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What is Network Segmentation? Introduction to Network Segmentation

A computer network is segmented when it is divided into smaller parts. Network segregation, network partitioning, and network isolation are all terms that refer to the same thing.

The purpose of network segmentation is to boost network performance and security. Network segmentation is particularly important for organizations that must adhere to healthcare or financial data protection standards such as HIPAA or PCI-DSS. It protects the company's intellectual property and data from unauthorized users.

Whether you're attempting to improve security in your infrastructure or achieve PCI compliance, network segmentation is an essential component of a comprehensive information security program. Your organization's devices, servers, and applications are isolated from the rest of the network by dividing your network into smaller networks. Potential attackers who successfully compromise your first line of defense are confined to the network segment they have access to.

Today, many organizations are implementing network segmentation to improve their IT security and reduce the risk of cyberattacks. In this article, various aspects of network segmentation is covered briefly, such as:

  1. What is Network Segmentation?
  2. Why is Network Segmentation Important?
  3. What are The Types of Network Segmentation?
  4. How is Network Segmentation Implemented?
  5. Benefits of network segmentation
  6. Who Needs Network Segmentation?
  7. Best Practices of Network Segmentation
  8. Examples of Network Segmentation

What is Network Segmentation?

Network segmentation is an architectural approach that divides a network into multiple segments or subnets, each of which functions as its small network and applies security protocols to each zone to manage security and compliance. It usually entails isolating traffic between network segments using virtual local area networks (VLANs), followed by security via firewalls to protect applications and data.

Network segmentation has been elevated as a solution that provides security without sacrificing performance because it enables the creation and maintenance of policies for different network segments.

Network segmentation allows breached zones to be quarantined without affecting the entire system or enterprise network. Devices on the same network segment can communicate directly with each other. To communicate with devices on another segment, traffic must pass through an external demarcation point (typically a router or firewall). This allows for traffic to be inspected or security policies to be implemented, thereby increasing overall security.

Why is Network Segmentation Important?

In today's world, even in a small business, IT systems terabytes of data are stored. And the size of the data increases every day. Furthermore, not all data in network infrastructure has the same importance. While some of them may like garbage, others are mission-critical for the organization and need to be protected from unauthorized access. But, securing all data, in the same way, is neither feasible nor financially reasonable. To protect sensitive data, rigid network segmentation with a combination of physical and logical separation is required.

All businesses, both public and private, must actively increase their level of readiness for cybercrime. The NIS (Network and Information Security) Directive expanded the requirements for critical infrastructure information security. The GDPR imposes severe penalties for improperly managing personal data. Most of all, information security is a strategic issue which affects an organization's growth, profitability, competitiveness, and future prospects. Efficient security procedures are typically a small fraction of the cost of possible damages.

Almost every organization has an external firewall to protect itself against cyberattacks. The problem is that intelligent attackers commonly figure out how to compromise these firewalls or hide malware in seemingly legitimate network packets flowing into the enterprise. Once inside the company network, the attack may impact negatively by moving laterally without restriction and gaining access to valuable assets such as cardholder data, corporate financial records, or it may shut down a critical service in exchange for a ransom.

To lower the risk of a cyber threat and limit its impact network segmentation should be implemented. Without a segmentation in an IT infrastructure, there is a high risk of sensitive information leaking or being manipulated, as well as computer viruses and malware spreading wildly and easily.

Network segmentation is one of the most effective prevention methods against data breaches, malware infections and other types of cybersecurity risks. Groups of end nodes, such as desktops and servers, in a properly segmented network, have only the connectivity required for legitimate business usages. This restricts malware's ability to spread or an attacker's ability to pivot from system to system.

Network segmentation provides demonstrable attention to data segregation and gives organizations a better chance of limiting the spread of a network compromise. For example, a company's guest traffic has no reason to access the finance department's data, and HR applications should not have access to HIPAA or PCI data. Network segmentation establishes strict borders between different network segments, and the implementation of a firewall protects networks from cyber threats. As a result, one solution of how cardholder data can be protected is network segmentation.

Network segmentation keeps black hat hackers and cyber threats from spreading or looking at moving laterally in enterprise networks, campus networks, and cloud environments. A cyber threat can be imprisoned to the network segment or host segment where it has been first seen so that hackers are prevented from accessing other parts of the network. Small security incidents are contained, resulting in better data breach protection for businesses.

What are The Types of Network Segmentation

Four types of network segmentation are explained below.

