Chris Parker MBE and Carla Baker gave evidence.

We will now hear oral evidence from Chris Parker, director of government strategy at Fortinet and co-chair of the UK cyber resilience committee at techUK, and Carla Baker, senior director of government affairs in the UK and Ireland at Palo Alto Networks. For this session, we have until 4.50 pm.

Q Thanks for coming to give evidence this afternoon. I have two questions—one for each of you. Chris, from Fortinet’s perspective, what more do you think the Government can do to support SMEs to improve their cyber-resilience, while at the same time ensuring that the burden of regulation remains proportionate, particularly on smaller companies?

Carla, from the Palo Alto Networks perspective, what are your views on the changes to the incident reporting regime under the Bill? Will the approach help or hinder regulators in identifying and responding to the most serious threats quickly?

Chris Parker:

I should point out that Carla is also co-chair of the cyber resilience committee, so you have both co-chairs here today.

As large cyber companies, we are very proud of one thing that is pertinent to the sector that may not be clear to everybody outside. I have worked in many sectors, and this is the most collaborative—most of it unseen—and sharing sector in the world. It has to be, because cyber does not respect borders. When we go to the most vulnerable organisations, which one would expect cannot afford things and therefore there must be a function of price, such as SMEs—I was an SME owner in a previous life—that is very dear to us. With the technology that is available, what is really good news is that when people buy cyber-security for their small business—in the UK or anywhere in the world—they are actually buying the same technology; it is effectively just a different engine size in most cases. There are different phases of technology. There is the latest stuff that is coming in, which they may not be getting into yet. However, the first thing to say is that it is a very fair system, and pricing-wise, it is a very fair system indeed for SMEs.

The second point is about making sure we are aware of the amount of free training going on across the world, and most of the vendors—the manufacturers—do that. Fortinet has a huge system of free training available for all people. What does that give? It is not just technical training for cyber-security staff; it is for ordinary people, including administrative workers and the people who are sometimes the ones who let the bad actor in. There are a lot of efforts. There is a human factor, as well as technological and commercial factors.

The other thing I would like to mention is that the cyber resilience committee, which Carla and I are lucky to co-chair, is elected. We have elected quite a large proportion of SME members. There is also a separate committee run by techUK. You heard from Stuart McKean earlier today, and he is one of the co-chairs, or the vice chair, of that committee.

Carla Baker:

On incident reporting, as I am sure you are aware, the Bill states that organisations must report an incident if it is

“likely to have an impact”.

Our view, and I think that of techUK, is that the definition is far too broad. Anything that is likely to cause an impact could be a phishing email that an organisation has received. Organisations receive lots and lots of spoof emails.

I will give an example. Palo Alto Networks is one of the largest pure-play cyber-security companies. Our security operations centre—the hub of our organisation—processes something like 90 billion alerts a day. That is just our organisation. Through analysis and automation, the number is whittled down to just over 20,000. Then, through technology and capabilities, it is further whittled down, so that we are analysing about 75 alerts.

You can equate it to a car, for example. If you are driving and see a flashing yellow light, something is wrong. That is like 20,000 alerts. It is then whittled down to about 75, so we would potentially have to report up to 75 incidents per day, and that is just one organisation. There are a lot more. The burden on the regulator would be massive because there would be a lot of noise. It would struggle to ascertain what is the real problem—the high-risk incidents that impact the UK as a whole—and the noise would get in the way of that.

We have come up with a suggestion, an Amendment to the legislation, that would involve a more tiered approach. There would be a more measurable and proportionate reporting threshold, with three tiers. The first is an incident that causes material service disruption, affecting a core service, a critical customer or a significant portion of users. The second is unauthorised, persistent access to a system. The third is an incident that has compromised core security controls—that is, security systems. Having a threshold that is measurable and proportionate is easier for organisations to understand than referring to an incident that is

“likely to have an impact”,

because, as I said, a phishing email is likely to cause an impact if an organisation does not have the right security measures in place.

