although “cyber security”
and “information security” are frequently used as synonyms, they do not always mean the
same thing. Some regulators require companies in the financial sector to have separate
information security and cyber security functions. Where information security tries to
secure information in its analogous form, cyber security tries to protect information that is
vulnerable through the use of information and communication technology. In this course
book, the term “cyber security” will also define the security of analogous information.
When referring to standards and laws, the term “information security” will be used since it
is commonly referred to within legal documents.
CIA triad The CIA triad of information security defines cyber security. Cyber security is put in place
This model influences to protect the confidentiality, integrity, and availability of information.
policies for information
security within organiza-
tions.
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Figure 1: CIA Triad of Cyber Security
Source: Created on behalf of IU (2020).
The “C” in “CIA” stands for confidentiality. It means that information is only made availa-
ble to those authorized to have access. An attack on confidentiality could lead to the unin-
tended disclosure of a customer database that is stored on a cloud storage space.
The “I” stands for integrity, meaning the maintenance and assurance of the accuracy and
completeness of information over its entire life cycle. A hacker who, for example, changes
marks in a university information system to increase a student’s grades, would impair
integrity.
Finally, the “A” stands for availability. Information must be available when it is needed.
Availability can be impaired when a system is attacked, for example, by a distributed
denial of service (DDoS), rendering the system unavailable for use.
There are other security goals that are sometimes mentioned alongside the CIA. We can
assign them to parts of the CIA, but they often stand on their own:
• “Resilience” ensures that systems are built with the ability to withstand an attack or
outage.
• “Authenticity” ensures that personnel and users are who they say they are.
• “Nonrepudiation” means that a person cannot deny having taken action.
Information is protected by mitigation of risk; hence, cyber security is often seen as a part
of risk management. This is achieved through a structured risk management process, con-
sisting of
• identification of risk,
• analysis of risk,
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• mitigation of risk, and
• reporting risks.
1.2 Core Concepts of IT Security

Cyber security consists of many disciplines and is often divided into different domains.
Different organizations have developed frameworks specifically suited to their individual
needs. The International Information System Security Certification Consortium, also
known as (ISC)², classifies cyber security into eight different domains:
• security and risk management,

• asset security,
• security architecture and engineering,
• communication and network security,
• identity and access management (IAM),
• security assessment and testing,
• security operations, and
• software development security (International Information System Security Certification Con-
sortium, n.d., How...? Section, para. 2).
The United States National Institute of Standards and Technology (NIST) considers the fol-
lowing aspects as part of cyber security in its standard family SP-800:
1. Information security governance

2. System development life cycle
3. Awareness and training
4. Capital planning and investment control
5. Interconnecting systems
6. Performance measures
7. Security planning
8. Information technology contingency planning
9. Risk management
10. Certification, accreditation, and security assessments
11. Security services and product acquisition
12. Incidence response
13. Configuration management (Bowen, 2008).
These lists show that a holistic cyber security program has a wide scope covering many
aspects and domains—we will use a combination of both approaches to introduce a few of
the core concepts of security.
The concept of “defense” works by assuming that one or more controls are broken, so
other layers of defense must be able to protect assets. We cannot assume that border
perimeters, such as the internal network, are impenetrable, or that resources inside that
perimeter do not need to be protected. Instead, we assume that protection is also needed
16
internally. Due to the new trend of resources outside the internal network (cloud comput-
ing, SaaS, etc.), it is crucial to consider all parts of the organization when implementing
defensive measures.
Governance and Risk Management
Cyber security governance is used to proactively manage cyber security and implement
and monitor necessary controls, but it must also align with the business in relation to the
goals of the cyber security program. After considering the needs of the business, an organ-
ization develops its cyber security strategy and plan, and governance structures are then
established. Cyber security governance boards, or risk committees, play a critical role as
they decide on the way forward, which is influenced by whether the business, IT, and
cyber security have the same priorities. A security policy and a plan to continuously
improve and audit cyber security are developed, and then the governance aspect of cyber
security oversees their implementation.
Risk management helps to identify, assess, and mitigate cyber security risks, as well as
implement adequate controls in order to bring risks to a tolerable level.
Security Awareness
People play the most important role in securing the organization. Social engineering is an
attack vector that manipulates people into performing actions that could harm an organi-
zation. Examples are phishing emails, unsolicited phone calls, or impersonation attacks.
Security awareness helps to mitigate these attacks by making everyone in the organiza-
tion aware of their duties and responsibilities concerning cyber security. An awareness
program must be relevant for the audience, e.g., a user would receive different training to
a security professional. Awareness, training, and certification are the components that
make up the security awareness program. Finally, the success of the program should be
monitored. An organization can monitor who completed their training or test the users’
awareness by sending out fake phishing emails.
Identity and Access Management
Identity and access management ensures that users in an organization are identified and
manages users’ access to resources. A central concept that is employed is the Access Con-
trol List (ACL). An ACL includes the access rights for each resource. In the Unix operation
systems such as Linux and BSD Unix, each user or group is categorized based on their
authorization to either read, write, or execute rights for a particular resource. These cate-
gories are known as the rwx triple.
Identification and Authentication, Authorization, and Accountability is also known as IAAA

and contains the following steps:
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1. “Identification” means that a user states who they are. This can be achieved by typing
in a username or stating one’s name at an entrance gate.
2. “Authentication” is the process where a user shows that they are the individual they
claimed to be in step one. This should be done by presenting multiple factors, as one
factor could be easily be compromised. There are five different factors:
a) Something you know: Type 1 authentication (passwords, pass phrase, PIN, etc.)
b) Something you have: Type 2 authentication (ID, passport, smart card, token,
cookie on PC, etc.)
c) Something you are: Type 3 authentication (biometrics such as a fingerprint, iris
scan, facial geometry, etc.)
d) Somewhere you are: Type 4 authentication (IP/MAC address)
e) Something you do: Type 5 authentication (signature, pattern unlock)
3. “Authorization” checks which resources a user has access to. This is done via RBAC,
DAC, or MAC and ACLs.
4. “Accountability” ensures that an audit trail, such as a log, exists. It traces the actions
of users and records what they have done to prove their non-repudiation.
Network Security
Network security includes all means used to protect the CIA of the organization’s net-
works. There are many ways to protect a network, and here we will introduce some of
them.
Encrypting the network traffic is a basic concept used to ensure that an attacker, if they
have access to a network, cannot see information within that network. Nowadays, organi-
zations should encrypt as much network traffic as possible in order to reduce the attack
vectors by the maximum feasible amount. Non-encrypted protocols such as telnet or ftp
must be avoided and replaced with their encrypted alternatives. When using wireless net-
works (WiFi), encryption is usually built into the protocols, for example, WiFi Protected
Access 2 (WPA2).
A firewall monitors and controls incoming and outgoing traffic based on predefined rules.
Originally, firewalls were placed at the outside perimeters of a network but nowadays, we
also find them within organizations where they segment the network and ensure security
in depth. Complex firewall structures are the new norm. Firewalls have developed over
time in the following ways:
1. First generation firewalls, or packet filter firewalls, inspect each packet and filter it
based on specific rules, usually on IP addresses and ports.
2. Second generation firewalls, or stateful filters, also maintain information based on the
connection between two hosts.
3. Third generation firewalls, or application firewalls, understand certain applications
and their vulnerabilities so that they can protect them.
4. Next generation firewalls (NGFW) can inspect connections on a deeper level. Intrusion
Prevention Systems (IPS) learn from the behavior of hosts and network connections
so that they can prevent attacks.
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Software Development Security
The system development life cycle (SDLC) is the development, maintenance, and retire-
ment of information systems. Security must be applied to all phases of the SDLC. The
Open Web Application Security Project (OWASP) is a non-profit organization that pub-
lishes typical Web application vulnerabilities, but also develops standards on the topic of
implementing software securely.
The OWASP top ten list, last updated in 2021, consists of the following ten vulnerabilities
that are often seen in Web applications (Open Web Application Security Project, 2021):
• A1:2021—Broken Access Control: restrictions on what authenticated users are allowed

to do are often not properly enforced. Attackers can exploit these flaws so that they can
have unauthorized functionality and/or data, such as access to other users’ accounts
and sensitive files, the ability to modify other users’ data, or permission to change
access rights.
• A2:2021—Cryptographic Failures: many web applications and APIs do not properly pro-
tect sensitive data such as financial, healthcare, and PII, applying cryptography either
incorrectly or not at all. For example, they use algorithms and protocols that are weak
or inadequate to the task, or weak keys. Attackers may steal or modify such weakly pro-
tected data to commit credit card fraud, identity theft, or other crimes. Without extra
protection such as encryption at rest or in transit, sensitive data may be compromised
and require special precautions when exchanged with the browser.
• A3:2021—Injection: injection flaws such as SQL, NoSQL, OS, and LDAP injection may
occur when untrusted data is sent to an interpreter as part of a command or query, usu-
ally after passing on data from some user input field without verification. The attacker’s
hostile data can trick the interpreter into executing unintended commands or accessing
data without proper authorization.
• A4:2021—Insecure Design: even a perfect implementation of a web application will be
insecure if it is not based on a secure design, for example leaving out important security
controls. To achieve a secure design, tools such as threat modeling, secure design pat-
terns and principles, and reference architectures should be used.
• A5:2021—Security Misconfiguration: security misconfiguration usually is a result of inse-
cure default configurations, unnecessary ports or services, misconfigured HTTP head-
ers, and verbose error messages containing sensitive information. All operating sys-
tems, frameworks, libraries, and applications must be securely configured, as well as
patched and upgraded in a timely fashion.
• A6:2021—Vulnerable and Outdated Components: components such as libraries, frame-
works, and other software modules run with the same privileges as the application
itself. If a vulnerable or outdated component is exploited, such an attack can facilitate
serious data loss or server takeover. Applications and APIs using components with
known vulnerabilities may undermine application defenses and enable various attacks
and impacts.
• A7:2021—Identification and Authentication Failures: application functions related to
authentication and session management are often implemented incorrectly, allowing
attackers to compromise passwords, keys, or session tokens, or to exploit other imple-
19
mentation flaws in order to assume other users’ identities temporarily or permanently.
Examples involve allowing weak passwords, permitting brute force or other automated
attacks, and weak processes for forgotten passwords.
• A8:2021—Software and Data Integrity Failures: if software and data are transferred
between environments, their integrity must be verified, e.g. using signatures. This
applies e.g. to moving code along the CI/CD pipeline, downloading updates, or insecure
Serialization and deseri- deserialization.
alization • A9:2021—Security Logging and Monitoring Failures: insufficient logging and monitoring,
Serialization is the proc-
ess of converting objects coupled with missing or ineffective integration with incident response, allows attackers
into a linear (serial) for- to further attack systems, move on to additional systems, and tamper, extract, or
mat such as a text string. destroy data. Most breach studies show that the time it takes to detect a breach is over
Deserialization is the
process of converting 200 days, and they are typically detected by external parties rather than by internal pro-
such a linear format back cesses or monitoring.
into the object.
• A10:2021—Server-Side Request Forgery (SSRF): in SSRF, an insecure server is used to
send HTTP requests to some system that the attacker cannot access directly. For exam-
ple, the server is induced to connect to an external system and leak information such as
login credentials to the attacker. Commonly, an SSRF attack can be performed if the
server is trusted by a third system to send requests that contain an URL. In such a case,
an attacker may try to modify the URL or some other part of the request, causing the
recipient server (which may be the same as the original insecure server) to read or mod-
ify internal resources.
OWASP proposes that the Software Assurance Maturity Model (SAMM) should be the prime
maturity model for software assurance. It provides an effective and measurable way for all
types of organizations to analyze and improve their software security posture. OWASP
SAMM supports the complete software life cycle, including development and acquisition,
and is technology and process agnostic. It is intentionally built to be evolutive and risk-
driven in nature. The most recently developed version of the OWASP SAMM is version 2.0.
Security Incident Management
Every organization and security incident management will work to ensure that the impact
of a security incident is reduced to an acceptable level. A security incident response plan
includes the steps that are necessary to reduce the impact. This plan should be tested at
least annually. The figure below shows the typical life cycle of an incident.
Figure 2: Incident Life Cycle
20
In preparation, an incident response policy is drafted and the response plan and reporting
plan are developed. Standard operational procedures (SOPs) define the specific technical
processes, techniques, and checklists that might be used during an incident. The structure
and staffing of the incident response team is defined, the team is trained, and measures to
prevent incidents are taken.
Detecting and analyzing an incident is often the most challenging phase of the incident
response process. A security incident and event management (SIEM) system can be used
to detect the occurrence of an incident. This is helpful because millions of different events
happen every second and teams must focus on the relevant ones in order to avoid event
fatigue.
After the incident is identified, measures must be taken to contain it so that it does not
spread throughout the organization or to other systems. After these measures have been
implemented, eradication may be necessary in order to eliminate components of the inci-
dents, such as deleting a virus. Recovery might include restoring data from backups,
installing patches, or changing passwords.
Post-incident reviews and activities include discussing lessons learned and implementing
further security controls in order to avoid similar incidents in the future.
1.3 Core Concepts of Data Protection and

Privacy
Data protection, also known as data privacy, refers to the conflict faced when protecting
the privacy of individuals as well as processing their data. Cyber security is used to protect
personal identifiable information (PII) and the security controls are called technical and
administrative (or organizational) measures.
Different laws govern data protection worldwide and, as of early 2020, many laws are in
the legislative process. Recent additions at the time of writing are the General Data Protec-
tion Regulation (GDPR) in the European Union and the Californian Consumer Privacy Act
(CCPA) that begins a whole new era of privacy laws in the United States. In particular,
GDPR led many countries to start thinking of their privacy laws and many of them, includ-
ing India, Brazil, and Nigeria, have already enacted new privacy laws or are progressing
through the legislative process.
The basic principles of data protection are as follows:
1. Consent and choice

2. Purpose legitimacy and specification
3. Collection limitation
4. Data minimization
5. Use, retention, and disclosure limitation
6. Accuracy and quality
21
7. Openness, transparency, and notice
8. Individual participation and access
9. Accountability
10. Information security
11. Privacy compliance
1.4 Core Concepts of Cryptography

Cryptography is the study of secure communication. Cryptoanalysis tries to find weak-
nesses in cryptographic algorithms, enabling the decryption of encrypted messages.
We must first define the terminology of cryptography.
1. “Plaintext” is the name of the message before any encryption is applied, when it is still
readable by computers or humans.
2. “Encryption” is the process of encoding a message so that it cannot be accessed by
anyone without the authorization to do so.
3. “Ciphertext” is the name for the encrypted message.
4. “Cipher” is the algorithm that encrypts and decrypts the plaintext.
5. “Decryption” is the process used to apply the cipher to the ciphertext, resulting in the
plaintext.
6. The “key” is the name of the code that, together with the cipher, allows the encryp-
tion and decryption of the plaintext and ciphertext.
Kerckhoff’s principle states that a cryptographic system must be secure even if everything
is known besides the key. Security is not achieved by keeping the cipher algorithm secure
but by keeping the key secure (Kerckhoff, 1883). Violations of Kerckhoff’s principle are
known as “security by obscurity” and have proven to be insecure in the long run. The rea-
son is that known algorithms can be checked, proven, and improved by cryptographic
research, and secret algorithms are much more likely to have a weakness.
Figure 3: Symmetric Cryptography
22
It is common to use the names Bob and Alice to represent actors who want to exchange a
message. In the figure above, both Bob and Alice know a secret key that they use to
encrypt the plaintext “Hello Alice.” They exchange a ciphertext and Alice uses the secret
key to decrypt the ciphertext into the original plaintext. As only one key is used, this is
called symmetric cryptography.
The challenge with symmetric cryptography is exchanging the secret key in a secure man-
ner. In modern scenarios where we want to encrypt every message in a worldwide com-
puter network, exchanging keys would be impossible.
Asymmetric cryptography addresses that issue by giving two keys to each actor: one pub-
lic key, known to everyone, and one private key that is secret. The public key can be used
to encrypt a message to a person and the private key can be used to decrypt it.
Figure 4: Asymmetric Cryptography
Asymmetric cryptography can also be used to apply digital signatures and achieve non-
repudiation.
Generally, asymmetric cryptography is much slower than symmetric cryptography. Mod-

ern cryptographic systems often use asymmetric cryptography to exchange a secret sym-
metric key and then continue using symmetric cryptography.
Commonly known algorithms for symmetric cryptography are AES or 3DES, and for asym-
metric cryptography, RSA or ECC.
1.5 Legal Aspects

Although data protection and privacy laws already exist and are implemented effectively,
other legal aspects also influence cyber security.
23
Cyber Security Laws in the United States
The main regulation in the United States around cyber security is the Federal Information
Security Management Act of 2002, which was amended by the Federal Information Secur-
ity Modernization Act of 2014 (both acts are known as FISMA). The act acknowledges the
importance of cyber security in relation to the economic and national security of the Uni-
ted States. It requires each federal agency to develop, document, and implement an
agency-wide program to provide information security for the information and systems
that support the operations and assets of the agency, including those provided or man-
aged by another agency, contractor, or source.
FISMA requires federal agencies to manage security based on risk and to have a security
program that does the following:
1. Plan for security.

2. Ensure that appropriate officials are assigned security responsibility.
3. Periodically review the security controls in their systems.
4. Authorize system processing prior to operations and periodically thereafter (Hansche,
2005).
The National Institute of Standards and Technology (NIST) publishes documents that pro-
vide guidance and clarify how a federal agency can comply with FISMA.
Cyber Security Laws in Europe
The major regulations in Europe are the regulations of the European Union Agency for
Cybersecurity (ENISA) and the Directive on Security of Network and Information Systems
(NIS).
ENISA (n.d.) is actively contributing to European cyber security policy by supporting Mem-
ber States and European Union stakeholders concerning a response to large-scale cyber
incidents in cases where two or more EU Member States have been affected. This work
also contributes to the proper functioning of the digital single market.
ENISA’s approach consists of activities in the following areas:
• recommendations regarding cyber security and independent advice,

• activities that support policy-making and implementation,
• hands-on work where ENISA collaborates directly with operational teams throughout
the EU,
• unity of EU communities and coordination of the response to large scale cross-border
cyber security incidents, and
• composition of cyber security certification schemes (ENISA, n.d.).
ENISA works together with the national Computer Security Incident Response Teams
(CSIRTs).
24
NIS helps to increase the level of cyber security within the EU. Both digital services provid-
ers (DSPs) and operators of essential services (OESs) are in the scope of the directive. OESs
provide services such as energy utilities, food supply, and financial services that greatly
affect societal and economic activities.
Both DSPs and OESs must report major security incidents to their national CSIRTs.
The NIS follows a risk-based approach requiring both DPSs and OESs to do the following:
• Prevent risks. This includes technical and organizational measures that are appropriate
and proportionate to the risk.
• Ensure security of network and information systems. This includes measures to ensure
a level of security around the network and information systems that is appropriate to
the risks (European Commission, 2016).
SUMMARY
Cyber security and data protection play a vital role in the world today.
Cyber security protects the confidentiality, integrity, and availability of

information by using a risk-based approach. Many aspects or domains
make up a holistic cyber security program including access control, net-
work security, or the secure development of software.
Cryptography helps to transmit messages secretly. We distinguish

between symmetric and asymmetric cryptography. Cryptoanalysis tries
to find weaknesses in cryptographic systems.
Data protection and data privacy protect the interests of individuals

whenever their personal data is processed.
Many additional legal regulations affect cyber security, including FISMA

from the United States, or the NIS regulations and laws that are imple-
mented in the European Union.
25
UNIT 2
DATA PROTECTION
STUDY GOALS
– the fundamental principles of privacy and data protection that are applicable in all
data privacy regulations.
– how ISO 29100 describes the fundamentals of data protection.
– the specifics of data protection regulation in Europe (GDPR).
– an overview of data protection in the United States with a focus on the California Con-
sumer Privacy Act (CCPA).
– an overview of data protection in Asia.
2. DATA PROTECTION
Introduction
Data protection and data privacy play an increasingly important role in our personal lives,
as well as in the processing of data in our organizations. In 2019, Shinzo Abe, Japan’s
prime minister, made data privacy a priority for the G20 summit hosted by Japan. Many
developed and developing countries have already enacted new data protection regula-
tions or are currently implementing legislative processes to enact them. This shows that
regulations are an important factor to consider in the 21st century. Protecting the privacy
of every individual is an important ethical requirement, so societies all over the globe are
demanding further protection.
Global and holistic concepts define data protection and set principles that feature in every
national and international regulation.
2.1 Basic Concepts of Data Protection

(ISO/IEC 29100, Privacy by Design)
Data Privacy versus Data Protection
Data privacy and data protection, though connected, are commonly recognized all over
the world as two separate rights. In many countries, they are considered vital components
of a sustainable democracy.
In Article 1 of the Universal Declaration of Human Rights (United Nations, 1948), human
dignity is recognized as an absolute fundamental right. These notions of dignity, privacy or
the right to a private life, autonomy, or the right to be left alone, plays a pivotal role. Pri-
vacy is not only an individual right but also a social value.
Historically, in other parts of the world, such as the United States, privacy has often been
regarded as an element of liberty, for example, the right to be free from intrusions by the
state.
Privacy—A Fundamental Right
Almost every country in the world recognizes privacy in some way, be it in their constitu-
tion or in other provisions.
Moreover, privacy is recognized as a universal human right, while data protection is not—
at least, not yet.
28
The right to privacy or a private life is enshrined in the Universal Declaration of Human
Rights (Article 12) (United Nations, 1948), the European Convention on Human Rights
(Article 8) (European Court of Human Rights, 2013), and the European Charter of Funda-
mental Rights (Article 7) (European Union, 2000).
What Is Data Protection?
Data protection applies to any information relating to an identified or identifiable natural

