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Cybersecurity Public Private Partnerships: Challenges and Opportunities

Close cooperation between the public and private sector is crucial, given the enormous risks associated with the continued acceleration of global connectedness. Upon closer inspection, however, significant cultural and legal barriers exist that can hinder further cooperation necessary to effectively combat the cyber theat.

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The allegations that Russia hacked the Democratic National Committee (DNC) is the latest evidence that cybersecurity has and will continue to have an overarching impact on our daily lives. Further complicating the cyber threat is that it is evolving so quickly that it outstrips the ability of our private or government sectors to adequately address the threat and its consequences. The severity of the cyber threat has resulted in the private sector and the United States government partnering to identify and respond to threats that can impact entire industries, especially financial services and the electrical grid, two essential parts of our country’s critical infrastructure. This article examines: 1) the challenges that inhibit partnering between the private and public sectors; 2) how such partnership is addressed in the Cybersecurity Information Sharing Act (CISA) of 2015; and 3) what this all means going forward.

Cybersecurity impacts individual privacy, commerce among businesses, and our national security. Critical infrastructure such as financial services are owned, operated and protected by the private sector, which is mainly concerned with competing in their industry and making a profit. See, Eric A. Kaijankoski, Cybersecurity Information Sharing Between Public-Private Sector Agencies, Naval Post Graduate School Theses and Dissertation, March, 2015, page 35. Moreover, the financial services industry facilitates commerce globally. Meanwhile, the government is concerned that a hack could render our entire financial services industry inoperable for just a few days and place our national security in extreme peril.

The acceleration of global connectivity is unparalleled in human history. At the same time, it has created unprecedented benefits and multifaceted opportunities for those who wish to do unimaginable and irreparable harm. Close cooperation between the public and private sector is crucial, given the enormous risks associated with the continued acceleration of global connectedness. Upon closer inspection, however, significant cultural and legal barriers exist that can hinder further cooperation necessary to effectively combat the cyber threat.

Cooperation Challenges

In today’s world, significant cooperation challenges continue to exist between the private and public sector. The biggest challenge that undercuts cooperation is a lack of trust between the public and private sector. Can business leaders trust that the government won’t interfere with operations? Does government involvement mean providing unfettered access to systems and ceding control of such systems along with confidential information and incident response strategies? See, Judith H. Germano, Cybersecurity Partnerships: A New Era of Public-Private Collaboration, The Center on Law and Security NYU School of Law, October 2014, page 3.

The Snowden episode has made businesses wary of being seen in the marketplace as too closely cooperating with government. The private sector is also concerned that disclosing vulnerabilities or threats could result in an unwelcome visit from the Federal Trade Commission (FTC), Securities and Exchange Commission (SEC), Department of Health and Human Services (HHS) or other industry government regulators voicing concerns about cyber compliance. A company may fear that such collaboration with a government entity might intentionally or unwittingly result in a release of proprietary information that makes industry competitors aware of a vulnerability that they might exploit for economic benefit.

Additionally the unsettled, conflicting and evolving cybersecurity U.S. regulatory regime gives the private sector pause when considering closer collaboration with the government. Liability for breaches under the current regulatory framework can include actions by diverse governmental agencies that can include the FTC, SEC, Department of Justice (DOJ) and state attorneys general. In addition to government enforcement actions, data breaches may also result in class action lawsuits. All these challenges occur in an environment where there is no federal data breach notification law. Therefore, companies are left to navigate the conflicting data breach notification laws currently enacted by 47 states.

Criminals and nation states who conduct cyberattacks are a separate category of challenges impacting the development of a private and public partnership. According to Assistant U.S. Attorney (AUSA) Steven D. Grimberg, Deputy Chief, Financial Fraud & Cyber Division of the U.S. Attorney’s Office, Northern District of Georgia: “It is difficult to overstate the importance of reporting breach activity to the government, especially if it’s coming from actors outside the United States. A Chief Information Security Officer (CISO) may think no information has been taken, but it does not address that the network that was breached might be used to gain access to another network, or used as a test run to see if a method of attack is successful.”