Q Thank you both for joining us. I have a very broad, open question: what other measures, both legislative and non-legislative, could the UK Government take to enhance the cyber-resilience of the UK’s critical national infrastructure?

Chris Parker:

That is an excellent question. The good news is that a lot is happening already. An enormous amount of collaborative effort is going on at the moment. We must also give grace to the fact that it is a very new sector and a new problem, so everybody is going at it. That leads me on to the fact that the UK has a critical role in this, but it is a global problem, and therefore the amount of international collaboration is significant—not only from law enforcement and cyber-security agencies, but from businesses. Of course, our footprints, as big businesses, mean that we are always collaborating and talking to our teams around the world.

In terms of what the UK can do more of, a lot of the things that have to change are a function of two words: culture and harmonisation—harmonisation of standards. It is about trying not to be too concerned about getting everything absolutely right scientifically, which is quite tempting, but to make sure we can harmonise examples of international cyber-standards. It is about going after some commonality and those sorts of things.

I think the UK could have a unique role in driving that, as we have done with other organisations based out of London, such as the International Maritime Organisation for shipping standards. That is an aspiration, but we should all drive towards it. I think it is something the UK could definitely do because of our unique position in looking at multiple jurisdictions. We also have our own responsibilities, not only with the Commonwealth but with other bodies that we are part of, such as the United Nations.

It is not all good news. The challenge is that, as much as we know that harmonisation is okay, unfortunately everyone is moving. Things have started, and everyone is running hot. An important point to make is that it is one of the busiest sectors in the world right now, and everybody is very busy. This comes back to the UK having a particular eye on regulatory load, versus the important part that other elements of our society want, which is growth and economic prosperity. We talked earlier about SMEs. They do not have the capability to cover compliance and regulatory load easily, and we would probably all accept that. We have to be careful when talking about things such as designating critical suppliers.

All of this wraps up into increasing collaboration through public-private partnerships and building trust, so that when the Government and hard-working civil servants want to see which boundaries are right to push and which are not, bodies such as the UK cyber resilience committee, which Carla and I are on, can use those collaborative examples as much as possible.

There is quite a lot there, but something the UK certainly should be pushing to do is culture change, which we know has to be part of it—things have been talked about today by various speakers—as well as the harmonisation of standards.

Carla Baker:

I think we are in a really interesting and exciting part of policy development: we have the Bill, and we have recently had the Government cyber action plan, which you may have heard about; and the national cyber action plan is coming in a few months’ time. The Government cyber action plan is internally facing, looking at what the Government need to do to address their resilience. The national cyber action plan is wider and looks at what the UK must do. We are at a really exciting point, with lots of focus and attention on cyber-security.

To address your point, I think there are three overarching things that we should be looking at. First is incentivising organisations, which is part of the Bill and will hopefully be a big part of the national cyber action plan. We must incentivise organisations to do more around cyber-security to improve their security posture. We heard from previous panellists about the threats that are arising, so organisations have to take a step forward.

Secondly, I think the Government should use their purchasing power and their position to start supporting organisations that are doing the right thing and are championing good cyber-security. There is more that the Government can do there. They could use procurement processes to mandate certain security requirements. We know that Cyber Essentials is nearly always on procurement tenders and all those types of things, but more can be done here to embed the need for enhanced security requirements.

Thirdly, I think a previous witness talked about information sharing. There is a bit of a void at the moment around information sharing. The cyber security information sharing partnership was set up, I think, 10 years ago—

Chris Parker:

Yes, 10 years ago.

Carla Baker:

It was disbanded a couple of months ago, and that has left a massive void. How does industry share intelligence and information about the threats they are seeing? Likewise, how can they receive information about the threat landscape? We have sector-specific things, but there isn’t a global pool, and there is a slight void at the moment.