(living) person including names, dates of birth, photographs, video footage, email
addresses, telephone numbers, and more.
Different regulations have different names for these aspects, e.g., data subjects in the EU,
PII principals in international standards such as ISO 27701 and ISO 29100, and consumers
in California (International Organization for Standardization, n.d.). This course book will
use the term “PII principals” to ensure the consistency and neutrality of certain specific
regulations.
The term used for the data about a PII principal will be Personal Identifiable Information
(PII) for the remainder of this unit. This is also a term used in many regulations and in the
relevant ISO standards.
The notion of data protection originates from the right to privacy—both are instrumental
not only to the preservation and promotion of fundamental values and rights, but also to
the exercising of other rights and freedoms such as free speech or the right to assembly.
Data protection includes the rights of the PII principal that consist of fair processing, trans-
parency, and certain rights to access or change PII.
Data protection has precise aims to ensure the fair processing (collection, use, and stor-
age) of personal data by both the public and private sectors.
Principles of Data Protection
The following principles are guiding all global data protection regulations. They can be
found in international standards, specifically in ISO/IEC 29100:2011 Information technol-
ogy—Security techniques—Privacy framework (2011); ISO/IEC 27701:2019 Security techni-
ques—Extension to ISO/IEC 27001 (2019); and ISO/IEC 27002 for privacy information man-
agement—Requirements and guidelines (2019).
PII controllers and PII processors
PII controllers determine the means and purposes of processing PII. Controllers must
ensure that applicable laws are adhered to, and they are obliged to demonstrate compli-
ance. A PII processor follows the instructions of a PII controller in order to process PII.
Under many regulations, the relationship between a controller and processor requires a
written contract.
29
Consent and choice
PII principals should have the choice of whether their data is processed. That choice
Opting in or opting out should be presented upfront, and the consequences of opting in or opting out should be
Opt-in: default value is no, made clear. The consent given by the PII principals can be withdrawn at a later stage. This
but principals may allow
that their data are pro- principle is not contrary to the fact that, in many cases, processing is based on existing
cessed. Opt-out: default contracts, legal requirements, or other legal means. It applies to cases where consent is
value is yes, but princi- the legal basis for the processing of PII.
pals may object to their
data being processed.
Example: Before using cookies to track a user’s behavior on a website, permission should
be requested and consent should be obtained for the implementation of cookies on the
user’s desktop.
Purpose legitimacy and specification
All processing of PII must be compliant with applicable laws. The purpose of data process-
ing must be communicated to the PII principals upfront, but it should be communicated
again if the purpose changes over time.
Example: If data was collected by a Web shop for the purpose of delivering the ordered
products to the PII principal, the purpose should not be changed without obtaining fur-
ther consent and giving the participants information about their being part of a big data
analysis.
Collection limitation
The collection of PII should be limited to what is strictly necessary for the purpose defined
and should be within the limitations of applicable laws.
Example: A Web shop might need to check if there is an age requirement that must be met
in order to be permitted to buy products such as alcohol. It might be tempting to record
the date of birth but that is not strictly necessary. Simply recording that an age check was
done would fulfill the requirement.
Data minimization
Data minimization is related to collection limitation but goes further, looking at the pro-
cessing after the initial collection of PII. It means that the processes and systems for pro-
cessing PII must limit the number of stakeholders that have access to or the ability to proc-
ess data; ensure that PII can be accessed on a need-to-know basis only; and offer options
that do not require the use of PII. Also, PII must be deleted when there are no longer legal
requirements stating that it should be stored and it is not needed for any further purpose.
Example: In a hospital, it might be practical for all medical personnel, nurses, doctors, and
administration staff to have access to the patients’ PII. However, on a need-to-know basis,
doctors and nurses should only have access to the data of their own patients, and the
administration staff only needs data that is relevant for coping with insurances and invoi-
ces.
30
Use, retention, and disclosure limitation
Data must not be retained forever. This principle is about retaining data for a defined pur-
pose, but only for as long as it is required by the organization and by law. After that period,
PII should be destroyed. An example is locking records. This is necessary when the pro-
cessing of data is no longer required but applicable laws still require that the data is kept
for archiving purposes. In this case, the record must be locked, which means that it cannot
be used anymore outside of the access allowed by the law.
Example: The purpose of keeping payroll data is limited to the time that an individual is
employed by an organization. Applicable laws such as social security laws, labor laws, or
taxation regulations might require the data to be archived for several years. The records
must be locked after the individual leaves the company, and the data must be destroyed
when the limits set by the other laws are reached, e.g., after six or ten years.
Accuracy and quality
The PII process has to be accurate and completed to a degree that it can be adequately
used for the purpose defined. If PII is collected from a source that is not the PII principal,
the reliability must be ensured. The accuracy and quality of the data should be checked
regularly.
Example: A credit scoring system relies on accurate data from an individual’s credit his-
tory. If that history is not correct, e.g., a loan which was repaid is recorded as defaulted,
the individual might be refused a loan that they were eligible to get. Both the individual
and the loan association would be damaged by this inaccuracy of data.
Openness, transparency, and notice
This principle means that information about the processing of PII and the purposes and
means for doing so should be provided to the PII principals. In the interest of transpar-
ency, this notice should be easily readable, especially if a processing activity includes deci-
sion-making based on the PII.
Example: If an individual uses an internet search engine, the data of the individual are pro-
cessed. The search engine provider publishes a data privacy notice that explains which
data are processed and how they are processed. This notice includes information that
influences the search results and advertisements shown to the individual.
Individual participation and access
Individuals have many rights, including the right to access their data, change inaccurate
data, delete or lock the data, and easily assert these rights. In some legislations (e.g.,
GDPR and CCPA), they also have the right to portability, making the data available in an
electronic, standardized form. Often CSV, JSON, or XML formats are used.
31
Example: Individuals can ask an online shop to provide them with their data. If they
decide not to be targeted any more by newsletters, they can have their data record locked.
A deletion can take place when other laws do not require the records to be archived any
longer.
Accountability
There is a duty of due care stating that measures must be taken by an organization to
ensure the protection of PII. Accountability means that an organization must be able to
prove its compliance. Data privacy policies and processes are documented. Contractual
agreements provide safeguards when transferring data to third parties. When a breach
occurs, the individuals must be informed about it. If privacy authorities exist, they have
certain audit rights as well as the right to be informed about the processing of PII.
Example: In Israel, the Protection of Privacy Law requires an organization that processes
more than 10,000 personal records in a database to register this database with the
national authority. This registration includes documentation of the nature of the data-
base, the processing, and the security measures taken to protect the database.
Information security
PII must be protected, and the CIA (confidentiality, integrity, and availability) of informa-
tion has to be assured by the controller. The precautions taken are usually based on a risk
assessment and a catalog detailing which steps should be implemented. It includes access
control on a need-to-know basis, encryption of data, relevant physical and network con-
trols, and other security measures.
Example: A database containing PII should be encrypted, and passwords of user accounts
should be hashed and salted to protect the confidentiality and integrity of the database.
Privacy compliance
An organization must be able to demonstrate compliance by having independently veri-

fied internal controls in place. An adequate and documented risk management system is a
way to show privacy compliance.
Example: Internal and external audit programs, including certification by accredited certif-
ication bodies, are ways to show compliance.
2.2 Data Protection in Europe: The GDPR

Within Europe, the major international organization is the European Union (EU). The Gen-
eral Data Protection Regulation 616/679 (GDPR) is directly applicable in all EU Member
States and the states belonging to the European economic area. It is accompanied by the
ePrivacy Directive (ePD) 2002/58/EC, which is planned to be replaced by an updated regu-
lation (note that the legislative process was postponed several times and proposals were
32
rejected). The GDPR replaces the former directive 95/46/EC concerning data privacy. As a
regulation, the GDPR is directly applicable by law in the Member States and does not
require a local law to be effective. However, the Member States implemented local privacy
legislations to support the GDPR. In addition, several other national laws are applicable,
including state laws, church laws, labor laws, and contractual agreements (for example,
those between trade unions and employer organizations).
The GDPR is recognized worldwide as the benchmark for privacy regulation. Upcoming
regulations in several countries, including the United States, India, Brazil, and Nigeria, are
based on the same principles and structured in a similar way.
The GDPR consists of 99 articles in 11 chapters. One hundred and seventy-three recitals
help with the interpretation of the law.
Scope of the GDPR
The material scope of the GDPR covers all personal and material relationships of an identi-
fied or identifiable natural person. PII must be processed either in an automated way, a
semi-automated way, or as a paper-based archive. There are few exceptions to the mate-
rial scope of GDPR, including private households, law enforcement activities, and data
usage for national security. The GDPR applies to both controllers and processors.
The territorial scope follows the market principle. It applies to all organizations estab-
lished in the EU, and to organizations that track EU citizens and offer services or products
within the EU. As the EU is the largest market in the world, this makes the GDPR applicable
to many organizations operating outside of the EU.
Special Categories of Data
Article 9 GDPR (European Union, 2018) defines special categories of data. The processing Categories of data
of those is only allowed if there is a special legal requirement or if the individual gave con- Note that sensitive infor-
mation is sometimes indi-
sent. These legal requirements are as follows: rectly included in the
data, for example, an HR
• race and ethnic origin, database requiring the
name of someone’s part-
• religious or philosophical beliefs, ner could reveal their sex-
• political opinions, ual orientation.
• trade union memberships,
• biometric data used to identify an individual,
• genetic data,
• health data, and
• data related to sexual preferences and/or sexual orientation.
If special categories of data are processed, the security of the processing must account for
the high risk of that data.
33
Accountability in GDPR
To demonstrate accountability, GDPR requires organizations to maintain a record of pro-

cessing activities (ROP). Article 30 GDPR (European Union, 2018) describes what a record
of processing activities must include. The authorities can ask for the ROP when auditing
organizations. Organizations must also implement security which includes the CIA plus
resilience as a fourth factor of security. During implementation, security risk needs to be
considered. Article 25 GDPR (European Union, 2018) states that the following criteria
should be considered when carrying out the risk assessment:
• state of the art,

• costs of implementation,
• nature, scope, context and purposes of processing, and
• risk of varying likelihood and severity to the rights and freedoms of natural persons.
In case of a planned activity that poses a high risk to the rights and the freedom of a per-
son, a data protection impact assessment (DPIA) must be done (European Union, 2018).
National authorities and the European Data Protection Board (EDPB) clarify that some
activities always require a DPIA. Examples of those are CCTV and credit scoring.
Privacy by design and by default are principles that an organization must obey. It means
that privacy is not an afterthought, but rather needs to be implemented during the design
phase of processes and tools. Privacy by default means that privacy friendly settings must
be the default option. An example is the settings of cookies that should only be pre-tagged
if they are essential to the functioning of a website, whereas all other kind of cookies must
be untagged by default.
Lawfulness of Processing
According to Article 6 GDPR, there are exactly six reasons that make the processing of PII
lawful (European Union, 2018). They are as follows:
• The PII principal (data subject) has given consent.

• Processing is necessary for the performance of a contract to which the data subject is a
party, or in order to take steps at the request of the data subject prior to entering into a
contract.
• Processing is necessary for compliance with a legal obligation to which the controller is
subject.
• Processing is necessary in order to protect the vital interests of the data subject or of
another natural person.
• Processing is necessary for the performance of a task carried out in the public interest
or in the exercise of official authority vested in the controller.
• Processing is necessary for the purposes of the legitimate interests pursued by the con-
troller.
34
It is important to understand the legal basis when PII is processed. Consent is often mis-
used as another legal basis, but that consent must be freely given and can be withdrawn
at any time. The vital interest legal basis is interpreted in a way that applies to emergency
situations. Not every health related activity falls under this legal basis.
Privacy Compliance
Compliance to the GDPR is both self-controlled and controlled by supervisory authorities.

A crucial role in controlling compliance is played by the Data Protection Officers (DPOs).
They are employed by the organizations that are processing PII, and they monitor and
audit the compliance with GDPR. They also give advice and handle the complaints of the
PII principals. To ensure that they can act independently, a DPO must not receive any
direct instructions. The DPO must report to the highest management level in an organiza-
tion.
External control is ensured via the supervisory authorities. The Member States of the EU
have set up these authorities on either a country or a state level. They collaborate via the
European Data Protection Board, formerly known as the Article 29 group. They can gather
information, audit organizations, handle complaints, and request the mitigation of issues
found. They can also issue fines for non-compliance. The fines should be effective, propor-
tionate, and dissuasive. The fines are capped at a maximum of four percent of the world-
wide revenue of an organization or EUR 20 million.
Article 42 GDPR (European Union, 2018) facilitates a certification that could be obtained to
show compliance. At the time of writing, no approved certification scheme exists. Note
that a certification against ISO 27001 in conjunction with ISO 27701 will not be an Article
42 GDPR certification as those are based on ISO 17021, whereas the Article 42 GDPR certifi-
cation will be based on ISO 17065.
Rights of the Data Subjects
Chapter 3 of the GDPR (European Union, 2018) notes the rights of the data subject (PII
principal). They are
• transparency about the processing of data and the rights of the individual,
• information and access to personal data,
• rectification and erasure, and
• the right to object and automated individual decision-making.
In case of damages occurred, the data subjects can hold an organization liable. The liabil-
ity is unrestricted and based on the damages caused, e.g., by a data breach.
Data Transfers
Data transfers between controllers and processors, and between controllers and control-
lers, require a written contract, known as a Data Processing Agreement (DPA). Article 28
GDPR (European Union, 2018) requires eight topics to be added to the DPA. They are as
follows:
35
• The processor only agrees to process personal data if they have received the written
instructions of the controller.
• Everyone who comes into contact with the data is sworn to confidentiality.
• All appropriate technical and organizational measures are used to protect the security
of the data.
• The processor will not subcontract to another processor unless instructed to do so in
writing by the controller, in which case, another DPA will need to be signed with the
sub-processor (pursuant to Sections 2 and 4 of Article 28).
• The processor will help the controller uphold their obligations under the GDPR, particu-
larly concerning data subjects’ rights.
• The processor will help the controller maintain GDPR compliance with regard to Article
32 (security of processing) and Article 36 (consulting with the data protection authority
before undertaking high-risk processing).
• The processor agrees to delete all personal data upon the termination of services or
return the data to the controller.
• The processor must allow the controller to conduct an audit and will provide whatever
information necessary to prove compliance.
A data transfer can also take place between parties outside of the European Union. In this
case, specific additional safeguards need to be in place. The most common safeguards are
as follows:
• Adequacy decisions: The EU Commission decides that the level of data protection in a
third country is at a level that is acceptable to the EU. Current big economies that have
obtained an adequacy decision are Argentina, Japan, Canada (private sector). The for-
mer adequacy decision for the United States (Privacy Shield) was invalidated by a deci-
sion of the European Court of Justice in July 2020.
• EU model clauses: The model clauses or standard contractual clauses issued by the EU.
If a processor or controller outside the EU signs and obeys them and the remaining risk
is considered acceptable as shown by a transfer impact assessment (TIA), the data can
be transferred. This is the most common way to safeguard data transfers to third coun-
tries.
• Binding corporate rules: An enterprise can obey binding corporate rules that have been
approved by the national authorities of the country where its EU headquarters are
based. If those are approved, data can flow inside this enterprise. Binding corporate
rules have no impact on relationships outside of that enterprise.
Data Breaches
Whenever a data breach occurs, the organization has 72 hours from the time that the
breach was discovered to inform the supervisory authority. If the risks to the rights and
freedoms of the individuals is high, the affected individuals must also be informed about
the breach.
36
2.3 Data Protection in the United States
At the time of writing, data protection laws in the United States are changing significantly.
At least 17 states are carrying out legislative processes to enact new data protection laws,
California being the first with the Californian Consumer Privacy Act (CCPA). Both the
Republican and the Democratic parties have proposed new data protection laws at the
federal level. Both proposals refer to the European GDPR and are aligned towards similar
principles. The current legislation is mostly dependent on the state and stems from con-
sumer rights. Also, sector-specific laws, such as the Health Insurance Portability and
Accountability Act (HIPAA) for the health sector or the Fair Credit Reporting Act (FCRA) for
the banking sector, exist and play a large role in their respective sectors.
The Federal Trade Commission (FTC), an important federal agency, has worked since the
1970s to protect the privacy of consumers from the United States. It does not play the
same role as a privacy authority in other states; however, the proposed laws on a federal
level try to place the supervisory function with the FTC, emphasizing the role it plays in
relation to privacy in the United States.
In this section, we will focus on the CCPA regulation, and HIPAA as examples of privacy
regulations in the United States. We will also cover the role of the FTC. In the absence of a
federal law it is not possible to provide a complete and holistic overview, but the choice
allows the reader to understand what privacy currently means in the United States.
The Role of the FTC
When companies tell consumers that they will safeguard personal information, the FTC
can take legal action to make sure that companies live up to these promises. The FTC has
brought legal actions against organizations that have violated consumers’ privacy rights,
misled them by failing to maintain security for sensitive consumer information, or caused
substantial consumer injury. In many of these cases, the FTC has charged the defendants
with violating Section 5 of the FTC Act, which bars unfair and deceptive acts or practices in
or affecting commerce. In addition to the FTC Act, the agency also enforces other federal
laws relating to consumers’ privacy and security (Federal Trade Commission, n.d.).
Hence, the FTC plays a role in protecting consumers’ privacy. An example is the case
against YouTube (FTC no. 172 3083) (Federal Trade Comission, 2019) where the FTC issued
them a fine of $170 million for collecting the information of minors without prior consent
from their parents.
Californian Consumer Privacy Act
On January 1st, 2020, the Californian Consumer Privacy Act (CCPA) was enacted, beginning
the modernization of United States privacy laws. The title of the CCPA is a bit misleading
because it does not only protect consumers, but all California residents, their devices, and
their households. California represents about 12 percent of the United States population
and is the seventh largest economy in the world. Hence, the CCPA has national and inter-
national influence.
37
To be under the scope of the CCPA, an organization must meet at least one of the following
criteria:
• Annual gross revenue of $25 million

• Buys, receives, sells, or shares the personal information of 50,000 or more consumers,
households, or devices
• At least 50 percent of annual revenue from selling consumers’ personal information
(California Legislative Information, 2018)
The PII principals are considered to be consumers under CCPA and have the right to
• know what PII is being collected about them.

