What is a Hardware Security Module (HSM)

What is a Hardware Security Module (HSM)?

If you run or manage your own company, you’ll most likely be concerned with not only protecting your business’s sensitive data but also that of your clients. While you may have a basic defense against unwanted access to your data, implementing top-tier levels of security will guarantee you your information is protected at all times.

As a company operating in the internet age, you’d want to prioritize security for essential data such as:

  • Trade secrets
  • Payment methods/transactions (credit cards)
  • Personal customer information and identities
  • Business documents (i.e., supplier data, inventory data, etc.)
  • Public key infrastructure (PKI) certificates

While there are various methods of security available, hardware security modules (HSMs) are considered one of the best forms of protection for a wide variety of industries. 

What are HSMs and how do they work?

In simple terms, a hardware security module is a physical computing device that manages cryptographic keys. These keys perform several functions for various applications, databases and identities, including provisions for the following:

  • Encryption
  • Decryption
  • Authentication
  • Digital signing services

In addition to the above, HSMs also manage, store, dispose and/or archive cryptographic keys. HSMs are also typically classified into two categories: general purpose and transactions and payments.

General purpose hardware security modules are great for securing databases, supporting PKI infrastructures, etc. Transaction and payment HSMs are specifically designed to protect credit and debit card payment data, from credit card numbers to personal pins, CVVs, and more.

As for how they work, HSMs can either be embedded within or attached to other hardware, connected to a server or used as a standalone device. Your HSM can be kept within your company’s premises; however, depending upon your requirements and/or preferences, you can also outsource this type of security to third-party data centers.

What is a cryptographic key?

Simply put, cryptographic keys are a core component of cryptographic operations, or in layman’s terms, ‘secret writing’. They’re similar to physical keys in a sense that they lock or encrypt data so only people with the key have access to the secured information.

This is achieved through encryption algorithms that alter data so it’s displayed in a random, incomprehensible code—also known as cipher text.

How are HSMs used in business?

Whether you run your business solely in the digital world or only partly, chances are that you already have an existing online presence and experience with various platforms and tools like servers, websites, social media and mobile applications in which you store your data.

If you’re using any of these in your day-to-day operations, HSMs could add another layer of security as these were especially developed to protect your data stored in these platforms.

Among many other instances, cryptographic key use also covers:

  • Corporate virtual private networks (VPN)
  • Transport layer security (TLS) to protect your servers
  • Secure payment data
  • Zero-trust environments
  • Digital document signing
  • Sign code
  • Emails encryption and backup files
  • Sensitive data processing and storage

If any of these apply to your company, using HSMs can further enhance the defenses you’ve already set in place.

Which industries use HSMs?

Considering the high level of protection offered by HSMs, as initially touched on, most of the business world has been using HSMs in their operations. That said, the most common industries that use HSMs to protect their and their clients’ data comprise of:

  • Banking institutions
  • Financial service companies
  • Private corporations
  • Financial technology (fintech) and investment firms
  • Government and defense agencies

These industries could also benefit from the security measures of HSMs: 

  • Automotive
  • Healthcare
  • Energy and utilities
  • Industrial manufacturing 
  • Gaming 
  • Media and entertainment 
  • Road infrastructure
  • Telecommunications
  • Cloud services

Advantages of Using HSMs 

HSMs provide a lot of benefits that other security systems just can’t match, such as: 

  • Protect internet of things (IoT) and blockchain products. HSMs provide a unique layer of protection for IoT and blockchain products. Keep data ironclad—and give peace of mind to your clients, too.
  • High levels of trust and authentication. HSMs can show customers and clients that you’re serious about security. In fields like financing, cloud computing, and healthcare, clients need to know that their personal data is safe and protected from security breaches.
  • Tamper-resistant and tamper-evident. Different hardware security module systems have different levels of tamper resistance, but many of them are designed to withstand tampering and show evidence of tampering in case of a breach.
  • Detailed access logs. By providing detailed access logs, you can securely track who interacts with the HSM and what they do with it.
  • Single crypto key storage. The only place your key exists is in the HSM. This reduces the likelihood of theft and makes it easier to keep track of the key.

PCI Compliance for Merchants and Businesses 

HSMs can also be used to help businesses stay compliant with security regulations set by government agencies and/or private sector partners. One of the most important security standards HSMs helps businesses meet is PCI compliance.

The Payment Card Industry Data Security Standard, or PCI DSS for short, applies to any business that processes, stores, or transmits credit card data.

While HSMs are not required to meet PCI DSS compliance standards, they make it much easier by simplifying complex processes such as: 

  • Key generation, distribution, exchange, 
  • Key change prevention
  • Rotation/encryption times
  • “Dual control” and “split information” implementation
  • Retention management

Start Safeguarding Your Data Today

Protecting your business’s data should be one of your top priorities. While you may have some security systems set in place, adopting additional devices such as HSMs is recommended to bolster the systems you have for optimal data security. HSMs, in particular, are useful in many industries and offer security features other systems don’t have.

While most online applications present possible risks and threats, there are ways to mitigate them to ensure your information remains for your eyes only.
To learn more about how HSMs can benefit your company or to begin the process of boosting your digital security systems, contact our team at REALSEC.