Q What about workforce? One thing we have heard today from the regulators is that they are going to have to expand their teams. Reportedly, there are thousands of vacancies across cyber-security, and there is more regulation coming that they will have to comply with. What should the Government be doing to improve and expand the size of the workforce that is available to do all of this work?

Chris Parker:

It is a national problem. We have had a lot of discussion on that at the techUK cyber resilience committee. We think it is not just about skills and bunging lots of training at people, because you have to work out cyber as a whole. A very small component of cyber is people at the wonderfully high-tech end, where they are coding and writing software. There are an awful lot of jobs in places out there that a lot of people are just not aware of, and perhaps would therefore not be volunteering or aiming towards it—even at their school. There are lots of jobs in cyber sales, marketing and analysis that do not require a very high level of mathematics, for example. Some of them do not need a very high level of mathematics at all. I think that some awareness needs to be built there.

Personally, I would like to see more championing of the people who are in the sector at the moment. We have some fantastic young men and women in the sector, but we also need to make sure they are able to have chartered status. It is out there, now that we are starting, but it needs to gather pace, because we need to make sure these people are represented and feel professional, so that it can be reflected.

Another thing to mention is that there is a lot of effort in the cyber growth partnership, which is run through DSIT and techUK. It is initiating an idea where people will be lent from industry into academia, to offer inspiration but also to improve lecture quality and standards, because things move fast and we are running so hot. It is very hard for academia to keep up. There is quite a lot that can be done to increase the workforce and skills, but going back to our original points, with greater public-private collaboration and discussion, we will get it absolutely right on focusing on the right places to spend resources.

I call Tim Roca.

Sorry, Chair, I don’t have a question.

You don’t? Okay, I call Allison Gardner.

Q I have loads. Before I come to the question I was going to ask, I want to pick you up on the worry about information sharing. I have worked across regulators, and they seemed to be really confident about information sharing, but I know that is not always the case. There is some protection of turf, and other Acts might prohibit that information sharing. Could you expand on that area of concern? What would be your recommendation?

Carla Baker:

My comment on information sharing was about what else the Government could do. It was not necessarily specifically to do with the Bill. If you want me to elaborate on the wider issue of information sharing, I am happy to.

Particularly between regulators, and how that would work.

Carla Baker:

I cannot necessarily talk in much detail about information sharing across regulators. It is more about information sharing across the technology industry that I can talk about.

Q Okay, I am glad I clarified, because that is quite interesting.

I will ask my actual question, and I am trying to get my head around this. You recommend mandating that company boards be accountable for mitigating cyber-risks, and as we know from the annual cyber-security breaches survey, there are declining levels of board responsibility for cyber in recent years, which links to whether there should be a statutory duty. I am a little worried about small and microbusinesses having to deal with that regulatory burden, especially if they are designated as critical suppliers. I am trying to marry those two things together, and the concern of where liability sits, because we are very dependent on service providers. I do not know if that makes any sense to you, but could you clarify my thinking?

Chris Parker:

It is a concern. I will start off with a small point about where there is a statutory requirement, certainly for large companies. I personally believe—and I am pretty sure that most industry people I speak to would say this—that it would be very surprising if we did not have cyber-focused people on boards and in much bigger governance, as we would in a financial services company, where people who are expert in financial risk are able to govern appropriately. As we get smaller and smaller in scale, that is much harder to do.

The good news is that there are some brilliant—and I really mean that—resources available from probably the most underused website in the world, but the best one, which is the National Cyber Security Centre website. It has some outstanding advice for boards and governance on there. You can effectively make a pack and write a checklist, even if you are a very small company with a board of two people, and go through your own things and make sure your checklists are there.

The data and the capability are there to give support. Whether it is signposted enough, and whether we are helping on a local level, to make sure that people are aware of those things is perhaps something we could do better at in this country. But I am sure that industry will do our part, and we do, to share and reinforce the good sharing of things like that website, to guide good governance for SMEs especially.