• access their PII in a readily useable format.
• know whether their personal information is being sold or shared, and if so, with whom.
• opt out of the sale of their PII (opt in, in cases of minors).
• equal service and price regardless of exercising individual rights.
• deletion of their PII upon request.
Data requested is from the preceding 12 months, and individuals can make up to two
requests in a 12-month period. An organization has to set up a free number to call and an
email address or Web form where consumers can request that any of their rights are enac-
ted. The law uses the term “personal information” broadly, so traditional information, as
well as behavior or preference-based information, falls under it. The CCPA defines the
term “selling” in a broad sense, and further clarifications are expected. It includes selling,
renting, releasing, disclosing, disseminating, making available, transferring, or otherwise
communicating PII to another business or third party for monetary or other valuable con-
sideration. If a company is selling data, it must place a link on its Web page where individ-
uals can opt out of selling their data. The default option can be opt out for adults, but for
minors, the default is opt in.
The CCPA uses the terms “service providers” for controllers and “third parties” for process-
ors. To enforce the act, the California attorney general can issue fines of up to $7,500 per
violation. It is not yet clear how the violations are counted. If they result from a failure to
maintain reasonable security, private right of action is limited to $750. These are normally
enforced during a class action. Keep in mind that the private damages are per record, so if
100,000 records are breached and all affected consumers take part in the class action, the
liability could reach $75 million. Several amendments were enacted to clarify the scope of
CCPA or to put a moratorium on the scope. Important ones are Assembly Bill 25 (AB-25)
that exempts employee data from the scope for one year and AB-1355 for a moratorium on
B2B-related PII. The CCPA does not require an organization to have a data protection offi-
cer (DPO).
Health Insurance Portability and Accountability Act
Due to its sensitive nature, a federal legislation on health privacy was enacted in 1996.
This is the Health Insurance Portability and Accountability Act, known as HIPAA. Since
then, it has regularly been updated to cope with technological progress and changes in
scope. The PII principals are called “patients” in HIPAA, and the Act safeguards patient
38
data in all forms, such as health plans, healthcare clearinghouses, and healthcare provid-
ers (including doctors, nurses, hospitals, and therapists). Patient information in oral, writ-
ten, and electronic form is protected. This includes demographic information that is tied
to the identity of the patient. Patients have the right to access their data. Organizations
can charge a reasonable amount to provide this information.
The privacy rules of HIPAA ensure that the policies are applied in a manner that ensures
proper protection of data and does not leave room for mistakes. It sets clear rules for med-
ical care organizations concerning the way that patient data is governed. Written permis-
sion is required whenever patient data is disclosed. HIPAA requires administrative, physi-
cal, and technical controls, policies, and procedures to guarantee the CIA of electronic
personal health information (ePHI). Examples of required administrative measures are the
implementation of risk management, or a data backup plan. Examples of required physi-
cal safeguards are a facility security plan or secure disposal of media. Examples of techni-
cal safeguards are authentication or emergency access procedures.
Penalties are enforced in the case of non-compliance with HIPAA. For a laptop theft includ-
ing unencrypted patient data at a hospice in Northern Idaho, a penalty of $50,000 was
issued. All together, fines have reached more than $36 million so far. The fines are limited
to $1.5 million per year per institution. The fines are enforced by the Department of Health
and Human Services’ Office for Civil Rights (OCR) and state attorneys general. The United
States Food & Drug Administration (FDA) checks medical devices before they reach the
market, and privacy is considered in that process (United States Food & Drug Administra-
tion, 2018).
2.4 Data Protection in Asia

There is no consistent data privacy law in Asia defined by any multinational organization
such as ASEAN, the largest trade organization in Asia. Each country in Asia has its own
data privacy regulations. In this section, we will examine the situation in India and Singa-
pore, focusing on two important economies in the region.
Data Privacy in India
Right now, India has constitutional right of privacy but no privacy law. Privacy law only
exists for case law and does not follow a concise structure like in the previously described
legislations. In 2018, the Indian Personal Data Protection Bill was proposed. At the time of
writing, this bill is still in the legislative process, and several changes and amendments
have been discussed. Until the law is enacted, privacy regulation in India remains a diffi-
cult subject.
The Information Technology Act (Parliament of India, 2000) has two sections concerning
privacy. Section 43A requires an organization to implement reasonable security practices
for sensitive personal data and to compensate an individual when a breach occurs. Sensi-
tive personal data are passwords, health records, sexual orientation, biometrics, and
financial information. Section 72A covers punishment such as fines and imprisonment of
39
up to three years, for people who cause data breaches. The same law gives the Indian gov-
ernment a lot of power to interfere with the data of its citizens. It permits the interception,
monitoring, and decryption of digital communication and allows the government to set
national encryption standards. There are governmental projects that intercept phones
and internet connections. The Indian National Intelligence Grid (NATGRID) project is an
example of this, combining several databases with citizens’ data and making it easily
accessible to intelligence agencies. The proposed privacy laws would make privacy a more
fundamental right and protect the citizens from state surveillance.
Data Privacy in Singapore
In Singapore, data privacy is regulated via the Personal Data Protection Act (PDPA) from
2012. Several regulations were added in 2013 to govern the enforcement of the Act detail-
ing special provisions regarding phone calls and exemptions therefore building a compre-
hensive privacy framework in Singapore (Personal Data Protection Commission Singa-
pore, n.d.).
The PDPA establishes a data protection law that comprises various rules governing the
collection, use, disclosure, and care of personal data. It recognizes both the rights of indi-
viduals to protect their personal data, including rights of access and correction, and the
needs of organizations to collect, use, or disclose personal data for legitimate and reason-
able purposes.
The PDPA provides for the establishment of a national Do Not Call (DNC) Registry. The DNC
Registry allows individuals to register their Singapore telephone numbers to opt out of
receiving marketing phone calls, mobile text messages such as SMS or MMS, and faxes
from organizations.
The scope of the PDPA covers all personal data with the following four exceptions:
1. Any individual acting on a personal or domestic basis

2. Any employee acting in the course of his or her employment with an organization
3. Any public agency or organization acting on behalf of a public agency in relation to
the collection, use, or disclosure of the personal data
4. Business contact information
The Act justifies the Personal Data Protection Commission, a privacy authority that has the
responsibility to administer the Act. Besides giving advice, the Commission also enforces
the Act and monitors its compliance.
Generally, the Act requires consent. The law defines a long list of activities where no con-
sent is required. Those are set in the second schedule of the Act and include things like the
interest of the individual, artistic purposes, and more.
The law gives individuals the right to access and correct their data for accuracy, protec-
tion, and adequate retention. In case of disputes, the commission helps the individual and
the controller to go through a mediation process to solve the conflict.
40
The possible punishments for non-compliance range from fines to three years in prison.
So far, many fines are in the region of 5,000—100,000 SGD.
The PDPA requires an organization to have a data protection officer (DPO). The DPO has
the following obligations (Personal Data Protection Commission Singapore, n.d.):
• ensure compliance of PDPA when developing and implementing policies and processes
for handling personal data,
• foster a data protection culture among employees and communicate personal data pro-
tection policies to stakeholders,
• manage personal data protection related queries and complaints,
• alert management to any risks that might arise with regard to personal data, and
• liaise with the PDPC on data protection matters, if necessary.
In Singapore, the privacy law is currently changing. In March 2019, the PDPC stated that
breach notifications might become mandatory and that individuals should have greater
control over data transfers to third parties. A draft bill is expected in 2020.
SUMMARY
Privacy and data protection are not the same. Regulations all over the
world follow similar principles in their data protection regulation, but
there are also significant differences. In Europe, the GDPR sets clear and
strict guidelines, whereas the regulations in the United States are more
diverse and heavily dependent on the state, the sector of industry, and
the scope of processing.
In Asia, the situation is even more diverse as each country has its own
data protection regulations. Some countries, such as India, are still in
the middle of a legislative process, whereas others, such as Singapore,
have more mature regulations.
Due to the high amount of fines and extraterritorial scope, the GDPR sets
the worldwide benchmark for privacy regulations and is applicable to
many organizations.
In almost all countries, privacy laws are emerging or being modernized,

so tany observer of privacy laws must watch carefully for new develop-
ments.
41
UNIT 3
APPLYING DATA PROTECTION
STUDY GOALS
– how to practically apply data protection regulations in several scenarios.

– what anonymity is and how it can be achieved.
– the challenges faced when using PII in big data scenarios.
– how online marketing can work in compliance with data protection.
– the impact of data protection on cloud computing.
3. APPLYING DATA PROTECTION
Introduction
In this unit, we will examine ways to implement laws and regulations that govern privacy
and data protection. Practice shows that it is not as easy as it sounds to implement the
requirements of the law. Recent reports about the influence of personal data on elections
and the availability of location data show that implementing adequate controls around
privacy is failing in some areas. We are going to examine several ways to achieve privacy
and the challenges in doing so.
3.1 Anonymity and Pseudonyms

Anonymity is a situation where the identity of the person acting is unknown. In informa-
tion technology, it refers to data where it is impossible to identify the individual whose
data is processed. One challenge when dealing with anonymity is that it is often possible
to re-identify individuals. Some examples include
• IP addresses assigned by Internet Service Providers (ISPs) who can identify individuals,
• location data history, which can often reveal an individual,
• unique identifiers such as social security numbers, customer numbers, or personnel
numbers, that can be mapped to an individual, and
• statistical data filtering, which can often reveal the identity of an individual.
These challenges have triggered research in the area of anonymity and how to achieve it.
k-Anonymity
k-anonymity is a concept that manages the conflict of using data and, at the same time,
protecting the privacy of the individuals involved with the data. This compromise is ach-
ieved by making the data less accurate. The following example will show how it works.
Assume that we have a list of voters in an employee satisfaction survey. We want to give
managers enough information to act on the feedback but, at the same time, ensure that
they cannot determine who provided the feedback. The initial, non-anonymized feedback
table looks like this:
Table 1: Non-Anonymized Feedback Table
Name Age Country Gender Feedback
Susan 24 USA Female Bad
Martin 27 Germany Male Good
Rachel 20 Israel Female Bad
44
Ramu 28 India Male Medium
Ralf 32 USA Male Good
Natalie 33 Israel Female Medium
Miriam 33 Germany Female Good
Sven 34 Germany Male Medium
Aurelie 30 Belgium Female Medium
Eva-Maria 29 USA Female Medium
The challenge with this kind of data is that even though the name is removed, filters relat-
ing to country or age could still indicate who gave the feedback. Upon seeing the age and
country of the individuals, it would be easy to get the feedback of Rachel and Natalie.
Hence, two methods are applied:
1. Suppression: Attributes are removed completely, in this case the name and the coun-
try.
2. Generalization: The process of replacing specific data with broader categories. An
example of this is demonstrated below in the age field.
Table 2: 2-Anonymity Feedback Table
* < 25 * Female Bad
* 25-35 * Male Good
* < 25 * Female Bad
* 25-35 * Male Medium
* 25-35 * Male Good
* 25-35 * Female Medium
* 25-35 * Female Good
* 25-35 * Male Medium
45
This dataset achieves 2-anonymity because for any combination of age and gender, there
are always at least two rows with the same attribute values.
This is still not ideal; in the example, even without knowing which of the two females in
the <25 age group is contained in which row, it is still clear that both gave the feedback
“bad”.
l-Diversity
l-diversity (often written as ℓ-diversity) is an extension of the k-anonymity model that

addresses the problem shown in the example. For a dataset to be l-diverse, it must be k-
anonymous for some value k ≥ l, and for any set of rows containing the same combination
of identifying attributes (in the example: age and gender), there must be at least l different
values in the sensitive attribute (in the example: feedback). Again, this is a compromise
between privacy and still being able to use the data. A 3-diverse table would look like the
one demonstrated in the following figure.
Table 3: 3-Diverse Feedback Table
* 2* * Female Bad
* 2* * Female Medium
* 2* * Female Bad
* 2* * Male Good
* 2* * Male Medium
* 2* * Male Good
* 3* * * Medium
* 3* * * Medium
* 3* * * Good
* 3* * * Medium
Differential Privacy
Differential privacy changes data so that it still can be used statistically, but the privacy of
individuals is maintained. A common example is to survey individuals if they possess a
certain trait. Everyone tosses a coin before answering. If the coin toss reveals heads, the
person answers with the truth. If not, the person answers with “yes.” This way, the overall
statistics of the dataset are still useful, but it makes it impossible to reveal whether the
answer “yes” by a certain individual was given because it is true or because of the coin
toss.
46
The definition of differential privacy uses the parameter ε to measure the privacy of a
dataset.
Differential privacy adds random noise to a dataset in order to achieve the requested level
of privacy. These can be random dummy records that are added or random changes to
datasets.
Pseudonymization
In some use cases, anonymizing data is not acceptable since one does not want to com-
pletely lose the relationship from data to the people concerned even though most of the
time, it is not needed. For example, in a long-term medical study one does not need to
know the identity of the patients whose data are processed, but one may want to be able
to assign new data collected a year later to the same patients.
This can be achieved by pseudonymizing the data which is a form of processing of per-
sonal data which ensures that, although persons can still be identified using the data, this
is only possible using additional information that is kept separately, with restricted access.
For example, the data may contain a random number (the pseudonym) instead of the
name of the person, and the table relating numbers and names is kept confidential.
From a data protection perspective, pseudonymized data are very different from anony-
mous data. Pseudonymizing data is a measure that can help to protect personal data ade-
quately and therefore is recommended in regulations such as GDPR or the PCI DSS stand-
ard used for credit card data. (Note that in PCI DSS, this approach is called masking.)
Nevertheless, pseudonymized data are still considered personal data and therefore have
to conform to relevant data protection regulations. Anonymous data, on the other hand,
are not considered personal data and data protection regulations are therefore not appli-
cable.
3.2 Data Protection in Data Science and

Big Data
The terms big data, data science, and artificial intelligence are often used together to
define similar things. As these concepts have similar challenges when it comes to data
protection, we will use the following definitions: Big data are high-volume, high-velocity,
and high-variety information assets that demand cost-effective, innovative forms of infor-
mation processing for enhanced insight and decision-making (Big Data, n.d.).
Artificial Intelligence (AI) is a subdiscipline of computer science which is concerned with

the investigation of the mechanisms of intelligent human behaviour. It tries to implement
into IT system behaviour that would be considered “intelligent” in humans.
47
Throughout this unit, we will use the term “big data,” but that also includes artificial intel-
ligence and data science applications. The following aspects make this kind of processing
special:
• use of algorithms,
• opacity of the processing,
• tendency to collect all of the data,
• repurposing of data, and
• use of new types of data.
Hence, from a data protection perspective, several principles are violated and need to be
taken care of in order to ensure compliance with privacy regulations. There are many ben-
efits that come from these new forms of processing. Examples include targeting customers
more specifically, ensuring more adequate personalized resources are produced for edu-
cation, and making transportation routes more efficient. There are also a lot of risks as
these tools can lead to unintended outcomes. For example, some algorithms have discri-
minated based on gender during job application processes or discriminated based on race
when it came to determining prison sentences. The ICO (Information Commissioner’s
Office), the data protection authority in the United Kingdom, requires organizations to
consider the following aspects when using big data (Information Commissioner’s Office,
2017). This list provides a summary of these requirements.
1. Fairness
Intrusive effects a) Some types of big data analytics, such as profiling, can have intrusive effects on
These can be credit individuals.
scores or decisions
regarding job applica- b) Organizations need to consider whether the use of personal data in big data appli-
tions. cations is within people’s reasonable expectations.
2. Conditions for processing personal data
a) Obtaining meaningful consent is often difficult in a big data context, but novel and
innovative approaches can help.
b) Relying on the legitimate interest condition is not a soft option. Big data organiza-
tions must always balance their own interests against those of the individuals
concerned.
3. Purpose limitation
a) The purpose limitation principle does not necessarily create a barrier for big data
analytics, but it means an assessment of the compatibility of processing purposes
must be completed.
4. Data minimization and retention
a) Big data analytics can result in the collection of personal data that is in excess of
what is needed for the processing purpose. Retention periods must not be exten-
ded to ensure that big data analysis can take place.
5. Accuracy
a) There are implications regarding the accuracy of personal data at all stages of a
big data project: collection, analysis, and application.
b) Hidden biases in datasets can lead to inaccurate predictions about individuals.
48
6. Rights of the individuals
a) The vast quantities of data used in big data analytics may make it more difficult
for organizations to comply with the right of access to personal data.
7. Accountability
a) Machine learning algorithms have the potential to make decisions that are dis-
criminatory, erroneous, and unjustified.
b) Data quality is a key issue for those with information governance responsibilities
in a big data context.
8. Data controllers and processors
a) Organizations outsourcing analytics to companies specializing in AI and machine
learning need to carefully consider who has control over the processing of any
personal data.
9. Anonymization
a) Often, big data analytics will not require the use of data that identifies individuals,
hence anonymization can mitigate a lot of the risks.
10. Privacy by design and by default
a) Embedding privacy by design solutions into big data analytics can help to protect
privacy through a range of technical and organizational measures.
11. Algorithmic transparency
a) Auditing techniques can be used to identify the factors that influence an algorith-
mic decision.
b) A combination of technical and organizational approaches to algorithmic trans-
parency should be used.
Having these measures in mind during implementation and design helps an organization
to achieve compliance and process PII in a fair and ethical way.
3.3 User Tracking in Online Marketing

Tracking in online marketing refers to logging a user’s activity on the Web. Tracking is Tracking
used to determine the success of marketing campaigns, to associate clicks with the affili- Advertisements on the
web are targeted at you
ate that helps to fund many websites, and to check whether or not a website can be used. based on previous inter-
est in a topic. This is ach-
Tracking provides the following information: ieved via tracking and
often via cookies.
• from where a user accesses a Web page,

• how often pages are accessed,
• how long a user stays on a certain page, and
• where users go when they leave the site.
The privacy risk is that via tracking the behavior of users, this behavior can be steered.
Cambridge Analytica used tracking to issue ads in a political campaign that included fake
news, but these ads were extremely difficult to detect as they only reached a small num-
ber of individuals (Hern, 2018). Sensitive personal data can also be revealed by under-
standing the browsing habits of an individual.
49
Different tools are used to track users’ behavior:
• First-party cookies are stored by the domain (website) that a user is visiting directly.
They allow website owners to collect analytics data, remember language settings, and
perform other functions.
• Third party cookies are created by domains outside of the one an individual is visiting
directly, hence the name “third party.” They are used for cross-site tracking, retargeting,
and ad-serving.
• Cross-device tracking is a technique used to track a user across the different devices
that they use.
• Fingerprint tracking uses certain characteristics of a browser (version, fonts installed,
hardware details, etc.) to identify a user. Nothing needs to be stored on the device of the
user.
• Common IDs that users log in to, such as Google ID or Apple ID.
• Advertising IDs allow tracking on mobile devices.
• Web beacons or tracking pixels can show that a user has accessed certain content.
There is a lot of ongoing discussion about the legality of Web tracking in the European
Union under GDPR. The CCPA may also change the situation in California in the future. The
advertising industry argues that it is their legitimate interest, inherent in their business
model, and also beneficial to the users to use tracking technology. Privacy advocates and
consumer groups argue that this is not the case and a user may only be legally tracked if
they have provided valid consent. A recent case (October 1st, 2019, Case C-673/17) at the
European Court of Justice made a preliminary ruling between Planet49, an advertisement
organization, and a German consumer organization. The case makes it clear that cookies
that are not strictly necessary must be untagged according to the privacy by default princi-
ple (Infocuria, 2019).
A typical cookie banner gives the users choices for each category of cookies. Buttons can
be pushed to accept all cookies or to save certain settings. Necessary cookies are usually
pre-tagged. Users get an explanation about the different categories of cookies. This is
done in language that users can understand without having technical background. Only
the necessary cookies should be turned on by default. Most authorities in Europe share
this opinion, but advertisement companies are fighting it. The previously mentioned EU
ePrivacy Directive should provide future guidance. CCPA and data protection rules other
than GDPR do not yet have a ruling such as this. Most of them only require information to
be provided to the individuals, nothing more.
3.4 Cloud Computing

Cloud computing is now commonly used. ISO/IEC 19941:2017 (2017) states that cloud
computing allows for network access to a scalable pool of physical or virtual resources
that can be shared. Administration and self-service provisioning are also available.
Cloud computing consists of the following essential characteristics:
50
• Resource pooling: The cloud provider extracts resources and collects them into pools,
then the portions of that pool are allocated to cloud customers.
• Broad network access: All resources are available via the internet.
• Rapid elasticity: Expanding and reducing the usage of cloud resources takes place as
needed following demand patterns.
• Measured service: That which is provided by the cloud provider is metered. Charging is
based on that measurement.
• On-demand self-service: Cloud customers manage the provisioning of resources on
their own.
Cloud models come in different service models, the most common ones are listed below:
• Software as a service (SaaS) is a full application managed and hosted by the provider.
• Platform as a service (PaaS) is an IT platform that is provided, such as a database plat-
form or several environments on which a customer can run their own application.
• Infrastructure as a service (IaaS) is a pool of fundamental IT services, such as servers
with operating systems, network, or storage.
It should be noted that sometimes the lines between the different service models cannot
be drawn accurately.
Finally, there are four different deployment models:
1. Public cloud: The cloud infrastructure is made available to the general public.
2. Private cloud: The cloud infrastructure is operated for one organization only.
3. Hybrid cloud: The cloud infrastructure is a composition of a public and private cloud.
4. Community cloud: Several organizations, usually from the same industry or geo-
graphic location, share cloud resources.
From a privacy perspective, the biggest challenge comes from the distributed nature of
cloud resources. Cloud computing happens across the globe and it is often unclear where
the resources of the cloud provider are really located. As a result, it can also be unclear
where the data of an organization is currently located. Several data protection regulations
require that PII is kept in the legislation or that special additional safeguards are imple-
mented to allow the exportation of PII.
These challenges are usually addressed by the following means:
• The cloud provider offers options to restrict where the data is stored. Microsoft allows
for the Azure cloud to define several regions and countries, and pricing is different for
each region. Amazon also offers storage options like this as part of their Amazon Web
Service (AWS) offerings.
• Cloud providers show the security of PII via certifications. ISO 27017 (Information tech-
nology—Security techniques—Code of practice for information security controls based
on ISO/IEC 27002 for cloud services) provides security guidelines, whereas ISO 27018
(Information technology—Security techniques—Code of practice for protection of per-
sonally identifiable information (PII) in public clouds acting as PII processors) is specifi-
51
cally tackling privacy. These certifications cannot circumvent the need for additional
safeguards, such as model clauses, but can help to assure that certain standards are
met.
• Model clauses or other contractual agreements are signed to ensure that exported PII is
processed correctly.
The different legal obligations are challenging. Many countries require that organizations
make data available to governmental agencies such as law enforcement agencies,
national security agencies, and others. These requirements can directly conflict with pri-
vacy laws of the data-exporting countries. A way to mitigate this challenge is to under-
stand and define where data are stored. Information can also be encrypted so a foreign
law enforcement agency cannot access PII. However, keep in mind that the implementa-
tion of that cryptographic scheme needs to ensure that data at rest, in transit, and in use
are encrypted in order to properly safeguard the information from a cloud provider seek-
ing access.
The Cloud Security Alliance proposes 14 domains that should be investigated in order to
achieve an adequate level of security (Cloud Security Alliance, 2017). These domains are
summarized below:
1. Cloud computing concepts and architectures: This domain is the conceptual frame-
work for the rest of the guidance. It describes and defines cloud computing, sets our
baseline terminology, and details the overall logical and architectural frameworks
used in the rest of the document.
2. Governance and enterprise risk management: This domain concerns the ability of an
organization to govern and measure enterprise risk introduced by cloud computing.
3. Legal issues, contracts, and electronic discovery potential: This domain covers legal
issues that may arise when using cloud computing. Issues covered in this section
include protection requirements for information and computer systems, security
breach disclosure laws, regulatory requirements, privacy requirements, international
laws, etc.
4. Compliance and audit management: This domain addresses ways to maintain and
prove compliance when using cloud computing.
5. Information governance: This domain focuses on governing data that is placed in the
cloud. Items surrounding the identification and control of data in the cloud, as well as
compensating controls that can be used to deal with the loss of physical control when
moving data to the cloud, are discussed here.
6. Management plane and business continuity: This domain gives guidance on securing
the management plane and administrative interfaces used when accessing the cloud,
including both web consoles and APIs.
7. Infrastructure security: This domain covers core cloud infrastructure security includ-
ing networking, workload security, and hybrid cloud considerations.
8. Virtualization and containers: This domain focuses on security for hypervisors, con-
tainers, and software defined networks.
9. Incident response: This domain gives guidance on proper and adequate incident
detection, response, notification, and remediation.
52
10. Application security: This domain focuses on securing application software that is
running on or being developed in the cloud. This includes reference to the OWASP top
10.
11. Data security and encryption: This domain addresses the implementation of data
security and encryption and ensuring scalable key management.
12. Identity, entitlement, and access management: This domain covers managing identi-
ties and leveraging directory services to provide access control.
13. Security as a service: This domain focuses on providing third party-facilitated security
services.
14. Related technologies: This domain addresses technologies with a relationship to
cloud computing including big data, Internet of Things, and mobile computing.
SUMMARY
Implementing privacy is possible but requires certain techniques to be
successful. Different variations of privacy provide different levels of pri-
vacy. More basic techniques, such as generalization and suppression,
need to be considered and used carefully as individual data can still be
revealed. Differential privacy provides a higher level of privacy assur-
ance, but it always comes with the cost of making the data less usable.
The right balance has to be found.
User tracking, cloud computing, and data science provide huge value for
an organization, but each have certain challenges from a privacy per-
spective. Where user tracking is a topic of transparency and consent,
data science brings us to an area where an organization has to find a bal-
ance between the interests of the organization and the individual. Pur-
pose limitation and data minimization are in direct conflict with the
needs of data science.
Cloud computing provides benefits, but it involves the data leaving the
organization and essentially being processed somewhere else. Some-
times it is not easy to determine where and how the PII is processed and
the cloud security alliance provides guidelines and a framework for
explaining how to tackle it. In particular, cross-border transfers of PII are
so easy that an organization has to consider the legality of them and
agree to the contractual safeguards or data processing in a specific
country or region.
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UNIT 4
BUILDING BLOCKS OF CYBER SECURITY
STUDY GOALS
– basic cyber security concepts and core cyber security buildings blocks.
– how to write a solid security plan.
– how to “secure” code and test Web applications in a security context.
– about the concept of DevSecOps.
– how to develop a secure IT system.
– how to best determine a cyber security framework for a company.
4. BUILDING BLOCKS OF CYBER SECURITY
Introduction
It is not simple to explain the concept and the necessary building blocks of cyber security
without clarifying some basic concepts. Unlike information or IT security, the main objec-
tives in cyber security are not only to defend digital information in the cyber world, but
also to defend other vulnerable aspects of the information and communication technol-
ogy environment. There are a lot of possible ways to define cyber security building blocks,
but their main features include
• identification, authentication, access management, accounting, and control (IAAA),

