What is bring your own key (BYOK)?

Often, a cloud service provider controls the encryption keys that provide data protection for an organization’s cloud-hosted assets. However, in a BYOK model, the organization controls its own encryption keys so no external entity can access its cloud data without its authorization.

Encryption keys transform plain text into unreadable ciphertext to protect sensitive data from unauthorized access. They can also decrypt ciphertext back into readable form for authorized users.

BYOK helps ensure that encryption keys are managed according to an organization’s security policies and are aligned with industry standards such as NIST guidelines and FIPS 140-2, regardless of cloud provider.

Most major cloud providers—including IBM Cloud, Microsoft Azure, Amazon Web Services (AWS) and Google Cloud—offer BYOK to their customers.

BYOK typically follows a process called “envelope encryption,” which uses a hierarchy of keys to protect data. This function is managed by the cloud provider’s key management system (KMS), which is a secure service that creates, stores and controls access to encryption keys.

Here are the basic steps for BYOK.

The customer generates a master key in their own environment, often by using an on-premises hardware security module (HSM) for enhanced security. The HSM is a tamper-resistant device that securely generates and stores cryptographic keys.

Using a public key provided by the cloud provider, the customer encrypts their master key to protect it during transit. The master key is then imported into the cloud provider’s key management service through a secure application programming interface (API). The key is typically stored in the cloud provider’s own hardware security module.

The cloud provider’s KMS generates a temporary, single-use data encryption key (DEK). This key is used to encrypt the customer’s data. The customer’s master key is then used to encrypt the DEK. The result is an encrypted DEK (EDEK). The EDEK is stored alongside the encrypted data, while the DEK is discarded from memory.

When the customer needs to access the data, the process is reversed. The cloud provider retrieves the encrypted data and the EDEK. The cloud provider’s KMS uses the customer’s master key to decrypt the EDEK, retrieving the DEK. The DEK is then used to decrypt the data so the customer can access it.

Consider a financial services firm that wants to move its customer transaction histories, account details and other sensitive records to a public cloud. However, due to stringent industry regulations such as the Payment Card Industry Data Security Standard (PCI DSS), it cannot cede control of its encryption keys to a third party.

With BYOK, the firm can use its own encryption keys to maintain strict control over its data, even though it is stored on the cloud provider’s infrastructure. Because an attacker would not have access to the master key needed to decrypt the data, the risk of a data breach is minimized. The firm can also prove to regulators that it has full control over the keys that secure customer data.

Data encryption is a core tool for protecting sensitive information, especially information stored and processed in the cloud. According to the IBM® Cost of a Data Breach Report, organizations that use encryption can reduce the financial impact of a data breach by over USD 200,000.

BYOK further enhances data protection by giving organizations direct control over the encryption keys used to secure sensitive data in the cloud. This control reduces the risk of unauthorized access to encrypted data by preventing cloud providers or third parties from decrypting the data.

Many enterprises use BYOK to protect sensitive customer data stored in a software-as-a-service (SaaS) platform such as Salesforce.

Regulations like the Health Insurance Portability and Accountability Act (HIPAA), the General Data Protection Regulation (GDPR) and PCI DSS often require strict control over data access and encryption practices. By using their own keys, organizations can help ensure they meet these standards and maintain audit trails for key access and usage.

Healthcare providers often use BYOK when encrypting patient records, which helps them demonstrate compliance with HIPAA by ensuring that only authorized parties can decrypt the data.

In multicloud and hybrid cloud environments, BYOK helps organizations centralize key management across platforms, maintaining consistency and control without relying on each cloud service provider’s separate key system.

For example, a business that uses AWS, Azure and Google Cloud can centrally manage encryption keys for all platforms, reducing complexity and improving security posture.

For SaaS companies and other vendors, offering BYOK sends a signal to customers that they take data privacy and ownership seriously. This signal is important for enterprise customers and regulated industries where transparency is a critical component of security.

Because the customer owns the master key in a BYOK model, they are responsible for its full lifecycle management. This lifecycle includes a series of ongoing tasks to help maintain the security and integrity of the key. Organizations often automate these tasks to reduce operational overhead and minimize the risk of human error.

Organizations regularly replace encryption keys with new ones to reduce the risk of unauthorized access, exposure or theft. Limiting the lifespan of a key helps improve cloud security.

Securely backing up master keys is essential to prevent data loss in case the original key is lost or corrupted. Without a valid master key, encrypted data can become permanently inaccessible.

Monitoring key usage through audit logs helps detect unauthorized data access or misuse. Auditing key management policies also helps verify compliance with regulatory requirements such as GDPR and HIPAA.

Having a clear, documented plan helps organizations prepare for situations such as the accidental deletion of a key, hardware failures or cyberattacks. Because cloud providers can’t recover the master key, it’s up to the organization to be prepared.

Bring your own key (BYOK) and hold your own key (HYOK) both give organizations more control over encryption, but they differ in how and where the keys are stored and managed.

With BYOK, the organization creates and owns the encryption keys but uploads them to the cloud provider’s key management system to use with cloud services.

With HYOK, the organization keeps the encryption keys entirely in its own environment and never shares them with the cloud provider. This arrangement offers a higher level of control and privacy, but it’s more complex to manage and not supported by all cloud services.

BYOK offers convenience with control, while HYOK offers maximum control but with more responsibility.