Carla Baker:

That board-level accountability is really important, and it is crucial for cyber-security. I think it is getting better—from the senior execs that I speak to in industry, there is more understanding—but generally speaking, there is a view that cyber-security is an IT issue, not a business issue. I am sure you have heard throughout the day about understanding the risks we have seen around vulnerabilities, and the incidents that have affected the retail or manufacturing sectors. Those are substantial incidents that have impacted the UK and have systemic knock-on effects. Organisations have to understand the serious nature of cyber-security, and therefore put more emphasis on cyber at the board level.

Should we be mandating board-level governance? That is useful for this debate to seek information and input on, but the burden on SMEs has to be risk-based and proportionate, however it is framed.

Q Very quickly—I apologise if I am taking too much time—accountability is slightly different from liability. In the case of a cyber-breach that has caused harm, where would you see the liability lying?

Chris Parker:

That is a harder question. There is precedent here—of course, we can think back to the precedents that this great building has set on allowing things such as, post-Clapham train disaster, the Corporate Manslaughter and Corporate Homicide Act 2007 putting it very firmly on boards, evolving from the Health and Safety at Work etc. Act 1974. We are not there yet, but do not forget that we are starting to legislate, as is everyone else in Europe and America who are on this journey.

I believe that we will see a requirement at some point in the future. We all hope that the requirement is not driven by something terrible, but is driven by sensible, wise methodology through which we can find out how we can ensure that people are liable and accept their liability. We have seen statements stood up on health and safety from CEOs at every office in this country, for good reason, and that sort of evolution may well be the next phase.

Carla and I talk about this a lot, but we have to be careful about how much we put into this Bill. We have to get the important bit about critical national infrastructure under way, and then we can address it all collaboratively at the next stage to deal with very important issues such as that.

Q I want to come back to that point. Chris, you said something like, “SMEs find it very difficult, if not impossible, to bear the regulatory burden, so we have to be very careful when designating SMEs as operators of essential services.” To me, that says that you think the Bill, as currently drafted, will place too much of a regulatory burden on SMEs. Is that correct?

Chris Parker:

I was referring to strategic and critical suppliers, which is a list of Government suppliers. We are advocating that the level of governance and regulatory requirement inside an organisation is difficult, and it really is. It requires quite a lot of work and resource, and if we are putting that on to too small a supplier, on the basis that we think it is on the critical path, I would advocate a different system for risk management of that organisation, rather than it being in the regulatory scope of a cyber-resilience Bill. The critical suppliers should be the larger companies. If we start that way in legislation and then work down—the Bill is designed to be flexible, which is excellent—we can try to get that way.

As a last point on flexibility—this is perhaps very obvious to us but less so to people who are less aware of the Bill—there is a huge dynamic going on here where you have a continuum, a line, at one end of which you have the need for clarity, which comes from business. At the other you have a need for flexibility, which quite rightly comes from the Government, who want to adjust and adapt quite quickly to secure the population, society and the economy against a changing threat. That continuum has an opposing dynamic, so the CRB has a big challenge. We must therefore not be too hard on ourselves in finding exactly where to be on that line. Some things will go well, and some will just need to be looked at after a few years of practice—I really believe that. We are not going to get it all right, because of the complexities and different dynamics along that line.

Carla Baker:

This debate about whether SMEs should be involved or regulated in this space has been around since we were discussing GDPR back in 2018. It comes down to the systemic nature of the supplier. You can look at the designation of critical dependencies. I am sure you have talked about this, but for example, an SME software company selling to an energy company could be deemed a critical supplier by a regulator, and it is then brought into scope. However, I think it should be the SMEs that are relevant to the whole sector, not just to one organisation. If they are systemic and integral to a number of different sectors, or a number of different organisations within a sector, it is fair enough that they are potentially brought into scope.

It is that risk-based approach again. But if it is just one supplier, one SME, that is selling to one energy company up in the north of England, is it risk-based and proportionate that they are brought into scope? I think that is debatable.