• network security,
• end-point security,
• information management,
• vulnerability, threat and incident management, and
• awareness, training, and education.
4.1 Authentication, Access Management,

and Control
There are four basic concepts, known as IAAA (spoken “I triple A”), that must be known
when managing access to a system. They are
• identification (who you are),

• authentication (proof of who you are),
• authorization (what you can do), and
• accountability (audit and audit logs concept).
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Figure 5: Process of Gaining Access to a System
The figure above shows the steps that should be taken in order to gain access to a system.
For the identification phase we need to have obtained one or more of the following: ID,
username, employee number, PIN, or something similar from HR. In order to move
through the authentication process, there is a requirement to produce something that we
know (PIN, password, pattern, etc.), something that we have (token, smart card, etc.), or
some biometric property (fingerprint, iris scan, etc.). After successful authentication, we
will gain limited access to the resources (permission and rights). Authentication is
designed to reduce the possibility that an unauthorized user obtains access by imperso-
nating an authorized user. The organization’s security policy should reflect how difficult it
is for one user to impersonate another. Highly sensitive or valuable information demands
stronger authentication technologies than less sensitive or valuable information (Pearson
IT certification, 2002). The most common and least stringent form of authentication tech-
nology only demands that users provide a valid account name and a password in order to
obtain access to a system or network. In environments where passwords provide the only
barriers to entry and access, it is essential to understand how to create strong passwords
and protect well-known accounts from attack. Today, most IT systems in companies
already have a mechanism for checking password complexity known as the complexity
rule. As of January 2020, common minimum requirements of the password policy dictate
that passwords must be at least 12 characters long (a combination of uppercase and low-
ercase letters, numbers, and special characters), for example, “gnlemZUH70_$.” The prob-
lem with such complexity is remembering this kind of password, but a user can build their
own algorithm to help with remembering, or they can use third party software for pass-
word management. One risk of having weak passwords in computer-readable formats is
that they can be used in a brute-force or dictionary attack. Effective authentication man-
agement is described in the new NIST Special Publication 800-63A-C—Digital Identity
Guidelines (Grassi et al., 2019).
An alternative method for authentication is biometrics. Biometrics refers to metrics rela-

ted to human characteristics. Biometric identifiers are measurable, distinctive characteris-
tics that are used to label and describe individuals. By utilizing biometrics, a user could be
distinguished by who they are instead of what they have (card, token) or what they know
57
(secret key, PIN) (Kalyani, 2017). Biometric systems “read” some physical characteristic of
the user such as a fingerprint, facial features, retinal pattern, voiceprint, hand geometry,
or signature. Even the user’s way of walking or typing on a keyboard can be used as bio-
metric authentication. These readings are compared to a database of authorized users, or
a pattern, to determine identity. Authentication based on biometrics seems very secure at
first sight, but experience shows some major drawbacks. First, there are several examples
of overcoming such a system, for example using a fingerprint dummy based on a high-res-
olution photograph of a glass touched by the person concerned. Second, since different
measurements of biometric properties of the same person are never identical, one must
access a certain degree of deviation. If the deviation accepted is too large, this leads to a
high false acceptance rate (FAR) where people with similar characteristics are accepted as
well. If the deviation accepted is too low, this leads to high false rejection rate (FRR) where
even legitimate users are not accepted and, if this happens repeatedly, may not be able to
access the system. Third, while it is possible to change a password or PIN, it is not possible
to change one’s biometric characteristics even if they have been “stolen” and are misused.
The next authentication method is security devices. These systems require the use of a
special hardware device that functions like a customized key to gain system access. The
device may be inserted into the system like a key or used to generate a code that is then
entered into the system.
For enhanced security, two (2-Factor Authentication (2FA)) or more (Multi-Factor Authenti-
cation (MFA)) factors may be combined for authentication. This can be a username and
password with other credentials, such as a code from the user’s smartphone or finger-
print, the answer to a security question, or facial recognition. The figure below shows a
specific example of an MFA, or three factor combination of authentication (username and
password + PIN + fingerprint).
Figure 6: Steps in the MFA Method
Single sign-on (SSO) is another method that many companies use. This is a combination of
identity and access management (IAM) that enables users to securely authenticate with
multiple applications and websites by logging in only once with just one set of credentials
(username and password, for example). “SSO is the ability for a user to authenticate once
to a single authentication authority and then access other protected resources without
authenticating again. The Open Group defines SSO as the mechanism whereby a single
58
action of user authentication and authorization can permit a user to access all computers
and systems where that user has access permission, without the need to enter multiple
passwords” (De Clercq, 2002, Abstract Section, para. 2).
Kerberos is a commonly used protocol for SSO in distributed environments. Kerberos is

implemented in open source products but also in Microsoft Active Directory. The main
component is a key distribution center (KDC) that holds the secret keys of all users and
services. It provides an authentication service (AS) and a key distribution functionality.
The KDC provides security services to the principals, which can be users, applications, or
other network services. The KDC must have an account for every principal. A ticket is gen-
erated by the ticket granting service (TGS) on the KDC and given to a principal. The ticket
enables the principal to authenticate to another principal (Neumann et al., 2005).
Figure 7: Kerberos, a Common SSO Protocol, Authentication
There are two methods of access—physical and logical. Physical access control is a
mechanical form—for example physical access to a room (locker server room) with keys.
Physical access can be achieved with physical keys, or it can be controlled by an applica-
tion or system software with a chip on an access card.
Logical access controls tools that are used for credentials, validation, authorization, and
accountability in cyber infrastructure and the systems within it. These components are
often implemented on several levels and enforce access control measures for systems,
applications, processes, and information. This type of access control can also be embed-
ded inside an application, operating system, database, or administrative system (Vacca,
2014).
Today, there are numerous methods of access controls implemented in real-world set-
tings. These include the following:
59
• Mandatory Access Control (MAC),
• Discretionary Access Control (DAC),
• Rule-Based Access Control, and
• Role-Based Access Control (RBAC).
In a Mandatory Access Control (MAC) environment, all requests for access to resources are
automatically subject to access controls. In such environments, all users and resources are
classified and receive one or more security labels (such as “Unclassified,” “Secret,” and
“Top Secret”). A well-known form of MAC is the Bell-LaPadula model where a user can only
access a resource if the user’s security label is at least as high as that of the resource. Any
resource created or written by a user automatically receives the security label of the user.
This approach works well for protecting confidentiality (no read-up) but, in its pure form,
makes it impossible for a user to communicate to other users who have a lower security
label (no write-down). The Biba model, on the other hand, puts the emphasis on integrity
rather than on confidentiality of the resources, therefore defining that a user can only
access a resource if the user’s security label is as high as that of the resource (no read-
down, no write-up). Since this leads to similar problems as Bell-LaPadula, both models are
useful as a basis but rarely used in pure form, only in weakened forms. For example, in the
Biba model, users are additionally allowed to access resources with lower security levels,
but only after they have explicitly confirmed that they want to access such less trusted
data.
In a Discretionary Access Controlled (DAC) environment, resource owners and administra-

tors jointly control access to resources. This model allows for much greater flexibility and
drastically reduces the administrative burdens of security implementation. In general,
rule-based access control systems associate explicit access controls with specific system
resources, such as files or printers. In such environments, administrators typically estab-
lish access rules on a per-resource basis, and the underlying operating system or directory
service employs those rules to grant or deny access to users who request it. Rule-based
access controls may use a MAC or DAC scheme, depending on the management role of the
resource owners. Role-based access control (RBAC) enforces access controls depending on
a user’s role(s). Roles represent specific organizational duties and are commonly mapped
to job titles such as “A/P clerk,” “receptionist,” or “chief executive officer.” Obviously, these
roles require vastly different network access privileges (Chapple et al., 2002).
Considering that users need access to a large number of applications, websites, Web serv-
ices, etc., it is important to have a “simple” method of authentication without a lot of com-
plex passwords or cards with chips. One solution to this challenge was offered by the FIDO
Alliance. The FIDO2 specifications are the World Wide Web Consortium’s (W3C) Web
Authentication (WebAuthn) specification and FIDO Alliance’s corresponding Client-to-
Authenticator Protocol (CTAP) (FIDO, n.d.). The idea to have sound authentication meth-
ods without passwords and/or complex hardware has been implemented through “pass-
wordless” authentication, two-factor authentication, or multi-factor authentication in
combination with biometrics. All of these options can be implemented in a simple piece of
hardware.
60
The FIDO alliance proposes a simpler and more effective standard regarding authentica-
tion. It specifically addresses the challenges around the dependency on passwords (FIDO
Alliance, n.d.-b). FIDO2 is comprised of the W3C Web Authentication specification and cor-
responding Client-to-Authenticator Protocols (CTAP) from the FIDO Alliance. FIDO2 sup-
ports passwordless, second factor, and multi-factor user experiences with embedded
(bound) authenticators such as biometrics or PINs, or external (roaming) authenticators
such as FIDO Security Keys, mobile devices, wearables, etc. The protocols do not provide
information that can be used by different online services to collaborate and track a user
across the services. Biometric information, if used, never leaves the user’s device (mobile
phone, USB stick, PC, etc.) (FIDO Alliance, n.d.-a).
Auditing capabilities ensure that users are accountable for their actions. They can be used
to verify users’ actions and help during investigations. Audit documentation and log files
hold a massive amount of information and the challenge is often to reduce it to the rele-
vant parts. Audit trails contain information about operating system activity, application
events, network events, and user actions. Audit trails can also be used to alert system
administrators or managers of a certain event. They can also be used later for forensics
during a criminal investigation. Audit trails can be reviewed manually or automatically,
but they must be reviewed and analyzed. A Security Information and Event Management
(SIEM) system can help to manage audit trails and alerts (Nieles et al., 2017). On the other
hand, audit trails create new challenges since they collect the personal data of the users,
so an adequate compromise must be found for any specific system.
4.2 Endpoint Security

General concept endpoint security refers to securing “end-user devices” like desktops, lap-
tops, and mobile devices. Conversely, servers in datacenters can also be considered end-
point devices. It is very hard to give a precise definition, but in the context of cyber secur-
ity, it can be said that endpoint devices are users’ devices that are connected to the
network. Endpoint security does not only involve antivirus-software protection. Endpoints
serve as points of access to an enterprise network and create points of entry that can be
exploited by malicious actors. Therefore, many types of endpoint protection are needed,
including antivirus-solutions, Internet of Things (IoT) security, network access control,
detection and response, encryption, and sandboxing to name just a few. There are many
features that endpoint security may have, such as
• data loss prevention (DLP),

• protection against insider threat,
• endpoint detection and response,
• encryption (email, communication, full disk),
• application whitelisting or control,
• network access control (NAC),
• data classification, and
• privileged user control.
61
Sometimes, the protection of endpoint devices is included in third party software; how-
ever, it can also be included in the development of the hardware itself, or the “security by
design” concept. This building block of cyber security must be taken seriously in the proc-
ess of developing a cyber security program or strategy. Below, the combination of fea-
tured endpoints will be explained.
The simplest way to explain endpoint security in action is through the protection of PCs or
laptops—the most-used endpoint devices in corporate settings. When securing these devi-
ces, we are not only securing the data stored on these devices, but also the entire corpo-
rate network. This means that many features must be implemented in order to achieve
this level of security.
When securing data and preventing data loss (data loss prevention or DLP), we first need
to prioritize, categorize (classify), and label information because not all information has
the same level of sensitivity. This is done through an internal company procedure, for
example, according to ISO27001, Annex A.8.2.1 and A.8.2.2. Typical classification levels in
the public sector are public, internal, secret, and top secret. In the private sector, public,
internal, restricted, and private are often used. After that, risk needs to be managed and a
procedure for monitoring the movement of data needs to be established. Typically, there
is always some kind of “.log” file monitoring system, such as SIEM (Security Information
and Event Management System). Logging data flow is very important in this process, as
the only way to get adequate information about security incidents that arise, or have
already occurred, is through data analysis. Protection from an external threat, such as
malware and malicious activity, is just as important and should always be part of corpo-
rate policy, including local anti-virus protections, centralized monitoring, and anti-virus
management. Firewall protection is very often combined with this kind of software in
order to protect access to and from external resources. Network security and privacy is not
only implemented through firewalls and rules, but also through encryption, proxy, and
VPNs. In a situation where we want to defend and protect our data and information on our
end devices or the flow of our data across the network, we will use cryptography and
encryption features. This can be a partial encryption of “top-secret” classified data,
encryption of the whole disk (a very common situation), or encryption of data flow across
the network with a VPN.
4.3 Cyber Security in Networks

Network security focuses on the security of communication networks.
Network security consists of policies, procedures, and practices which are adopted to
monitor, prevent, and defend against unauthorized access, misuse, modification, or denial
of service. Network security covers a variety of computer networks—public and private,
LAN, WAN, and others that are used in everyday jobs. Networks can be private company
networks or open to public access.
62
Cyber security in networks consists of protection, detection, and reaction phases. “Pro- Cyber security
tection” means that systems and networks must be configured as correctly as possible In networks, cyber secur-
ity consists of the protec-
with implemented security measures. “Detection” identifies when the configuration has tion, detection, and reac-
changed or when some network traffic indicates a problem. “Reaction” is the response to tion phases, although
a problem and the return to a safe state as quickly as possible. Today, most cyber security identify and recover pha-
ses can also be found in
frameworks, such as NIST and CSF, recommend working with these phases. some cyber security
frameworks.
There are many proposed methods and techniques, including the following:
• Access control blocks unauthorized users and devices from accessing the network.
Users that are allowed network access should only be able to work with the limited set
of resources for which they have been authorized (need to know/need to access princi-
ple).
• DLP (data loss prevention) implements processes to ensure that data is not exfiltrated
out of the network.
• Firewalls follow the rules that are defined to permit or deny network traffic between the
network and the internet (militarized and de-militarized zone). They establish a barrier
between trusted and untrusted sites.
• The intrusion detection and prevention system (IDS/IPS) scans network traffic to iden-
tify and block attacks, often by correlating network activity signatures with databases of
known attack techniques.
• Network segmentation—Network and software-defined segmentation puts network
traffic into different classifications and makes it easier to enforce security policies.
• Security information and event management (SIEM) products aim to automatically pull
together information from a variety of network tools to provide the data you need in
order to identify and respond to threats.
• Virtual private networks (VPN) are systems (typically based on IPsec or SSL) that protect
the communication between a device and a secure network, creating a secure, encryp-
ted “tunnel” across the open internet.
• Web security controls internal staff’s Web use in order to prevent Web-based threats
from using browsers as a vector to infect your network (Fruhlinger, 2018).
Incident management includes proactive and reactive processes so that incidents can be
detected and then dealt with. A SIEM system often helps, and a security operations center
(SOC) handles the incident. The team that consists of several (IT) experts to handle a con-
crete incident is a computer emergency response team (CERT). There are many incident
models and processes available that typically follow this structure:
1. Detection: An organization must realize that an actual incident has taken place, e.g.,
an attack. Sensors and SIEM systems help to detect an incident.
2. Response: The next step is to determine what the actual response will be. Usually
more data is gathered and analyzed at this stage to respond adequately. It is not good
to blindly change IPS or firewall rules at this point in time but to first understand what
an attacker wants, who they are, and what methods are used.
3. Mitigation: The next step is to mitigate or contain the damage caused by the incident.
The goal is to prevent or reduce further damage from this incident. Mitigation hap-
pens based on priority, so information of a high value (e.g., sensitive PII) will be con-
tained and protected first.
63
4. Reporting: Incident reporting and documentation happens throughout the process.
Often, someone else reports the unusual behavior of a system, then the CERT team
gets involved. Documenting the incident also plays a role in legal disputes or when
deciding whether a cyber security insurance needs to get involved afterwards.
5. Recover: Once the incident is mitigated, all systems and information must be enabled
again. Before that, evidence must be gathered for further forensics. This phase
includes fixing what was broken by the incident.
6. Remediation: In the last phase of an incident, it is ensured that the attack cannot be
successful again. In this phase, it is decided which measures are implemented, such
as firewall settings. Learning what went wrong and what can be done better is also an
important action in this phase.
Authentication, authorization, and accounting are important requirements during a

remote access session (RAS).
A central authentication service for dial-up users is the standard remote authentication
and dial-in user service (RADIUS). RADIUS incorporates an authentication server and
dynamic passwords. The RADIUS protocol is an open, lightweight, UDP-based protocol,
and the program can be modified so that it can work with a lot of security systems. It pro-
vides authentication, authorization, and accounting services to routers, modem servers,
and wireless applications. RADIUS is described in RFC 2865. The NAS also provides
accounting information to the RADIUS server for documentation purposes (Cole et al.,
2005). An updated and improved version of the RADIUS protocol was published as DIAME-
TER protocol.
Terminal access controller access control system (TACACS) is an authentication protocol.