In response to CISO’s who believe that sharing information with government prosecutors may trigger a visit from a regulator; AUSA Grimberg emphasized that: “Prosecutors are not generally in the business of sharing information with regulators. The prosecutor’s goal is to find the perpetrator or perpetrators who may be hurting multiple companies and possible national security implications.” These comments underline the delicate balance between a company concerned that sharing information may trigger a regulatory investigation with the prompt investigation of perpetrators whose attack may have industry wide or national security implications. AUSA Grimberg’s comments also draw a sharp distinction between the government’s role in apprehending cyber criminals and regulating the private sector. From a private sector perspective, industry is gratified when cyber criminals are brought to justice while at the same time chafing over the cost of complying with what the company or private sector believes are overly burdensome government regulations.

Trust, complicated and overlapping Federal and state cybersecurity regulatory regimes, and balancing the prosecutor and regulator roles are a significant but not exhaustive list of challenges that face the growth of public private partnership. How are these challenges addressed by CISA?

CISA

CISA was signed into law on Dec. 18, 2015 and has two main components. First, it authorizes companies to monitor and implement defensive measures on their own information systems to counter cyber threats. Second, the law provides certain protections to encourage companies to voluntarily share information — specifically, information about “cyber threat indicators” and “defensive measures” — with the federal, state and local governments, and other companies and private entities. See, Brad S. Karp, Federal Guidance on the Cybersecurity Information Sharing Act of 2015, Harvard Law School Forum on Corporate Governance and Financial Regulation, March 3, 2016, page 1.

CISA specifically addresses private sector concerns about legal liability by shielding private entities from any cause of action brought in a federal or state court for monitoring an information system and for sharing cyber threat indicators or defensive measures in accordance with CISA. Information shared under CISA will not be used for federal and state regulatory purposes. CISA also grants information shared with the government an exemption from Freedom of Information Act (FOIA) requests under federal or state law. CISA’s utility however, is weakened by the fact that it applies only if a company voluntarily shares information with the government and there is no statutory or regulatory requirement that a company share such information. A public company will also have to weigh if sharing information with the government under CISA satisfies a materiality threshold triggering disclosure in a public filing. Ibid, page 6.

Moving Forward

While CISA attempts to address barriers that inhibit closer public private partnership, it does not replace building the trust that is essential to closer collaboration. The financial services industry is undertaking efforts that are worthy of emulation by other industries. The Financial Services Information Sharing Analysis Center (FS-ISAC) is one of several sharing centers that are conduits for information sharing among the public and private sector. See, Kaijankoski, supra, page 49.

In addition to information sharing, the FS-ISAC conducts an annual Cyber Attack Against Payment Processes Simulation. FS-ISAC tests the nearly 1,000 and growing participating financial institutions that use payment services in responding to simulated cyber attacks. Ibid.

The value of cyber attack simulations and evaluating the incident response to the attack cannot be overemphasized. When asked what the most important thing companies can do differently in dealing with a cyber threat, AUSA Grimberg responded: “Many companies that have a cyber incident response plan fail to practice the plan and see how it works in a cyber attack simulation. Companies should have a tabletop exercise in responding to a hack to see how their cyber incident response plan works, and if it needs to be refined based on that simulated situation.” Cyber threat simulations are a key ingredient in a 21st century trust recipe that is necessary to cultivate improved public private collaboration.

The high stakes, sophistication and acceleration of technology vulnerable to cyber attacks means that existing collaboration is necessary, but not sufficient, in responding to the cyber threat. In the coming years, the private and public sector will need to find proactive, sensible and flexible ways to share information. The recent DNC breach represents another example that the consequences for continuing with the status quo presents more opportunities for those who hack for profit, or commercial or geopolitical gain. The economic repercussions from the next hack could very well make the 2008 recession seem mild by comparison.

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Justin S. Daniels
, a shareholder in Baker Donelson’s Atlanta office, serves as the head of the Baker Donelson Cybersecurity Accelerator and Baker Donelson’s Atlanta Emerging Companies Group. He may be reached at jdaniels@bakerdonelson.com. Joe D. Whitley, a shareholder in Baker Donelson’s Atlanta and Washington, DC, offices, chairs the firm’s Government Enforcement and Investigations Group and served as the first General Counsel of the United States Department of Homeland Security. He may be reached at jwhitley@bakerdonelson.com.

The views expressed in the article are those of the authors and not necessarily the views of their clients or other attorneys in their firm.

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