Carla, I want to come back on the potential for unnecessary over-reporting of incidents. I cannot speak for the Minister, but I am sure it is not his intention that every phishing email is reported. I was listening carefully to what you said about your proposed tiered approach, and I can imagine, say, a situation where you are United Utilities and you intercept somebody trying to put a pre-emptive virus on to one of your industrial control systems. There has been no impact on customers or your infrastructure, because you have caught it. However, I would argue that it is quite important that United Utilities share that information with the regulator and that that information is disseminated to Severn Trent, Thames Water and whoever else needs to know, so they can patch their systems, look out for the virus or find out whether they have been infected already.Q

I can imagine that the legislation has been worded as it is to try to capture that situation where activity might occur, but not have an impact. Would you accept that that is important, and how would that fit in with the tiered approach that you described?

Carla Baker:

I completely get your point. We have looked at that; my legal colleagues have looked at things such as spyware, where you have malware in the system that is not doing anything but is living there, for example, or pre-emptive, where they are waiting to launch an attack, and we think this Amendment would still cover those scenarios. It is not necessarily cause and impact: the lights have not gone out, but if there is, for example, a nation state actor in your network, we think the amendment would still cover that.

Q I would also like to ask some questions on this definition of critical supplier. I know you will have heard the questions I had for the other panel. Is there a danger, in the way this Bill is approaching definitions of critical suppliers, that a supplier may end up being deemed critical solely by virtue of supplying to a critical industry, rather than the criticality of that particular supplier in the ecosystem?

Chris Parker:

Yes, absolutely.

Carla Baker:

Yes, completely. That is similar to my point, which was probably not explained well enough: how you are deemed critical should be more about your criticality to the entire ecosystem, not just to one organisation.

Q Notwithstanding other components to the criteria one may seek to use or will use, is there a danger that—although this is clearly not the intention in the drafting—through the back door, our entire economy ends up being in scope of this Bill?

Carla Baker:

I think that is part of the issue about not having clear criteria about how regulators will designate. That also means that different regulators will take different approaches, so we would welcome more clarity and early consultation around the criteria that will be used for the regulators to designate a critical dependency, which prevents having different regulatory approaches across the 12 different regulators, which we obviously do not want, and gives greater harmonisation and greater clarity for organisations to know, “Okay, I might be brought in, because those are the clear criteria the Government will be using.”

Q This feels like quite a big issue to be flagging up quite late in the day. In terms of the legislative process, do you think there has been a good enough consultation process between Government and business?

Chris Parker:

The consultation has been a best effort and I think it is a best effort as a function of three things. First, we have a new sector, a new Bill—something very new, it is not repeating something. Secondly, we are doing something at pace, it is a moving target, we have to get on with this, and so there is some compulsion involved. Thirdly, there are already some collaborative areas set up, such as techUK, that have been used. Would I personally have liked to have seen more? Yes—but I am realistic about how much time is needed; when you only have a certain resource, some people have got to do some writing and crafting as well as discussing.

One thing that we could look at, if we did the process again, would be more modelling, exercising and testing the Bill until it shakes a bit more—that is something that perhaps we could do, if we were to do this again. With the Telecommunications (Security) Act 2021, that was done at length and collaboratively with industry, on a nearly fortnightly basis, for some time. Beyond that, I think that we are realistic in industry because we understand the pressures on the people trying to bring legislation in. A second point to remember is that we are all volunteers. Carla and I, and all those on the Cyber Resilience Committee, volunteer away from our day jobs—which are busy—to do all this. There is a realistic expectation, if you like—but I would say there has been a best effort.

Carla Baker:

I would like to look to the future. We have all the secondary legislation that is coming—and there will be lot—so we recommend early insights, and time to review and consult, in order to provide that industry insight that we are happy to provide. Let us look to the secondary legislation and hope that there is good consultation there.

If there are no further questions from Members, I will thank the witnesses for their evidence. We will now move on to our final panel.