TACACS provides remote access authentication and related services (event logging).
Another authentication mechanism is the password authentication protocol (PAP). In PAP,

a user provides an unencrypted username and password. Those are compared with the
corresponding information stored in a database of authorized users (patterns). The chal-
lenge handshake authentication protocol (CHAP) is described in detail in the RFC 1994
standard, but in short, provides authentication after the establishment of the initial com-
munication link between the user and CHAP (Cole et al., 2005).
Yet another method of remote authentication is callback. In callback, a remote user dials
in to the authentication server, provides an ID and password, and then hangs up. The
authentication server looks up the caller’s ID in a database of authorized users and
obtains a phone number at a fixed location. The authentication server calls the phone
number, the user answers, and then the user has access to the system (Cole et al., 2005).
Extensible authentication protocol (EAP) is extension of point to point and is described in

IEEE 802.1x. Its main task is to secure a connection with point to point or access to the
network, which is only possible after authentication.
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4.4 Developing Secure IT Systems
The first prerequisite for a secure IT system is a cyber security plan. This plan is always Cyber security plan
part of a cyber security strategy, which must be compatible with the corporate strategy. In A cyber security plan
must be incorporated in
this section, we will describe Common Criteria (CC) and evaluation assurance level, which to the cyber security and
are the technical base for product security evaluation and certification. At the end of this corporate strategies.
section, two examples of good practices will be presented—Open Web Application Secur- Common Criteria
This can be used as a
ity Project (OWASP) and development security operation (DevSecOps). guide or template for the
development of cyber
The Common Criteria for Information Technology Security Evaluation (CC), is technical basis for security systems.
an international agreement, the Common Criteria Recognition Arrangement (CCRA), which
ensures that
• products can be evaluated by competent and independent licensed laboratories to determine

the fulfilment of particular security properties to a certain extent or assurance.
• supporting documents are used within the Common Criteria certification process to define
how the criteria and evaluation methods are applied when certifying specific technologies.
• the certification of the security properties of an evaluated product can be issued by several
Certificate Authorizing Schemes, with this certification being based on the result of their eval-
uation.
• these certificates are recognized by all the signatories of the CCRA (Common Criteria, n.d., The
Common Criteria Section, para. 1).
The CC can be used as a guide for the development, evaluation, and/or procurement of IT
products with security functionality. CC is described in ISO standard ISO/IEC 15408. The
basic terms used in the CC domain are explained below.
• Target of evaluation (TOE)—the product or system that is the subject of the evaluation,
which also has the following security features:
◦ Protection profile (PP)—a document which describes security requirements, for
example, for equipment.
◦ Security targets (ST)—a document that identifies the security properties of the target
of evaluation.
◦ Security functional requirements (SFRs)—these specify individual security functions
which may be provided by a product.
Quality of the product can be achieved by paying attention to the following:
• Security assurance requirements (SARs) are measures taken during development and
evaluation of the product to assure compliance with the claimed security functionality.
• Evaluation assurance level (EAL) is the numerical rating describing the depth and rigor
of an evaluation (Common Criteria, 2017). Common Criteria lists seven levels of EAL
with EAL 1 being the most basic and EAL 7 being the most stringent:
◦ EAL1—functionally tested
◦ EAL2—structurally tested
◦ EAL3—methodically tested and checked
◦ EAL4—methodically designed, tested, and reviewed
◦ EAL5—semi-formally designed and tested
65
◦ EAL6—semi-formally verified design and tested
◦ EAL7—formally verified design and tested
A higher EAL does not necessarily mean that the products are more secure, but rather that
more thorough verification was performed. To better understand CC certification, the fol-
lowing are examples of some steps that companies must take to become CC certified:
• Security target (ST) and other supporting documents, such as an overview of the prod-
ucts with emphasis on security features and potential security threats, must be com-
plete.
• Self-assessment with documentation regarding the way that products conform to the
structure of protection profile and evaluation assurance level test must be completed.
• Evaluation of the products must be completed in an independent licensed laboratory.
There must be proof that the products’ security level is at a “satisfactory level.”
• If the security level of the product is satisfactory and the product passes the evaluation,
certification will be given by various certificate authorizing schemes (CAS).
A good way to build a secure IT system is to use the OWASP Security Knowledge Frame-
work. It can be used as a guide to help with the building and verification of secure soft-
ware. In the secure software development life cycle, education is the first step, so this
framework is useful when training developers in the area of application security.
Figure 8: High Level View on Vulnerability Concept
Source: Open Web Application Security Project, 2017.
66
The source code of an application must be good and secure, but what is good and secure
source code? One of the organizations that produces good coding standards is Carnegie
Mellon University’s Software Engineering Institute (SEI). SEI’s top ten secure coding practi-
ces are as follows (Seacord, 2018):
1. validate input. Validate input from all untrusted data sources.

2. heed compiler warnings. Compile code using the highest warning level available for
your compiler and eliminate warnings by modifying the code.
3. create architecture and design for security policies. Create a software architecture and
design your software to implement and enforce security policies.
4. keep it simple. Keep the design as simple and small as possible.
5. deny by default. Base access decisions on permission rather than exclusion.
6. adhere to the principle of least privilege. Every process should execute with the least
set of privileges necessary to complete the job.
7. sanitize data sent to other systems. Sanitize all data passed to complex subsystems.
The calling process understands the context, it is responsible for sanitizing the data
before invoking the subsystem.
8. practice defense in depth. Manage risk with multiple defensive strategies, so that if
one layer of defense turns out to be inadequate, another layer of defense can prevent
a security flaw from becoming an exploitable vulnerability and/or limit the conse-
quences of a successful exploit.
9. use effective quality assurance techniques. Good quality assurance techniques can be
effective in identifying and eliminating vulnerabilities. Fuzz testing, penetration test-
ing, and source code audits should all be incorporated as part of an effective quality
assurance program.
10. adopt a secure coding standard. Develop and/or apply a secure coding standard for
your target development language and platform.
The SEI publishes secure coding practises for many programming languages, including
Java, C, and C++. Another good approach that helps to “make everyone responsible for
security” is DevSecOps—an extension of the well-known concept DevOps. Successful
security programs involve three intersecting parts: people, processes, and technologies.
DevSecOps is no different, but it recognizes that security is the responsibility of everyone
in an organization, and that everyone has a role to play in security. This means that people
are the main priority in DevSecOps implementation. Hiring security specialists and
experts, giving them a voice in project delivery, and allowing them to integrate their pro-
cesses in the agile development world will deliver the necessary results. Agile develop-
ment helps to speed up product release dates, but often at the cost of neglecting security.
Appointing people to be in charge of security and providing good training will also ensure
that security is a priority in an organization. Despite people being the main focus, pro-
cesses are also key to the success of DevSecOps. Version control, metadata, orchestration,
integration, compliance, security architecture, incident management, and threat intelli-
gence are just some of the main processes in DevSecOps implementation. The end goal is
to have technologies that enable people to properly execute DevSecOps processes (Ray-
naud, 2017).
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Control A14.2 in ISO27001 Standard about security in development and support processes
has the objective of ensuring that information security is designed and implemented
within the development life cycle of information systems. The requirements are described
in
• A.14.2.1 Secure Development Policy,

• A.14.2.2 System Change Control Procedures,
• A.14.2.3 Technical Review of Applications After Operating Platform Changes,
• A.14.2.4 Restrictions on Changes to Software Packages,
• A.14.2.5 Secure System Engineering Principles,
• A.14.2.6 Secure Development Environment,
• A.14.2.7 Outsourced Development,
• A.14.2.8 System Security Testing, and
• A.14.2.9 System Acceptance Testing.
Additionally, there are requirements in IEC/IAS 62443-4-1 (“Secure product development

life cycle requirements”). This Standard describes security management, development
process, and all security requirements in the life cycle of IT/OT products in industry.
A prerequisite for a secure IT system is a security framework. We will now discuss the most
important and most used cyber security frameworks—NIST CSF, ISO27K, NIST 800-53, and
IEC 62443.
Today’s cyber security models have evolved from models of computer security from a
time when IT existed in the form of standalone computers, possibly connected in a local
area network, without the internet, cyber space, or today’s services and technologies.
Computer security models offered a scheme for the specification and implementation of
security policies and were, in fact, formal descriptions of security policies.
The Cybersecurity Framework is a product of NIST (National Institute of Standards and

Technology USA) and, as of April 2018, the current version is 1.1. The framework is a risk-
based approach, and it has the following three components:
• Core is a framework made up of a set of cyber security activities, desired results, and
applicable references that are common to critical infrastructure sectors. The box itself
consists of five competitive and constant functions—identify, protect, detect, response,
and recover.
• Framework implementation tier(s) provide content and a way for an organization to
approach and act in order to manage the risk.
• Framework profiles, in fact, represent results based on business needs, selected by the
organization within the framework itself (National Institute of Standards and Technol-
ogy, 2018).
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Figure 9: NIST Cybersecurity Framework
Source: National Institute for Standards and Technology, 2018.
A practically applicable characteristic of the framework itself is that it offers a complete list
of functions, categories, subcategories, and informative references that describe specific
cyber security activities, which are most common in all critical infrastructure sectors. NIST
(National Institute of Standards and Technology) released publication 800-53 as part of a
special series of NIST-800 publications consisting of a catalogue of 20 security and privacy
control groups. Control groups are conceived and implemented as very flexible and adapt-
able to users or organizers of different profiles. They are most often used as controls for
risk management strategies. The areas covered by the controls are access control, security
awareness, risk assessment, incident response, and monitoring (National Institute of
Standards and Technology, 2020).
CIS Critical Security Controls is a product developed by the SANS institute that aims to
publish a set of actions/activities for cyber defense. The document lists 20 controls, priori-
tized as hardware, software, configuration, malware defense, data recovery, account mon-
itoring, incident response, pen-test, and red-team training (Center for Internet Security,
n.d.). The “Information Security Standard” is essentially a two-part standard, the first of
which is ISO27001. It provides the ISMS (Information Security Management System) speci-
fication with Annex A (a checklist), while the second part is ISO27002 “Code of Practice,”
which is essentially a guide consisting of the best information security practices from
around the world. ISO27001 and ISO27002 are connected because if organizations use
Annex A controls, ISO27002 will offer them a way to implement those controls (Interna-
tional Organization for Standardization, 2019).
The IEC 62443 series of standards have been developed by the ISA99 committee (Industrial
Standard for Automation) and the IEC (International Electrotechnical Commission), with
the aim of highlighting the need to design a cyber security framework for the Industrial
Automation Control System (IACS). The goal of applying this series of standards is to
improve the security, availability, confidentiality, and integrity of the system components,
69
as well as the system as a whole. Requirements of the standard itself are not only to
improve electronic security, but also to identify and point out vulnerabilities while mini-
mizing the risk of compromising information, confidentiality, or causing degradation or
failure of controlled equipment (hardware or software). The set of standards was con-
ICS, SCADA ceived and implemented for ICS, SCADA, and IACS systems (industry) and consists of 13
Industrial control systems standards divided into groups as follows:
(ICS) and supervisory
control and data acquisi-
tion (SCADA) systems • General (62443-1-1, 62443-1-2, 62443-1-3, 62443-1-4)
steer and control indus- • Policies and procedures (62443-2-1, 62443-2-2, 62443-2-3, 62443-2-4)
trial IT, such as manufac-
turing equipment or • System (62443-3-1, 62443-3-2, 62443-3-3)
power plants. • Component (62443-4-1, 62443-4-2)
As explained, there are many different approaches when selecting models and frame-
works for cyber security; however, the generalization and the uniform approach to select-
ing the right model or framework is questionable. Cyber security is needed by small busi-
nesses, organizations, medium and large businesses, large corporations, administrations,
industries, civil society, and universities—each of these has its own specificities. They
could have different requirements for the size, domain, and sphere of business, activity,
service provided, and products produced. This imposes the need for a tailored approach
when selecting a framework or cyber security model (DKE VDE, 2019).
SUMMARY
It is not so simple to talk about cyber security building blocks, as there
are many concepts and approaches when dealing with cyber security. In
this unit, we explained how to choose the most important concepts in
the cyber security domain and how to recognize essential building
blocks.
When choosing an appropriate cyber security framework, it is very

important to know what kind of company or organization it is being
chosen for. Sometimes we can use just the ISO27K framework, but
sometimes the IEC62443 framework is required. In some situations, it is
necessary to combine NIST CSF, IEC62443, and ISO27K.
When building a cyber security system, we must employ an experienced

team consisting of experts in cyber security. This unit also recommends
the use of OWASP and DevSecOps concepts when building cyber secur-
ity systems.
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UNIT 5
IT SECURITY MANAGEMENT
STUDY GOALS
– how to manage cyber security holistically.

– what role the security policy plays.
– how to use risk management to steer and control cyber security.
– how IT security and IT governance collaborate.
– what the PCI DSS standard is and how it implements security management.
5. IT SECURITY MANAGEMENT
Introduction
Cyber security is not only an important practice within an organization, but it also plays a
crucial role when managing an enterprise in current times. As organizations become com-
pletely dependent on the confidentiality, integrity, and availability of the information they
handle, the need to manage security has continued to increase, even for industries not
directly related to IT. It is important to understand the business priorities to make sure
that security incidents do not threaten the critical systems of an organization. The tools,
processes, and controls needed to protect an organization’s assets are as complex as the
information systems they are designed to protect.
When combined, business objectives, a strategy, security policy, priorities, standards, pro-
cesses, controls, and metrics help to foster a holistic cyber security management program.
This is also known as an Information Security Management System (ISMS).
Further risk management helps to identify and evaluate potential negative outcomes in
relation to the CIA triad of cyber security.
5.1 Security Policy

The development of a security policy is a foundational component in any security man-
agement system. The policy defines the principles and actions that are required so that
the organization can protect its assets and personnel. The main audience for a security
policy is the personnel of an organization. Hence, it must be easily accessible and readable
so that the lack of expert knowledge is not an excuse for policy violations. Many organiza-
tions require their personnel to acknowledge the security policy formally, both initially
and during an annual process. Different parts of the policy can address different audien-
ces. So, IT engineers can be addressed via more technically specific policy statements
than other individual contributors in an organization. To be effective, communication of
the policy needs to follow organizational practices and can be supported by video record-
ings and mentioning it at regular meetings, for example. It is important that executive
management leads by example and acts in compliance with the policy; otherwise, a policy
can easily become ineffective. The security policy must be aligned with applicable laws,
regulations, standards, and contractual obligations. Privacy should be considered, and it
must fit into the organizational culture.
Controls
A security policy must be aligned with controls. Controls are formal descriptions, safe-
guards, or counter measures used to detect, avoid, counteract, or minimize risk towards
the information assets of the organization. Controls can be classified as preventative,
detective, or deterrent.
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• Preventative controls: These controls prevent the occurrence of an unwanted event.
Examples are badge entry systems or login screen messages that prevent unauthorized
people from entering a building or accessing an IT system.
• Detective controls: These controls record both good and bad events. Video surveillance
or event logs of a server are examples of a detective control.
• Deterrent controls: These controls convince somebody not to act in a certain way. Exam-
ples are warning signs or watch dogs. Video surveillance systems also act as a deterrent,
as they are detective controls.
Three types of controls that exist are as follows:
1. Physical. These controls exist in the physical world and include video surveillance,
locks on doors, and fences.
2. Technical. These controls are implemented in IT systems, and some examples are
access control lists, audit logs, and encryption mechanisms.
3. Administrative (sometimes referred to as managerial controls). These controls are
protocols, processes, standards, and policies that forbid or require a certain activity.
Examples are rules that only allow certain software installations on a device or forbid
the connection of private devices to the network.
The security policy must be in alignment with the controls. For every policy statement, a
control must exist and vice versa, but they must not contradict each other.
Security Policy Structure
Security policies can be structured in many ways. Whether the policy consists of one docu-
ment or several different documents with references to each other is the choice of the
organization. Generally, it should align with the way that other policies are published. A
security policy statement should be general in nature and should not cite specific devices,
technologies, or configurations. It should state what needs to be done, not how it needs to
be done. That way, the statement does not need to change as often. Various topics are
included, such as the following:
• Acceptable use
• Anti-Virus / malware
• Mobile device
• Password
• Bring your own device (BYOD)
• Email and communications
• Social media
• Physical security
• Cloud security
• Security incidents
• Third party security
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5.2 Security and Risk Analysis
Cyber security risk management is the practice of balancing business opportunities with
potential cyber security-related negative outcomes. It is largely a qualitative effort, since it
is difficult to know the probability and impact of potential negative outcome events. In
this section, several quantitative metrics will be presented, as they have been established
to measure and better understand how to handle risk.
Threats, Vulnerabilities, and Risk
The following terms are often misunderstood and need to be defined clearly in order to
understand risk.
• Asset: An asset is what needs to be protected, for example, information, people, or

property.
• Vulnerability: A vulnerability is a weakness or gap in the protection of an asset that can
be exploited by threats to impair the CIA of the asset.
• Threat: A threat is anything that can exploit a vulnerability. It damages, obtains, or
destroys an asset, whether intentionally or accidentally.
• Risk: A risk is the intersection of an asset, a threat, and a vulnerability. It can be written
as Risk = Asset + Threat + Vulnerability. A diffe re nt, more ge ne ral de finition
de scribe s a risk as a pote ntial damage that has a ce rtain impact and a ce rtain probabil-
ity of occurring.
For e xample , a Windows se rve r (the asse t) doe s not have the late st patch installe d. This is
a vulne rability. A hacke r (thre at actor) can try to e xploit this vulne rability to gain acce ss to
the custome r database store d on that se rve r. This is the thre at. The risk is the combination
of an unpatche d se rve r with a missing patch that can be e xploite d by a hacke r.
Microsoft propose s the STRIDE mode l to cate gorize thre ats. STRIDE stands for
• Spoofing identity
• Tampering with data
• Repudiation
• Information disclosure
• Denial of service
• Elevation of privilege (Microsoft, 2009)
The DREAD risk assessment model was originally created to categorize threats, as well as
risks. The creator, Microsoft, no longer uses it.
Dread stands for
• damage (How bad would an attack be?),

• Reproducibility (How easy is it to reproduce the attack?),
• Exploitability (How much work is it to launch the attack?),
• Affected (How many people will be impacted?), and
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• Discoverability (How easy is it to discover the threat?) (OpenStack, n.d.).
The OWASP top ten vulnerabilities are a good example of typical vulnerabilities in Web
applications.
Risk Management Process
Figure 10: A Risk Management Process
The figure above shows a typical risk management process. In the risk program, an organi-
zation defines the scope of the risk management activities. It typically includes the busi-
nesses and geographical areas that are in scope, as well as other parameters. During this
phase, an organization also defines its risk appetite or risk tolerance. It expresses the level
of risk that an organization is willing to take. In most organizations, this is described in
qualitative terms; however, in the financial industry (banks, insurances, etc.), we some-
times find quantitative terms. Note that a risk-free business does not exist, and risk is an
integral part of business and life, so it is not necessarily negative.
Risk identification is the first step in the iterative risk management process. The organiza-
tion identifies risks, vulnerabilities, and threats. Risk assessment is the second step in the
iterative approach, and several characteristics are determined. These are the probability
that the risk occurs, the impact the risk event would have, any available risk mitigations,
and a recommendation of how to address the risk. Risk treatment is typically the last step
of the risk management process. A decision-maker or a risk committee decides how to
treat each specific risk. There are four options for risk treatment.
75
1. Accept: The organization decides not to take any action regarding the risk.
2. Mitigate: Some actions are taken to reduce impact, probability, or both to an accepta-
ble level.
3. Transfer: A risk is transferred to a third party, usually an insurance company. Other
forms are available, for example, specific contractual agreements with third party
suppliers.
4. Avoid: The organization chooses to end the activity associated with the risk. This is
often the option when business activities are not needed any more or outdated sys-
tems are turned off.
Note that risk ignorance is not a valid risk treatment option.
Qualitative and Quantitative Risk Management
In qualitative risk analysis, the probability and impact of an event can be expressed on a
scale labeled high, medium, and low. The scale does not identify the exact value but usu-
ally has a description of what the different levels mean. It can be used to quickly under-
stand risks in relation to each other. The figure below shows a typical qualitative risk
matrix.
Figure 11: Qualitative Risk Matrix
Using an odd number of levels often makes risks lean towards the middle, hence an even
number of levels is often chosen.
Sometimes, semi-quantitative methods are chosen. This can be achieved by assigning

numbers to the different levels, such as 1 to low and 3 to high. Then, the numbers are mul-
tiplied to provide a risk level such as: high probability · medium impact = 3 · 2 = 6. So
the risk level would be 6 in this example. Here, the different values only determine the risk
level in relation to each other.
In quantitative risk analysis, the actual costs and the probability of events are determined.
Achieving the accuracy needed in order to come up with the exact event probability for
every scenario is difficult, if not impossible. Also, the exact costs of an event are difficult to
76
determine as incidents are often complex, and short- and long-term outcomes are not
easy to predict. Because of these challenges, quantitative risk analysis should try to
develop estimates, such as ranges, rather than exact figures.
Several figures can help when carrying out quantitative risk analysis.
1. Asset value (AV): This is the value of an asset that is usually the replacement value.
This is not the depreciated value, especially when it is nontangible and cannot be
determined by accounting.
2. Exposure factor (EF): This is the financial loss that results from the realization of a
threat. It is usually expressed as a percentage value of an asset value. A threat gener-
ally does not eliminate the whole asset value, but rather reduces the asset value. Dif-
ferent threats will have different impacts and exposure factors.
3. Single loss expectancy (SLE): The SLE represents the financial loss when a threat sce-
nario occurs once. It is defined as SLE = AV · EF.
4. Annualized rate of occurrence (ARO): The ARO is an estimate of how many times an
event occurs over one year. If the probability of a threat is once in 10 years, the ARO is
0.1.
5. Annualized loss expectancy (ALE): This is the expected annualized loss of asset value
due to the threat. It is defined as ALE = SLE · ARO.
Many risk frameworks exist, such as ISO 27005, NIST SP 800-39, and FAIR OCTAVE. They all
use quantitative, qualitative, or a combination of both approaches.
Risk management objectives
A variety of risk management objectives are typically used to determine the resources
required to continue business operations in case of an event. They mainly represent differ-
ent time intervals until data or systems and processes are operational. Senior manage-
ment is involved in creating these objectives, as the time intervals directly translate into
operational costs. Therefore, senior management involvement helps to adequately invest
in the right resources and prioritize based on business needs. The typical objectives are
listed below.
• Recovery time objective (RTO): RTO is the period from the beginning of an outage until
the service is operational again. It is a measurable interval of time in which the recovery
activities take place. Different business processes will have different RTO targets
depending on their priority for the business. A business impact analysis (BIA) can help
to establish the RTOs.
• Recovery point objective (RPO): The RPO is the period of acceptable loss of data due to
an incident or disaster. This is usually the maximum period between backups or replica-
tions in a system. Hours or minutes are normally measured, and as for RTO, shorter
periods of time are associated with higher costs.
• Maximum tolerable downtime (MTD): The MTD is a period after which the survival of the
organization would be at risk. Organizations often start by defining this measure and
then deriving RTO and RPO from it. The MTD should not be interpreted as a target num-
ber but rather a point of no return after which the business would have to close.
77
Other objectives exist based on the needs of the organization.
The Risk Register
Risk registers vary depending on the organization. The table below shows a typical risk
register with one sample risk record.
Table 4: Risk Register
Item Description Example
ID unique identifier for the risk record 15081
Status current status: open, closed, pending, in in progress

progress
Creation date date that the risk entry was created 2019-10-15
Source activity or event that was the source of first vulnerability management
information: risk assessments, vulnerabil-
ity management, security incident, threat
intelligence, third-parties
Title short description of the risk CRM system OS patch missing
Description description of the risk Due to missing patch KB4530691

of the Windows server
SRVWNDUS19007, a hacker
could get access to the CRM
database of the organization.
Threat description description of the potential threat An external or internal attacker

could exploit the vulnerability,
gain root access on the server,
and finally impair the confiden-
tiality, integrity, or availability of
the CRM database running on
that server.
Control impacted control patch management
Untreated impact impact level or value if risk is not treated high
Untreated probabil- probability level or value if risk is not trea- medium

ity ted
Untreated risk level risk level if risk is not treated high risk
Treated impact impact level or value if risk is treated high
Treated probability probability level or value if risk is treated low
Treated risk level risk level if risk is treated medium risk
Risk treatment chosen method of risk treatment: accept, mitigate

mitigate, transfer, avoid
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Item Description Example
Risk treatment details of the risk treatment Deploy patch KB4530691 on that
details Windows server. In the mean-
time, deploy patch KB4530691
on that Windows server and put
the server into a secure zone
protected by an IPS system.
Risk treatment plan- planned dates when the actions are taken 2019-12-15
ned implementation
dates
5.3 The ISO 27K Series

The ISO/IEC 27000-series (also known as the ISMS Family of Standards or ISO27K) consists
of information security standards published jointly by the International Organization for
Standardization (ISO) and the International Electrotechnical Commission (IEC). The series
provides best practice recommendations on information security management (the man-
agement of information risks through information security controls) within the context of
an overall information security management system (ISMS). As of January 2020, more
than 50 standards within the series have been published and more than 20 are in the mak-
ing. The scope of the standards is very broad but in parts it is very specific. There are
standards that focus on a certain set of technologies or industry sectors.
Organizations can be certified against the ISO 27001 standard, in conjunction with ISO
27002 and ISO 27701. Also, ISO 27017 and ISO 27018 are certifiable. The other ISO 27K
standards are not certifiable, but they provide guidance and form a holistic security frame-
work. The table lists the ISO 27K standards that are well known and play a large practical
role (SecAware Policies, n.d.).
Table 5: ISO 27k Standards
ISO 27K Standard Description
ISO/IEC 27000:2018 An overview and introduction to the ISO27K standards, plus a glossary
for the specialist vocabulary
ISO/IEC 27001:2013 The Information Security Management System requirements standard,

formally specifying a certifiable ISMS
ISO/IEC 27002:2013 The code of practice for information security controls
ISO/IEC 27003:2017 Guidance on how to implement ISO/IEC 27001
ISO/IEC 27004:2016 Information security management measurement
ISO/IEC 27005:2018 Information [security] risk management
ISO/IEC 27018:2019 Concerns Personally Identifiable Information in public clouds
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ISO 27K Standard Description
ISO/IEC 27701:2019 Requirements and Guidance on extending ISO/IEC 27001 and 27002 to
manage privacy as well as information security
Source: created on behalf of IU (2020), based on SecAware Policies, n.d.
An ISMS According to ISO 27001
ISO 27001 defines an Information Security Management System (ISMS) (International

Organization for Standardization, 2013b). It is the most cited standard in the 27K family
and the de facto international standard to prove that cyber security is managed ade-
quately in an organization. The standard consists of ten chapters and an annex. The first
three chapters briefly cover the scope, referencing ISO 27000 to define the terminology
and the terms used.
In chapter four (context of the organization), the standard requires an organization to

understand what the organizational goals are, what the stakeholders of the organization
expect, and what their needs are. Also, the scope of the ISMS must be determined. It is
crucial to understand that an organization usually narrows the scope of the ISMS to a cer-
tain geographical or organizational scope where it applies. The scope can also exclude cer-
tain controls in annex A.
Leadership is covered in chapter five. It requires an organization to demonstrate effective

leadership to implement and steer the ISMS. A policy must be drafted that meets the
needs of the organization. Also, roles and responsibilities are assigned and communica-
ted.
Planning of the ISMS is covered in chapter six of the standard. The main topic in this chap-
ter is to build and maintain a cyber security risk management system. The mitigations for
each risk must be chosen to match the control objectives in annex A. In this chapter, the
standard requires an organization to define cyber security objectives and their plans to
achieve them.
Having an adequate level of resources is the focus of chapter seven (support). The resour-
ces must be able to fulfill their roles and all contributors in the organization need to be
aware of the policy and their role in protecting the organization. Information must be
documented and undergo document control, which includes regular reviews and version
control.
Chapter eight is about operations, risk assessments, and risk treatment. In chapter nine,
the ISMS is evaluated. This happens via monitoring, internal audits, and management
reviews. Finally, chapter ten introduces continual improvement measures to the ISMS.
They should follow the well-known PDCA cycle shown in the figure below.
80
Figure 12: PDCA Cycle
Finally, annex A includes the 144 controls in 14 different groups, starting with A.5 (Interna- A.5
tional Organization for Standardization, 2013a). In ISO 27002, chapter five
and following are map-
ped exactly to the rele-
• A.5: Information security policies (two controls) vant annexes in ISO
• A.6: Organization of information security (seven controls) 27001, so annex A.5 in ISO
27001 maps to chapter
• A.7: Human resource security (six controls that are applied before, during, or after five in ISO 27002.
employment)
• A.8: Asset management (ten controls)
• A.9: Access control (fourteen controls)
• A.10: Cryptography (two controls)
• A.11: Physical and environmental security (fifteen controls)
• A.12: Operations security (fourteen controls)
• A.13: Communications security (seven controls)
• A.14: System acquisition, development, and maintenance (thirteen controls)
• A.15: Supplier relationships (five controls)
• A.16: Information security incident management (seven controls)
• A.17: Information security aspects of business continuity management (four controls)
• A.18: Compliance with internal requirements, such as policies, and with external
requirements, such as laws (eight controls)
ISO 27002 includes proposals concerning how to implement these controls. Note that it is
not mandatory to use these proposals—others are available such as NIST or the German
BSI Baseline Security, IT Grundschutz.
81
A PIMS according to ISO 27701
ISO 27701 is a relatively new standard that was published in 2019. It is an extension of ISO
27001 and ISO 27002, and describes a privacy information management system (PIMS),
sometimes also called data privacy management system (DPMS). An organization can only
be certified according to ISO 27701 in conjunction with its ISO 27001 certification. This cer-
tification demonstrates that an adequate privacy management system is set up, but it
would not satisfy the requirements of a certification against article 42 GDPR.
In chapters one to six, the standard emphasizes how ISO 27001 and ISO 27002 help to pro-
tect PII and how to use the same methods, such as policies or risk management, in a PIMS.
In chapters seven and eight, additional guidance for both controllers and processors are
described. The annex contains 49 additional controls that are relevant to data privacy. The
standard also contains a mapping table that shows how the different controls map to legal
requirements of GDPR.
The concept is to integrate both ISMS and PIMS into one management system. According
to ISO 9001, some organizations also choose to integrate it with quality management.
5.4 IT Security and IT Governance

IT governance and IT security must be aligned with business needs. The importance of this
cannot be underestimated as many organizations suffer from silo thinking in that area,
leading to unnecessary effort and conflict. An effective security governance program will
address several activities and responses.
• Risk management: Ensure that all cyber security risks are adequately addressed and
managed.
• Process improvements: Changes are made to business processes that improve security.
• Event identification: Technologies and processes are put in place to identify security
events and incidents as quickly as possible.
• Incident response: Incident response procedures that help to avoid incidents and man-
age them according to risk are put in place, helping to reduce the probability and
impact of an incident.
• Improved compliance: All applicable laws, regulations, and standards are re-identified
to ensure that the organization maintains compliance.
• Business continuity and disaster recovery planning: Adequate business continuity and
disaster recovery plans are maintained and tested regularly.
• Metrics: Key security events such as incidents, changes, policy violations, vulnerabili-
ties, audits, or trainings are measured.
• Resource management: Human and financial resources are allocated to security meas-
ures in order to achieve goals.
• Improved IT governance: An effective security governance helps to make better strate-
gic decisions and keeps risk at a tolerable level.
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Roles and Responsibilities
Organizations often use RACI charts to document the following: RACI Charts
A RACI chart is not only
used in cyber security,
• responsibility (person or role that performs the work). but in many other areas
• accountability (person or role that is ultimately answerable for the activity, often a man- of IT and business.
ager).
• consulted (roles that need to be consulted, such as experts).
• informed (roles that need to be informed about a certain activity or decision).
A typical RACI chart for a cyber security user account request can look like this:
Table 6: RACI Chart
Activity User Service desk Manager Security team
Request user account R I A I
Approve user account I C A C
Provision user account I R I I
When designing RACI matrices, a segregation of duties needs to be considered so at least

two roles or people have to execute a critical task. Also, conflicts of interest need to be
avoided, e.g., an approver cannot be the same person that executes the task or requests it.
Roles in, or related to, a security organization typically include
1. chief information security officer (CISO). This is the highest ranked role in the security
organization and is typically part of the board, or at least reports directly to them. To
avoid conflicts of interest, the CISO should not report to the CIO.
2. chief privacy officer (CPO). Organizations that manage a huge amount of PII often
appoint a CPO who safeguards the PII of the organization. Sometimes, a CPO can also
be the assigned DPO where legally required.
3. security audit manager. This role is responsible for the audits in the security area—
they schedule and manage audits.
There are many other roles that collaborate with cyber security in IT, risk management,
and other areas of the business.
Control Frameworks
Governance frameworks do not need to be invented for each organization and many are
available that help to manage the IT objectives of an organization. Some widespread
examples of such frameworks are listed below.
83
• COBIT: This stands for Control Objectives for Information and Related Technology. It is
an IT management and governance framework developed by ISACA, primarily focusing
on IT governance (although security processes are also part of its framework). The four
COBIT domains are
a) align, plan, and organize (APO);
b) build, acquire, and implement (BAI);
c) deliver, service, and support (DSS); and
d) monitor, evaluate, and assess (MEA) (ISACA, 2019).
• ISO/IEC 27K: This is family of standards for cyber security management.
• ISO/IEC 38500: This is an international standard on the governance of IT.
• ITIL & ISO/IEC 20000: The IT infrastructure library (ITIL) is a framework including IT
operational processes, such as security, in its framework. ISO/IEC 20000 is a certifiable
standard that is adopted from ITIL. The framework focuses on managing IT services.
• HIPAA: The United States Health Insurance Portability and Accountability Act requires
the protection of health information and the management of technical, administrative,
and physical safeguards.
• NIST SP 800—53: The United States National Institute for Standards and Technology
(NIST) special publication 800—53 is one of the most well-known security frameworks,
and is mandatory for all United States public sector information systems. Many other
organizations have also adopted those controls outside the public sector.
5.5 Example: IT Security for Credit Cards

(PCI DSS)
An example of a security framework is PCI DSS, the payment card industry data security
standard. Credit card companies such as VISA and American Express founded the standard
to ensure that credit card transactions are adequately secured and risk is reduced in the
card payment process.
The following are in scope:
• Systems that store, process, or transmit card holder data

• Systems that provide security functionalities or may impact the security of card holder
data
• Any other component or device located within, or connected to, card holder data envi-
ronment (CDE)
The standard applies to cases where the primary account number (PAN) is stored or pro-
cessed. The standard does not permit the storage of sensitive authentication data, includ-
ing the data of the magnetic strip of a card, the card control numbers, or the PIN. The
standard mainly consists of twelve high level requirements where PCI DSS sets controls
detailing rules that an organization that processes cardholder data must obey. The high-
level requirements are as follows:
• install and maintain a firewall configuration to protect cardholder data,
84
• do not use vendor-supplied defaults for system passwords and other security parame-
ters,
• protect stored cardholder data,
• encrypt transmission of cardholder data across open public networks,
• protect all systems against malware and regularly update anti-virus software or pro-
grams,
• develop and maintain secure systems and applications,
• restrict access to cardholder data by business need to know,
• identify and authenticate access to system components,
• restrict physical access to cardholder data,
• track and monitor all access to network resources and cardholder data,
• regularly test security systems and processes, and
• maintain a policy that addresses information security for all personnel.
For each of the requirements, specific test procedures are set out that help to prove that
an organization is compliant with the standard. They are audited before an organization is
allowed to process credit card data, and these audits are rigorous.
SUMMARY
Cyber security must be managed. An adequately structured security pol-
icy addresses the whole organization and ensures that everyone under-
stands their duties. It makes security enforceable and needs to be
policed, i.e., audited. Noncompliance has consequences and must be
documented.
Risk management plays an integral role in all cyber security frameworks

and in managing security. It can have several forms. A holistic risk man-
agement process ensures that risks are identified and adequately priori-
tized. The four risk treatment strategies help to find an adequate treat-
ment. Keep in mind that risk is part of business, and every business has
a certain risk tolerance.
The ISO 27K family of standards are general, specific, and constantly in
development. ISO 27001 is especially helpful when building an informa-
tion security management system (ISMS). IT governance and security
governance work together to foster good decisions within the business.
Frameworks such as COBIT or NIST SP 800—53 can help an organization
to find appropriate structures and controls. Finally, PCI DSS is a manda-
tory standard for organizations that processes credit card data. It has a
rigid set of requirements and controls that help to secure credit card
details and therefore reduce the risk in the payment card industry for
both the industry and cardholders.
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UNIT 6
CRYPTOGRAPHY
STUDY GOALS
– the basic concept of cryptography.

– the main concepts of symmetric and asymmetric encryption.
– how and why to use one-way functions and hashing algorithms.
– the main problems with the key exchange process.
– why cryptography is so important for ICT processes.
6. CRYPTOGRAPHY
Introduction
One of the first known uses of cryptography was in Roman times. When Caesar sent mes-
sages to his army, he replaced every “A” in his messages with “D,” every “B” with “E,” etc.,
because he did not trust the messengers. Only those who knew the encryption system
could read the message (i.e., “shift by 3” system). For example, “we will attack tomorrow
morning” would result in a message reading “zh zloo dwwdfn wrpruurz pruqlqj” after
being encrypted using Caesar’s method.
Cryptography is essential in the security domain and, in this unit, we will try to explain
some of the most important concepts.
Some terms must be clarified before we jump into the world of cryptography.
• “Plaintext” is information or a text that can be directly read by humans or a machine.

• “Ciphertext” is the result of an encryption process—this text cannot be read without a
special algorithm (cipher). Without the cipher, the ciphertext looks like a meaningless
message. A cipher is a mathematical function used in the encryption/decryption proc-
ess.
• A “key” is a phrase, number, word, or combination that is used to encrypt plaintext or
decrypt a ciphertext.
• “Encryption” is the process of translating plaintext into ciphertext.
• “Decryption” is the opposite process—this is the process of converting ciphertext into
its original form.
The figure below shows the process of encryption and decryption, as well as the role of
plaintext and ciphertext.
Figure 13: Encryption and Decryption Process
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• “Cryptography” is the science of using mathematical methods to securely encrypt data.
Cryptography is important in information and communications technology (ICT) and
the cyber security domain because it helps us to store sensitive data and transmit it
through an insecure network (LAN, WAN, Intranet, Internet, etc.).
• “Cryptoanalysis” is the science of analyzing and breaking this encrypted communica-
tion.
• “Cryptology” is the science of creating and breaking ciphers.
• “Cryptosystem” is a system that consists of a cryptographic algorithm, all keys, combi-
nations, and protocols. One example of a cryptosystem is Pretty Good Privacy (PGP).
89
Figure 14: Cryptology Overview
Classification of cryptographic algorithms can be done in several ways; in this unit, we will
use the simple classification method—“number of keys.”
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6.1 Symmetric Cryptography
The first type of algorithm we will talk about is symmetric cryptography or secret key cryp-
tography (SKC). This is an example of symmetric encryption because a single key is used
for both encryption and decryption.
In symmetric encryption, the sender uses the “secret” key to encrypt the plaintext and
then sends the ciphertext to the receiver. The receiver must apply the same secret key to
decrypt the message and recover the original plaintext, as shown in the figure below. With
this form of cryptography, the key must be known to both the sender and the receiver. The
biggest difficulty when taking this approach is the distribution and management of the
keys (Kessler, 2020). Using a secret key cipher means that you must exchange a separate
key with each communication partner, even for a short message, resulting in a large num-
ber of keys that must be managed by each user.
A one-time pad is the only proven non-decryptable encryption technique available. The
key length must be at least the same size as the plaintext. The key must be random and
must only be used once. One-time pads were used before the invention of computers and
they are still used today when encryption and decryption are done by hand. One-time
pads might play a role in quantum cryptography that goes beyond the scope of this unit.
Secret key cryptography schemes are generally categorized as being either stream ciphers
or block ciphers.
Figure 15: Symmetric Encryption
Stream cipher schemes operate on a single bit (or byte) at a time, encrypting each bit indi-
vidually. Most stream ciphers implement some form of feedback mechanism so that the
key is constantly changing. Self-synchronizing stream ciphers calculate each bit in the key-
stream as a function of the previous n bits in the keystream. It is called “self-synchroniz-
ing” because the decryption process can remain synchronized with the encryption proc-
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ess merely by knowing how far into the n-bit keystream it is (Kessler, 2020). Synchronous
stream ciphers generate the keystream so that it is independent of the message stream,
but the sender and the receiver use the same keystream generation function. While stream
ciphers do not propagate transmission errors, they are naturally periodic, meaning that
the keystream will eventually repeat.
A block cipher scheme encrypts one fixed-size block of data at a time. A block is a fixed
number of bits. Most block ciphers convert a block of plaintext into a ciphertext block of
the same size by applying a key and a method that is invertible. There are different ways
how to combine the individual blocks in a sequence of blocks, defined by different block
cipher modes.
In a block cipher, a plaintext is split into a sequence of blocks of the same length (typically
32, 64 or 128 bits) which are then encrypted separately. There are different ways how to
encrypt the individual blocks in a sequence of blocks, defined by different “block cipher
modes”. Apart from the electronic codebook mode ECB described below, all other modes
use additional information such as the previous block or a counter in order to ensure that
the same plaintext does not lead to the same ciphertext when encrypted using the same
key. The resulting block cipher modes differ considerably in their properties, including
their security, the effects of individual bit errors or lost blocks on other blocks, and
whether encryption and / or decryption can be sped up by working on different blocks in
parallel.
There are several common block cipher modes (Paar & Pelzl 2010, p. 124-134):
• ECB: Electronic codebook is the simplest and most obvious block cipher mode. Each
block is encrypted separately using the secret key, and the same plaintext block will
always lead to the same ciphertext block. This ensures that bit errors in transmission
only affect a single block, and allows different blocks to be encrypted and decrypted in
parallel. However, it is quite insecure since the same plaintext block always leads to the
same ciphertext block, which allows a number of attacks such as brute-force attacks or
the unnoticed substitution or insertion of blocks. Even without being able to decrypt a
block, it may provide important information to an attacker to know that the same mes-
sage block was sent repeatedly.
• CBC: Cipher block chaining is a commonly used mode of operation where every block of
plaintext is “XOR-ed” with the previous ciphertext block (or a random block called initi-
alization vector in the case of the first block) before being encrypted. This implies that
every ciphertext block depends on all plaintext blocks processed before this operation
as well as on the initialization vector.
The following three block cipher modes all work by adding a sequence of key-dependent
blocks to the plaintext rather than encrypting the plaintext itself. This has the advantage
that they can also be used as a stream cipher, because the resulting cipher text can be cre-
ated bitwise rather than blockwise.
• OFB: Output feedback uses an initialization vector plus the key to generate a sequence
of blocks that are then added bitwise (XOR-ed) to the plaintext.
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• CFB: Cipher feedback works similarly but additionally uses the ciphertext of the previ-
ous block to generate the sequence of blocks added to the plaintext.
• CTR: Counter mode uses a counter and an initialization vector to generate the sequence
of blocks added to the plaintext.
Table 7: Most Common Symmetric Encryption Algorithms
Algorithm Key length (bits) Block size (bits)
DES 56 64
3DES 56,112,168 64
AES 128,192,256 128
IDEA 128 64
RC4 40—256 Stream cipher
RC5 0—2040 32,64,128
Blowfish 32—448 64
Twofish To 256 128
Safer+/++ 128 64/128
The table above shows us some of the most used symmetric encryption algorithms along-
side their key length and block size (in bits).
DES was the dominant symmetric encryption algorithm from the mid-1970s to the
mid-1990s. DES is a good example of a block cipher that is very efficient in hardware
implementation.
However, today, a standard DES with a 56-bit key length can be broken relatively easily
and, because of that, triple DES (3DES) was created, which involves encryption with DES
three times in a row (Paar & Pelzl, 2010). Until a few years ago, it was considered to be
certain that there was no possible practical attack against 3DES.
The 3DES algorithm applies its keys as follows:
• encrypting with the first key (k1),

• decrypting with the second key (k2), and
• encrypting with the third key (k3).
There is also a two-key variant, where keys k1 and k3 are the same.
In 2016, researchers found a new way to recover and decrypt cookies from HTTPS authen-
tication sessions encrypted with 3DES. The weakness of Sweet32 was made public, and
this research exploited a known vulnerability to collision attacks in 3DES, which may
93
become possible during lengthy transmissions, the exchange of content files, or transmis-
sions vulnerable to text injection (Karthikeyan & Gaëtan, 2016). After the exposure of this
vulnerability, NIST proposed in the standard 800-131A that 3DES be deprecated. The docu-
ment “Transitioning the Use of Cryptographic Algorithms and Key Lengths” (Barker &
Roginsky, 2019) formalizes the retirement of triple DES by the end of 2023. After this, 3DES
will only be recommended for legacy use, which means decryption only.
Today, the most used symmetric algorithm, which is now the default, is the Advanced
Encryption Standard (AES) and its variants AES-128, AES-192, and AES-256. AES was intro-
duced in 2001 to replace 3DES. AES allows us to choose a 128-bit, 192-bit, or 256-bit key
(for very high security requirements), where the security of a key grows exponentially with
its size. AES is used in many applications, and it is the algorithm trusted as the standard by
the United States government as well as numerous other organizations. AES is efficient in
software and hardware. Today, we can see AES implementation in messaging apps such as
WhatsApp and Signal, applications like VeraCrypt and WinZip, and also in a range of hard-
ware. AES was originally known as the “Rijndael” block cipher, developed by Joan Dae-
men and Vincent Rijmen, two cryptographers from Belgium, until it was chosen by NIST as
the new standard successor to DES and then renamed AES. Reasons for selecting Rijndael
were its widespread abilities, including its performance on both hardware and software,
ease of implementation, and its level of security. AES was named the United States federal
standard in 2002 and became the standard encryption algorithm for the whole world.
The figure below depicts a memory stick with integrated AES256 encryption integrated in
chip.
Figure 16: USB Memory Stick with AES256 Encryption in Chip
Source: Vatiga.com, 2020.
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6.2 Asymmetric Cryptography
Symmetric cryptography is a very old practice and has been used since Roman times
when there was only one key for encryption and decryption. However, asymmetric
encryption, or public key cryptography, is relatively new—the general concept was first
presented in 1976. In this kind of encryption, there are two keys (one pair)—a public key
that may be disseminated widely and a private key which is only known to the owner. In
the PKC system, anyone can encrypt a message using the receiver’s public key. Encrypted
messages can only be decrypted with the receiver’s private key—this may be compared to
a mailbox on the street. The mailbox is public meaning that anyone who knows its loca-
tion (public key) can go to it and put in a letter, but only the owner of the mailbox has a
physical key (private key) which allows them to access the mailbox and read the letters.
Asymmetric cryptography uses trapdoor functions. A trapdoor function is easy to compute

in one direction but difficult in the opposite or inverse direction. The best-known algo-
rithm for PKC is the Rivest, Shamir, and Adleman (RSA) algorithm. The RSA algorithm gen-
erates a pair of “public and private keys.” Those keys are mathematically linked to each
other. Public keys are used to encrypt data, and only the corresponding private key can be
used to decrypt it. Knowing the public key does not enable a crypto analyst to reveal the
private key. The algorithm is based on Euler’s totient function. φ n is the number of inte-
gers k in the range 1 ≤ k ≤ n for which the greatest common divisor gcd(n, k) is equal to
1.
The algorithm consists of the following steps: Algorithm

The open source tool
CrypTool can be used to
• Choose two big prime numbers p and q. experiment and visualize
• Calculate n = pq. cryptographic algorithms.
• Choose a small, odd, natural number e, that is relative prime with
φ n = p − 1 q − 1 . Put differently, the greatest common divisor is e, φ n = 1.
• Calculate d as the solution to the equation ed modφ n = 1. The Euclidian algorithm
can be used for this.
• The pair P = (e,n) is the public key.
• The pair S(d,n) is the private key.
The RSA algorithm is applied by
• encryption of the message M:E M = Memod n, and

d
• decryption of the ciphertext C:D C = C mod n.
It can now be shown mathematically that D(E(M)) = M mod n and E(D(C)) = C mod
n.
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Figure 17: Asymmetric Cryptography (Public Key Cryptography)
As we can see in the figure above, the sender and receiver want to exchange a message
(plaintext) via an unsecured communication channel, for example, the internet. The
sender uses a receiver’s public key to encrypt a message and sends a cipher to the receiver
who then uses their own private key to decrypt a message. In order to encrypt a text with
the receiver’s public key, a receiver must make this key available to the sender, but receiv-
ers never distribute their own private key.
To deliver confidentiality, integrity, authenticity, and non-reputability, users and systems

need to be sure that a public key is authentic. This means that one needs to be sure that
the public key belongs to the correct person or entity and that it has not been tampered
with or replaced by a malicious third party. In a Public Key Infrastructure (PKI), trusted
Certificate Authorities (CA) certify ownership of key pairs and certificates in order to
authenticate the digital identities of the users. Encryption products based on the Pretty
Good Privacy (PGP) model (i.e. OpenPGP) rely on a decentralized authentication model
called a “web of trust.” The web of trust is a concept that provides authenticity by binding
a public key to its owner. It does not rely on a central authority, but rather on trust
between the users of the network.
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6.3 Elliptic-Curve Cryptography
Figure 18: Example of an Elliptic Curve
The challenge with RSA is that factoring algorithms becomes more efficient as the size of
the numbers being factored gets larger. Hence, the key lengths that must be used for RSA
get larger and larger, so specifically for small devices or smart cards, this is not a long-term
sustainable solution.
Elliptic-curve cryptography (ECC) is an approach to public-key cryptography based on the

algebraic structure of elliptic curves over finite fields. ECC requires smaller keys compared
to non-EC cryptography to provide an equivalent level of security.
The math is not as simple as factoring and will not be covered in this course. In this field of
mathematics, points on the curve compose a structure called a group. It uses the horizon-
tal symmetry of every elliptic curve and the fact that when a line is drawn that connects
two points on the curve, it will intersect with the line at exactly one more place. Now we
use the symmetric structure of the curve to derive the dot at the other side of the symme-
try axis of the curve. It turns out that if you have two points, an initial point “dotted” with
itself n times to arrive at a final point, finding out n when you only know the final point
and the first point is hard. If we only have the resulting point of that operation, it is
extremely difficult to understand what combination of other dots provided this result;
hence, we have a trapdoor function.
6.4 Hash Function

In mathematics, a hash function maps data of a variable input size onto an image of fixed
size. It is therefore usually not reversible. The image is called hash or digest. A pure mathe-
matical hash function is not resistant to cryptographic attacks as it is not designed for
cryptography.
97
Hash Function A cryptographic hash function is resistant to a number of cryptographic attacks. They
A hash function is a “one- employ
way” function that gener-
ates the “hash” of a file.
• pre-image resistance. For a given h in the output space of the hash function, it is hard to
find any message x with H(x) = h. This is an alternative way of stating that H must be
a one-way function.
• second pre-image resistance. For a given message x1 it is hard to find a second message
x2 ≠ x1 with H(x1) = H(x2). This is also called weak collision resistance.
• collision resistance. It is hard to find a pair of messages x1 ≠ x2 with H(x1) = H(x2).
It is clear that if pre-image resistance is not achieved, collision resistance cannot be ach-
ieved.
Cryptographic hash functions, or message digests (MD), are algorithms that use no keys.
Ideally, it is practically impossible to recover the original content of a hashed file. This is
the most important difference between “hashing” and “encryption.” Hash algorithms are
typically used to provide a “digital fingerprint” of a file, which is often used to ensure file
integrity and make sure that the file has not been altered by a virus or an intruder. Hash
functions are also used by many operating systems to store passwords securely.
Figure 19: Hash Function
We can try to experiment with a string: “IUBH.” As a result of hashing with the MD5 func-
tion, we will get the “34d4d02d2f87b03e94ec3754b64f1392” string. The string “IUBH is
your future” results in the MD5 digest “badae2ff12f456a2da21328d982670a6”. The hash is
the same size but is completely different from the previous hash. Commonly used words
and their hashes are included in rainbow tables, which are used to hack password files
and derive the original passwords.
98
There are many different hash functions, but the most popular ones are the MD4 family.
MD5, SHA, and RIPEMD are based on the MD4 algorithm. MD4 was an innovative idea pro-
posed by Ronald Rivest, and MD5 is a strengthened version that was also proposed by Riv-
est in 1991. MD5 became widely used, for example, in internet security protocols, for com-
puting checksums of files, or for storing of password hashes. In 1993, NIST published a
new MD standard called Secure Hash Algorithm (SHA). The first version was SHA-0, later
renamed SHA-1, which is a replacement for MD5 as it turned out to no longer be secure. In
2001, NIST introduced three more variants of SHA-1: SHA-256, SHA-384 and SHA-512, with
message digest lengths of 256, 384, and 512 bits, respectively. In 2004, SHA-224 was intro-
duced to fit the security level of 3DES. These four hash functions are often referred to as
SHA-2.
Table 8: MD4 Family of Hash Functions
Output Input No. of Collisions

Algorithm [bit] [bit] rounds found
MD5 128 512 64 yes

SHA-1
160 512 80 not yet
SHA-2 SHA-224 224 512 64 no
SHA-256 256 512 64 no
SHA-384 284 1024 80 no
SHA-512 512 1024 80 no
Source: Paar & Pelzl, 2010.
Similar to the selection of Rijndael as the standard symmetric encryption algorithm

(which was then named AES), the United States standards organization set up a competi-
tion for a new cryptographic hash algorithm which led to the KECCAK algorithm being
selected in 2012 as the new SHA-3 algorithm. Four fixed-length hash algorithms were
defined: SHA3-224, SHA3-256, SHA3-384, and SHA3-512, as well as two closely related
“extendable-output” functions (XOFs) SHAKE128 and SHAKE256.
Currently, only the four fixed-length SHA-3 algorithms are approved hash algorithms, pro-
viding alternatives to the SHA-2 family of hash functions. The XOFs can be specialized to
become hash functions, subject to additional security considerations. Guidelines for using
the XOFs will be provided in the future (National Institute of Standards and Technology,
2019).
Table 9: SHA-3 Family
Security
Hash length strengths
Name (output) Block size Capacity (bits)
SHA3-224 224 1152 448 224
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Security
Hash length strengths
Name (output) Block size Capacity (bits)
SHA3-256 256 1088 512 256
SHA3-384 384 832 768 384
SHA3-512 512 576 1024 512
SHAKE128 variable (n) 1344 256 min (n, 128)
SHAKE256 variable (n) 1088 512 min (n, 256)
Some of the previously used hash functions are not resistant to collision. An example is
SHA-1, where it was shown that several documents that produced the same hash value
could be created. It should not be used any longer. At the time of writing, SHA3 is the most
reliable option.
6.5 Secure Key Exchange

As previously mentioned, one of the main problems in secure communication is how to
exchange a key between two parties that need to exchange encrypted information (i.e.
sender and receiver). This method of exchanging a key is also known as secure key
exchange or key establishment.
In symmetric cryptography, there is only one key, the secret key, that needs to be
exchanged. This means that the sender and receiver, in order to communicate confiden-
tially, must exchange the secret key before exchanging encrypted messages. In asymmet-
ric cryptography, on the other hand, the private and secret key are used, and we need to
know the other person’s public key. The private key should stay private and is not
exchanged. In situations where there is more than one person with whom we communi-
cate, a system for key management—the Cryptographic Key Management System (CKMS)
—must be established. CKMS must specify rules for this information that will protect the
confidentiality, integrity, availability, and authentication of sources. CKMS consists of key
exchange, storage, and use. Key exchange is a process in which cryptographic keys are
exchanged between the sender and receiver using a cryptographic algorithm.
The Diffie-Hellman key exchange protocol was published in 1976 by Whitfield Diffie and
Martin Hellman (based on Ralph Merkle’s concepts). According to the contribution of stu-
dent Ralph Merkle in 2002, Hellman suggested the algorithm be called “Diffie–Hellman–
Merkle” key exchange. The Diffie-Hellman key exchange allows users (parties who have
not previously met) to securely exchange keys, even if they are using an insecure connec-
tion (Diffie & Hellman, 1976). Like other asymmetric cryptosystems, the secrecy of this key
exchange is guaranteed due to the use of a one-way function, in this case the discrete log-
arithm. This was the first asymmetric cryptosystem published, and until then, only sym-
metric cryptosystems were known.
100
The Diffie-Hellman key exchange is one of the most commonly used methods to safely dis-
tribute keys, and because of that, it is frequently implemented in security protocols such
as TLS, IPsec, SSH, or PGP. This makes it an integral part of our secure communications. In
practice, the Diffie-Hellman key exchange is rarely used by itself because it does not pro-
vide any authentication—without authentication, users are vulnerable to Man-in-the-Mid-
dle (MitM) attacks. Because of this, Diffie-Hellman is often implemented in combination
with RSA or other algorithms to provide authentication for the connection (Lake, 2019).
The Diffie-Hellman algorithm works as follows.
1. Alice and Bob, who want to exchange a key, agree on a huge prime number n and a
huge figure g. Those numbers can be public.
2. Alice chooses a random number x and sends X = gx mod n to Bob. (X,g,n) is her
public key and (x,g,n) is her private key.
3. Bob chooses a huge random number y and sends Y = gy mod n to Alice. (Y,g,n) is
his public key and (y,g,n) is his private key.
4. Alice calculates the secret key k = Yx mod n.
5. Bob calculates the secret key k' = Xy mod n.
Hence k = k', as k = Yx mod n = gxy mod n = Xy mod n = k'.
A crypto analyst eavesdropping the connection knows n,g,X,Y but not k. The crypto ana-
lyst tries to solve the equations Y = gy mod n and X = gx mod n to get x and y. This is
possible but very difficult and is known as the problem of discrete logarithms.
Perfect forward secrecy (PFS) is a “key-agreement” protocol that uses a unique public key
for each session between a client and a server, or between two users, for example. The key
that results is never used to derive another key. This ensures that a current session cannot
be compromised by using a key derived from any previous session, and previous sessions
cannot be decrypted by anyone who manages to acquire the current key (Villanova-Uni-
versity, 2019). This key-agreement protocol uses complex mathematical processes and
discourages brute force hacking attempts. Even if an attacker somehow came into posses-
sion of a session key, the worst that could happen is that the attacker gains access to a
single session.
Steganography
Steganography is a method of secretly hiding a message within another medium. The

main goal is to avoid the detection of the message, but that message could be encrypted
using the same methods mentioned previously. One of the easier methods is the least sig-
nificant bit (LSB) method. With this method, usually used on an image or video stream, the
last bit of the color coding is changed. The change is not visible to the human eye; hence,
it hides the message. However, this method is also easy to detect if an analyst is looking
for it, and more sophisticated methods are available.
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SUMMARY
In this unit, the concept of symmetric and asymmetric cryptology is
introduced, along with an explanation of how they work. It introduces
the concept of a trapdoor function as the basis for asymmetric cryptog-
raphy, implemented by factoring and by elliptic-curve cryptography.
Hash functions are also discussed, while additionally covering de-hash-
ing. Finally, secure key exchange and methods of executing it are descri-
bed.
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UNIT 7
CRYPTOGRAPHIC APPLICATION
STUDY GOALS
– basic concepts of applied cryptography and cryptographic application.

– about Secure Internet Protocol(s).
– how cryptography can be applied in internet security.
– why applied cryptography is so important for IT processes.
7. CRYPTOGRAPHIC APPLICATION
Introduction
Cryptography was, for a long time in history, an esoteric science with very few practical
applications. It was used by the military and governments, but without proper computing
power, it never reached the masses. In the first part of the 20th century, electromechanical
encryption machines were invented, the most famous being the ENIGMA, which was used
in World War II by the Axis forces. With the internet revolution starting in the 70s, it
became apparent that cryptography is necessary to secure the privacy of users and to ena-
ble modern business models such as e-commerce. Nowadays, cryptography plays a cru-
cial role in our day to day lives. For example, over 80 percent of internet traffic is encryp-
ted, encryption is used in electronic payments, and private communication via email or
chat services relies on encryption for safety. Law enforcement bodies are challenging the
use of encryption and trying to find ways to collect evidence, hence attempting to decrypt
data. Finally, cryptography enabled the blockchain technology, which might change the
way that transactions occur in the future.
7.1 Digital Signatures

When exchanging documents, a signature provides evidence that the integrity and
authenticity of that document is valid. Seals, stamps, and putting initials on each page fur-
ther strengthen this. A digital signature transports those methods into the electronic
world using cryptography.
Digital signature A digital signature is a cryptographic operation where a sender seals a message or file
With digital signature, we using their identity. Digital signatures are used to authenticate a message and ensure its
can verify authenticity
and integrity and achieve integrity; however, they do not protect the confidentiality of a message or replace encryp-
non-repudiation. tion. Digital signatures work by encrypting the hashes of messages. Recipients verify the
integrity and authenticity by decrypting the hashes and comparing with the original mes-
sage.
A digital signature also provides non-repudiation, meaning that the sender cannot dispute
its authorship or validity of the document. A digital signature serves the same purpose as
a handwritten signature, but it must be emphasised that a handwritten signature is much
easier to counterfeit. Another reason that the digital signature is superior and nearly
impossible to counterfeit is that a digital signature attests the integrity of the message as
well as the identity of the signer (PGP, 2002).
According to NIST, an electronic signature is a cryptographic mechanism used to verify the

origin (authenticity) and contents (integrity) of a message (Gutmann & Roback, 1995). The
difference between a digital signature and an electronic signature is in the method of
identifying businesses and signers. Digital signatures embed Public Key Infrastructure
(PKI) into the signing process to identify both the party requesting a signature and the
104
party that provides one. Both the electronic signature and the digital signature are equally
capable of identifying a signer, and they are both legally considered signatures, depending
on the legislation they are used in. An example is the electronic identification, authentica-
tion, and trust services (eIDAS) directive in the European Union, “regulation (EU) No
910/2014 of the European parliament and of the council on electronic identification and
trust services for electronic transactions in the internal market and repealing Directive
1999/93/EC” (European Union, 2014, p. 73). Other legislations have implemented similar
regulations.
A digital signature is one of the most important cryptographic tools that is widely used
today. Applications that currently use a digital signature include e-commerce, the legal
signing of contracts, and secure software updates (Paar & Pelzl, 2010).
The following list details the security goals that are achieved with electronic signatures.
• Integrity: Messages have not been modified in transit.

• Message authentication: The sender of a message is authentic. An alternative term is
data origin authentication.
• Non-repudiation: The sender of a message cannot deny the creation of the message
(Paar & Pelzl, 2010).
In addition to the four core security services, the following list includes some other secur-
ity services that are often implemented in combination with electronic signatures.
• Confidentiality is not directly supported by digital signatures but is typically part of a

public key infrastructure solution, so it is implemented with the same pair of keys.
• Identification/entity authentication: Establishes and verifies the identity of an entity, for
example, a person, a computer, or a credit card.
• Access control: Restricts access to the resources for privileged entities.
• Availability: Provides assurance that the electronic system is reliably available.
• Auditing: Provides evidence about security-relevant activities, e.g., by keeping logs
about certain events.
• Physical security: Provides protection against physical tampering and/or responses to
physical tampering attempts.
• Anonymity: Provides protection against discovery and misuse of identity (Paar & Pelzl,
2010).
Digital signatures use asymmetric cryptography. The following figure demonstrates the
way that a digital signature works.
105
Figure 20: How Digital Signatures Work
Source: Docusign, n.d.
The process of digital signing typically consists of three steps. They are
• key generation,
• signing, and
• verification.
Understanding Public Key Cryptography (PKC) is crucial for better use of the digital signa-
ture concept. Public Key Cryptography is relatively new—Whitfield Diffie, Martin Hellman,
and Ralph Merkle presented it in 1976. It makes use of asymmetric cryptography with a
public and a private key pair. These are public keys, that may be disseminated widely, and
private keys, which are known only to the owner. In a PKC system, any person can encrypt
a message using the receiver’s public key. Messages that have been encrypted this way
can only be decrypted with the receiver’s private key.
Public Key Infrastructure (PKI) is a centralized function that is used to store and publish
public keys as well as other information. It addresses the challenge of exchanging valid
public keys. Several implementations exist, for example, a common implementation is
Microsoft’s Active Directory service. PKI consists of additional services such as the Certifi-
cate Authority (CA), a digital certificate, end-user enrollment software, and tools for man-
aging, renewing, and revoking keys and certificates (DocuSign, n.d.).
When a document is signed, we need assurance that the documents and the keys are valid
and created securely. Certificate Authorities (CAs) are a type of “trust service provider,”
which are third party organizations that can provide the necessary digital certificates and
have been widely accepted as reliable sources for ensuring key security. Both the entity
(the sender of the document) and the recipient must agree to use the same CA. A CA is a
company or organization that validates the identities of entities. Entities can be websites,
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email addresses, companies, individual persons, etc. After validation, CAs bind them to
cryptographic keys by issuing electronic documents such as digital certificates (Docusign,
n.d.).
A digital certificate is a digital credential that consists of a public key and a block of infor-
mation that identifies the owner of that certificate. The following figure shows a chain of
certificates and how they relate to different CAs in a hierarchy.
Figure 21: Digital Certificate Chain
Further services in a PKI include the registration authority (RA) that operates alongside a
CA to accept requests for new certificates. It verifies the authenticity of a requestor and,
when satisfied with the provided documents, issues a digital certificate. A certificate revo-
cation list (CRL) is an electronic list of digital certificates that have been revoked prior to
their expiration date. This might be the case if a private key was stolen, a certificate was
issued in error, or for another reason.
Another concept that implements digital signatures without a PKI is PGP, or Pretty Good PGP
Privacy, which was originally described by Phil Zimmerman in 1991. PGP is an encryption This stands for Pretty
Good Privacy and does
program that is used to achieve privacy and authentication. Its functions include signing, not need CAs but relies on
encryption, and decryption of text, files, emails, etc. A PGP user maintains a local keyring the web of trust.
of all their known and trusted public keys (without CAs). The user makes their own judge-
107
ment about the trustworthiness of a key using what is called a “web of trust.” A web of
trust is when two people who trust each other meet and share their public keys with each
other. They also trust the keys that the other persons trusts; hence a web of trust is estab-
lished (Cole et al., 2005).
PGP can be used to sign or encrypt email messages with a mere click of the mouse.
Depending on the version of PGP, the software uses SHA or MD5 to calculate the message
hash; CAST, Triple-DES, or IDEA for encryption; and RSA or DSS/Diffie-Hellman for key
exchange and digital signatures (Kessler, 2020).
Due to concerns about licensing and patents, a new, free version of PGP emerged, which is
available through the International PGP Page and the OpenPGP Alliance (described in RFC
4880). The open-source programming project has developed GnuPG. PGP (or GPG)
requires the combination of two encryption/decryption keys—public and private—so that
it can work. The public key is always shared with others. The sender uses a public key to
encrypt the message. The message is sent, but no one can decipher it, even if they are
trying to read the message. The only person that can decrypt the message is the receiver
that owns the private key.
7.2 Secure Internet Protocols

Internet is free, easy to use, and is part of our life. To help to protect our data, which are
sent thought internet channels, different protocols are required. These protocols can be
used for file transfer, email communication, financial transactions, and more. Protocols
such as HTTPS, SFTP, SSH, IPSec, SSL, and TLS are part of many applications that we use
every day. Network security protocols are designed to prevent unauthorized access to any
data that is sent through a network.
Secure Internet Secure Internet Protocols implement cryptography and encryption techniques to secure
Protocols the data, meaning that encrypted data can only be decrypted with a special algorithm,
They are used daily and
almost all traffic on mod- mathematical formula, logical key, or a combination of all of them. Internet Protocol
ern networks is encrypted Security (IPSec) is an open standard for ensuring private and secure communications over
using them. IP networks using cryptographic security services. IPSec-based encryption schemes pro-
vide many different security features, including
• confidentiality,
• authentication,
• data integrity, and
• protection against data reply attacks (Cole et al., 2005).
IPSec operates in tunnelled or transport mode. In transport mode, the entire IP packet
(the header and data fields) is not encapsulated, but appropriate changes are made to the
protocol fields to represent it as a transport mode IPSec packet. Hosts have software
directly installed on them so that they can handle transport mode IPSec packets. In tun-
nelled mode, complete encapsulation of the IP packet takes place in the data field of the
IPSec packet. The routers and gateways are normally involved in handling and processing
108
the IPSec packets in the transport mode, but tunnelled mode can address destinations
that may not be intended at the source, providing additional security by concealing the
source and destination field.
IPSec consists of two main protocols: Encapsulating Security Payload (ESP) and Authenti-
cation Header (AH). If ESP is used, then all encapsulated traffic is encrypted. If AH is used,
then only IPSec’s authentication feature is used.
IPSec can be used to provide secure encrypted communication between two hosts instead
of a Secure Internet Protocol network. It can also be used in virtual private networks
(VPNs).
Cryptographic algorithms that can be used with IPSec include
• HMAC-SHA1/SHA2 for integrity protection and authenticity.

• TripleDES-CBC for confidentiality.
• AES-CBC for confidentiality.
• AES-GCM for both confidentiality and authentication.
• ChaCha20 + Poly1305 for both confidentiality and authentication. IPSec uses crypto-
graphic security services.
Hypertext Transfer Protocol Secure (HTTPS) is a protocol that protects the integrity and
confidentiality of data between a user’s computer and a site. Data sent using HTTPS are
secured via Transport Layer Security (TLS) protocol connection. Transport Layer
Security
TLS works on top of the
The TLS’s basic aim is to provide authentication and integrity negotiation between appli- TCP layer in the TCP/IP
cations involved. The negotiations can be used to decide which encryption algorithms will protocol stack.
be used in the data exchange between the two parties. Today, most of the Web browsers,
such as Chrome and Firefox, come with built-in TLS support that make them relatively
transparent to the end user (Cole et al., 2005). Secure Sockets Layer (SSL) (and its succes- Secure Sockets Layer
sor Transport Layer Security (TLS)) is an encryption protocol that is used to establish an SSL is an old version of
TLS.
encrypted link between nodes—typically a Web server (website) and a browser, or a mail
server and an email client.
TLS relies on public key cryptography for mutual authentication, confidentiality, and data
integrity for Web browsers. The system provides high-end security for the Web browsers at
very little incremental cost. Most transactions require protection between the servers and
the clients. The servers require the verification of the user when remote users download
proprietary and confidential information from an organization’s server. There are three
versions of the SSL protocol, but the first version was never released. All of these SSL ver-
sions are now obsolete and have been replaced with TLS. At the time of writing, the cur-
rent version is TLS 1.3, and only TLS version 1.2 and above are deemed to be secure.
When installed on a (Web) server, TLS certificates (small data files that bind a crypto-
graphic key to an organization) activate the HTTPS protocol. This allows secure connec-
tions from a Web server to a browser. TLS is not only used to secure credit card transac-
tions, data transfer, and logins, but it is now the norm when securing the browsing of all
sorts of sites. This certificate needs to be installed on the server to initiate a secure session
109
with the Web browser. After the connection has been successfully established, all Web traf-
fic will be secured through HTTPS protocol. This means that after installing a certificate on
a server, HTTP will be automatically changed to HTTPS.
The three main components of TLS are
• encryption (hides the transferred data from others),

• authentication (ensures that the sides who exchange information are who they claim to
be), and
• integrity (verifies that the data has not been forged or tampered with) (Cloudflare, n.d.).
TLS protocol encrypts internet traffic of all types. The SSL or TLS handshake enables the
SSL or TLS client and server to establish the secret keys with which they communicate.
The TLS handshake is a process that consists of multiple steps. A basic TLS handshake
involves the client and server sending “hello” messages and the exchange of keys, a cipher
message, and a finish message. The multi-step process is what makes TLS flexible enough
to use in different applications because the format and order of exchange can be modified
(Dierks & Rescola, 2008).
Figure 22: TLS/SSL Handshake
Source: IBM, 2020.
110
TLS uses a hybrid form of cryptography. The connection is established using asymmetric
cryptography. This connection is used to exchange the key that is then used to encrypt the
connection symmetrically, since asymmetric cryptography is very costly and slow com-
pared to symmetric cryptography.
7.3 Blockchain
A blockchain is a growing list of records, called blocks. The blocks are linked together Blockchain
using cryptography. They are usually implemented as Merkle trees. Hashing is used to Based on P2P and public
electronic ledger, block-
identify the previous block; hence, each subsequent block includes the hash of the previ- chain is used to let people
ous block, a timestamp, and data. A blockchain is setup as a peer-to-peer network and is share data securely and
resistant against manipulations. Compared to a classic database, the record-keeping on a without tampering.
blockchain is decentralized, making it almost impossible to destroy the integrity of

records in the blockchain.
Nodes share data in a secure, tamper-proof way, even without the need to trust each
other. Blockchain makes this possible because it stores data using cryptography rules that
are extremely difficult for attackers to manipulate (Orcutt, 2018). However, it comes with a
cost—blockchain databases are more costly to maintain than central databases, such as
relational database systems.
Blockchain technology is based on a peer-to-peer (P2P) network topology and a “public

electronic ledger.” Blockchain technology allows data to be stored globally on any device.
Anyone in this network can see everyone else’s entries in real time. This function of block-
chain allows users to create an “unchangeable” record of transactions. Every transaction
is time-stamped and linked to the previous one in a chain. When a new set of transactions
is added, the data becomes another block in the chain, hence the name blockchain. Every
transaction on a blockchain is secured with a digital signature, meaning that authenticity
can be proved. Using encryption and digital signatures, the data stored on the blockchain
cannot be changed and is therefore immutable.
A result of the open structure of the blockchain is that anonymity cannot be achieved but
the data is pseudonymized only. Also, data that was once accepted to the blockchain stays
there forever. This might have legal implications in the future as it will be difficult to ach-
ieve privacy. A situation might evolve where illegal content is stored on the blockchain
that cannot be removed by anyone.
Typical blockchains use elliptic-curve-cryptography (ECC) to sign the blocks. Each block in
a blockchain network stores some information within the hash of its previous block. This
hash is a unique code of a specific block. If we change or modify the information inside the
block, the hash of the block will also be modified. Unique hash keys that connect the
blocks are the reason that blockchain is secure.
111
Blockchain can be classified as either public or private. In a public blockchain, the ledger
is public and can be accessed by anyone who has access to the network in the form of an
internet connection. Private blockchains, however, are only shared among the trusted par-
ticipants, for example, within a company. There are four main features that characterize
blockchain and will determine the future use of this technology.
• Immutable—The data cannot be changed and therefore has integrity.

• Tamper-proof—Data tampering is prevented, but if it occurs, it is detected, as mecha-
nisms exist to cope with tampering.
• Decentralization—Nobody owns the network; it is owned by all entities that participate
and hold a copy of the current blockchain.
• Peer-to-peer network—There is no central server, meaning that all peers in the network
are equal.
Blockchain technology has many uses outside of cryptocurrency. There are a lot of
domains where it is currently used or will be used in the future. These include supply
chain communications, distributed storage, digital voting, smart contracts as legal docu-
ments, process of digitalization, and more. Typical open source implementations can be
found at the Hyperledger project, administered by the Linux Foundation (The Linux Foun-
dation, n.d.). Hyperledger is often used in private blockchains, and several cloud comput-
ing providers offer it as part of their services.
The figure below shows a simplified blockchain.
Figure 23: Blockchain Schema
112
7.4 Electronic Money
According to some sources, electronic money (“e-money”, digital currency, digital money,
or electronic currency) is broadly defined as an “electronic store of monetary value on a
technical device that may be widely used for making payments to entities other than the
e-money issuer” (European Central Bank, n.d., Electronic Money Section, para. 1). E-
money products can be hardware-based (e.g., chip cards) or software-based (specialized
software such as PayPal that is installed on smartphones, tablets, and PCs), depending on
the technology used to store the monetary value. E-money can either be centralized with
the control point, or decentralized without the control point, meaning that it can come
from various sources or networks of sources such as virtual values or Bitcoin.
There are two main challenges that electronic money needs to address.
1. Privacy: In contrast to physical coins and bills, electronic money exists in a database
and it contains information concerning who transferred money to whom, the amount,
and potentially even for which services the transaction was executed.
2. Double spend: An electronic system could be tampered with so that a double spend
might be enacted by fraudsters or just by mistake. This would lead to inflation and
mistrust into the electronic money system.
The idea of digital cash was introduced for the first time in the research of Chaum, pub-
lished in 1982. In short, electronic money (e-money) is the money balance recorded elec-
tronically on a stored-value card or remotely on a server. The Bank for International Settle-
ments (1997, pp. 2—3), which is a Central Bank Cooperation based in Basel, Switzerland,
defines e-money as “stored-value or prepaid payment mechanisms for executing pay-
ments via point-of-sale terminals, direct transfers between two devices, or even open
computer networks such as the internet.” Some say that examples of e-money are bank
deposits, electronic fund transfers, payment processors, and digital currencies. It could be
said that all transactions and money keeping where computer systems, data storage sys-
tems, and computer networks are involved can be defined as e-money.
There are several kinds of e-money in use and currently in development. Credit cards can
be used both offline and in e-commerce. PCI DSS sets stringent rules for this method of
payment. If used online, it usually uses TLS to encrypt the connection. Authentication
methods vary but include a second factor such as Verified by Visa or 3DSecure of Master-
Card. Bank transfers are another method to transfer money. They can also be used so that
providers get direct access to a user’s bank account and execute the transfer so that the
recipient has confidence that the transfer took place. Mobile money wallets are often used
by those who do not have access to classical banking or credit cards. Their security is
mainly based on keys and certificates on the SIM card and secure SMS. A layer above bank
accounts or credit cards are online payment providers such as AliPay or PayPal. These
services rely on this basic payment infrastructure, but add a layer of comfort. These apps
only require the scan of a QR code or an email address to perform a transaction. Security
relies on TLS and MFA for authentication. Digital certificates and signatures ensure non-
repudiation.
113
The development of cryptocurrency is the newest stage of money evolution (Vlasov, 2017).
According to Investopedia, “a cryptocurrency is a digital or virtual currency that is secured
by cryptography, which makes it nearly impossible to counterfeit or double spend” (Frank-
enfield, 2020, What Is... Section, para. 1).
The first widely adopted blockchain-based cryptocurrency, which can also be classed as
Bitcoin decentralized e-money, is Bitcoin. It remains the most popular cryptocurrency and has
This and other cryptocur- the highest market capitalization of all cryptocurrencies at the time of writing. Bitcoin is
rencies were created
answering the 2008 finan- an electronic money system, established in 2009. It is a free and innovative platform—any-
cial crisis. one is free to program and run services on the open Bitcoin standard as there are no
required permissions from central authorities. Bitcoin is a very popular cryptocurrency
because, firstly, the banks and the government do not control it, and secondly, people can
spend their Bitcoins anonymously. Bitcoins can be purchased and payed for with fiat cur-
rency, or it can be mined using computing power. After you have installed a Bitcoin wallet
(to store private keys of bitcoins) on an electronic device, a first Bitcoin address will be
generated. After that, more and more Bitcoin addresses can be created. These addresses
can be sent to another person to send or receive money. Bitcoin addresses should only be
used once.
Every Bitcoin transaction is recorded in a public list called a blockchain. Blockchain is an

essential component of many cryptocurrencies. Today, most cryptocurrencies use block-
chain technology to record transactions. Although all transactions are recorded, there is
no account number to identify a person—blockchain preserves anonymity. The decentral-
ized nature of Bitcoin may make it more expensive and more difficult to market new serv-
ices, as they are likely to be pitched directly to users rather than to a small set of interme-
diaries. Innovators without much marketing experience may be unable to sustain their
innovations (Nian & Chuen, 2015).
Transactions are signed using asymmetric cryptography based on elliptic-curve cryptogra-

phy (ECC). The mining of bitcoin involves finding a SHA-256 hash for the next block, this is
called “proof of work.” As this is energy-intensive and provides no further value, other
cryptocurrencies use some other concepts such as “proof of stake.” In a proof of stake
process, the holder of most units of a cryptocurrency gets the reward for approving the
next transaction (instead of the one who invested the most computing power). Some stud-
ies state that the evolution of electronic money has led to cryptocurrency having signifi-
cant advantages over other forms of money (Vlasov, 2017).
The cryptocurrency system must meet a few conditions (Lansky, 2018).
• The system must have distributed consensus so there is no need for a central authority.
• The system must keep an overview of cryptocurrency units and their ownership.
• The system must define whether new cryptocurrency units can be created. If yes, the
system defines how to determine the ownership of these and the circumstances of their
origin.
• Ownership of cryptocurrency units can only be proved by using cryptography.
• The system must allow transactions in which ownership of the cryptographic units is
changed.
114
• If two different instructions for changing the ownership of the same cryptographic units
are simultaneously entered, the system must only perform one of them.
The following figure shows transactions on the Bitcoin blockchain.
Figure 24: Transactions on the Bitcoin Blockchain
Source: Nakamoto, 2008.
SUMMARY
In this unit, the concepts and possibilities of applied cryptography have
been explored. The benefits of digital signatures and Public Key Cryp-
tography were discussed in detail with emphasis on the ways they can
provide security. Blockchain, or distributed ledger technology, and its
applications were also covered, focusing on the ways that blockchain
can ensure the authenticity and integrity of data.
115
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123
LIST OF TABLES AND
FIGURES
Figure 1: CIA Triad of Cyber Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Figure 2: Incident Life Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Figure 3: Symmetric Cryptography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Figure 4: Asymmetric Cryptography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Table 1: Non-Anonymized Feedback Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Table 2: 2-Anonymity Feedback Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Table 3: 3-Diverse Feedback Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Figure 5: Process of Gaining Access to a System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Figure 6: Steps in the MFA Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Figure 7: Kerberos, a Common SSO Protocol, Authentication . . . . . . . . . . . . . . . . . . . . . . . . . 59
Figure 8: High Level View on Vulnerability Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Figure 9: NIST Cybersecurity Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Figure 10: A Risk Management Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Figure 11: Qualitative Risk Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Table 4: Risk Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Table 5: ISO 27k Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Figure 12: PDCA Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Table 6: RACI Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Figure 13: Encryption and Decryption Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Figure 14: Cryptology Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
124
Figure 15: Symmetric Encryption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Table 7: Most Common Symmetric Encryption Algorithms . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Figure 16: USB Memory Stick with AES256 Encryption in Chip . . . . . . . . . . . . . . . . . . . . . . . . 94
Figure 17: Asymmetric Cryptography (Public Key Cryptography) . . . . . . . . . . . . . . . . . . . . . 96
Figure 18: Example of an Elliptic Curve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Figure 19: Hash Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Table 8: MD4 Family of Hash Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Table 9: SHA-3 Family . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Figure 20: How Digital Signatures Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Figure 21: Digital Certificate Chain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Figure 22: TLS/SSL Handshake . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Figure 23: Blockchain Schema . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Figure 24: Transactions on the Bitcoin Blockchain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
125
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CYBER SECURITY AND DATA

Martin Macke; Jasmin Cosic

© 2024 IU Internationale Hochschule GmbH

1.1 Terminology and Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

2.1 Basic Concepts of Data Protection (ISO/IEC 29100, Privacy by Design) . . . . . . . . . . . . . 28

3.1 Anonymity and Pseudonyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

4.1 Authentication, Access Management, and Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

5.1 Security Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

6.1 Symmetric Cryptography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

7.1 Digital Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104

International Organization for Standardization. (2011). Information technology — Security

Schneider, B. (1995). Applied cryptography: Protocols, algorithms and source code in C.

National Institute of Standards and Technology. (n.d.). An introduction to computer secur-

Microsoft. (2009). The STRIDE threat model. Available online.

PGP. (2002). An introduction to cryptography. Available online.

Kessler, G. C. (2019). An overview of cryptography. Database: BASE

On completion of this unit, you will have learned …

– the basic terms of security and risk management.

1.1 Terminology and Risk Management

Source: Created on behalf of IU (2020).

1.2 Core Concepts of IT Security

• security and risk management,

1. Information security governance

Governance and Risk Management

Identity and Access Management

Identification and Authentication, Authorization, and Accountability is also known as IAAA

• A1:2021—Broken Access Control: restrictions on what authenticated users are allowed

Security Incident Management

Figure 2: Incident Life Cycle

Source: Created on behalf of IU (2020).

1.3 Core Concepts of Data Protection and

The basic principles of data protection are as follows:

1. Consent and choice

1.4 Core Concepts of Cryptography

We must first define the terminology of cryptography.

Figure 3: Symmetric Cryptography

Source: Created on behalf of IU (2020).

Figure 4: Asymmetric Cryptography

Source: Created on behalf of IU (2020).

Generally, asymmetric cryptography is much slower than symmetric cryptography. Mod-

1.5 Legal Aspects

1. Plan for security.

Cyber Security Laws in Europe

ENISA’s approach consists of activities in the following areas:

• recommendations regarding cyber security and independent advice,

Cyber security protects the confidentiality, integrity, and availability of

Cryptography helps to transmit messages secretly. We distinguish

Data protection and data privacy protect the interests of individuals

Many additional legal regulations affect cyber security, including FISMA

On completion of this unit, you will have learned …

2.1 Basic Concepts of Data Protection

Privacy—A Fundamental Right

What Is Data Protection?

Data protection applies to any information relating to an identified or identifiable natural

Principles of Data Protection

PII controllers and PII processors

Purpose legitimacy and specification

Accuracy and quality

Openness, transparency, and notice