1. Firewall Segmentation

Firewalls are used within an enterprise network to create internal zones that separate functional areas to minimize attack surfaces and prevent threats from spreading beyond a zone. Separating finance applications from human resources applications is a widespread example of firewall segmentation. Another common sample is safeguarding sensitive regions such as servers, storage, and client PCs in the finance department where PCI data are kept.

Firewall administrators are well-versed in the use of firewalls deployed as internet firewalls. But, when the same firewalls are deployed as internal firewalls or data center firewalls for internal segmentation, they tend to introduce significant complexity. Because internal network segmentation requires much more firewall rules than the external firewall. Another disadvantage of firewall segmentation is the considerable cost it imposes since it requires a pair of firewalls that are expensive for each site. Lastly, a human error such as misconfiguration of the internal firewall may cause some critical service or production interruptions in the enterprise.

2. Network Segmentation

Network segmentation can be deployed in enterprise networks by creating VLANs or subnets. Virtual Local Area Networks (VLANs) split networks into smaller segments in which all devices are virtually connected to each other as if they were in the same LAN. Subnets partition a network into smaller subnets that are linked by networking equipment using IP addresses. These two approaches not only lead to more efficient network performance but also prevent cyber threats from spreading beyond a specific network.

The implementation of network segmentation presents the following difficulties. First, to handle segmentation requirements network infrastructure must be frequently redesigned and reconfigured. Writing and managing the thousands of access control list rules that run on the router or network switch has high complexity which may result in misconfiguration.

3. Segmentation with SDN

Internal firewalls, as well as Virtual Local Area Network (VLAN) and Access Control List (ACL) configurations on network devices, were examples of traditional segmentation technologies. These approaches, however, are costly and difficult. They necessitate a significant amount of manual labor and do not scale well.

Network engineers must carefully consider which resources belong to the same network segment, as well as define appropriate security policies to govern the communication between network segments. Then they must configure all of the affected network devices, which is a time-consuming and frequently error-prone process. Also, implementing network segmentation best practices in complex networks may be impossible without interrupting daily operations.

Another drawback of these methods is that they presume that every device in the network is trustworthy. Because they are primarily intended to prevent external attacks, these approaches can leave organizations vulnerable to insider attacks.

To resolve these concerns, IT executives are implementing novel approaches such as micro-segmentation and software-defined networking (SDN). These segmentation methods allow more granular control and easier administration.

Both SDN and micro-segmentation assume that all devices are considered untrusted by default, even if they are already part of the corporate network. To become "trusted" and gain access to corporate resources, the device must fulfill certain requirements, such as running antivirus or completing Multi-Factor Authentication (MFA).

By classifying and tagging network traffic, software-defined access technology now simplifies network traffic segmentation. It then uses traffic tags to directly enforce network segmentation policy on network equipment, eliminating the complexity of traditional approaches.

Software-defined networking(SDN) provides customers with different virtual networks while utilizing the same underlying physical infrastructure. SDN is used to increase network automation and programmability by using centralized controllers that are abstracted from the physical hardware. Some network operators try to coax segmentation out of their SDN network overlay implementation by developing policies that route packets through a distributed set of firewalls.

The disadvantage of SDN segmentation is the high level of complexity required for successful micro-segmentation, especially when applications do not fit within network boundaries. SDN focuses on network policy rather than the security visibility into workloads and application flows addressed by other approaches.

4. Micro-Segmentation

In segmentation policies, micro-segmentation makes use of a lot more information, such as application-layer information. It enables more granular and flexible policies to meet the highly specific needs of an organization or business application.

Instead of using a firewall or VLANs for segmentation, host workload can be used in micro-segmentation. Micro-segmentation is also known as host-based segmentation. Each host in the data center includes a native stateful firewall, such as Windows Filtering Platform in Windows or iptables in Linux. This method typically employs whitelist models, which block all network packets except those that are permitted. It enables network traffic control down to the application or workload level.

Workload telemetry is used in micro-segmentation to create a map of IT environments and applications. This map is used to visualize what needs to be protected and to implement an automated segmentation policy. To define a policy, this method employs human-readable labels rather than IP addresses, port numbers, or firewall rules. The ability to enforce segmentation down to the process level, rather than just specific service ports, is advantageous for micro-segmentation.

The drawback of micro-segmentation is that it requires some time for education and adaptation of the system or security administrators. Most system administrators are familiar with network equipment and firewalls; however, they may need to be trained on a new way to define a policy and implement host-level segmentation.

What are the Benefits of Network Segmentation

Implementing network segmentation can provide significant benefits to organizations. And the advantages of network segmentation are as follows:

1. Performance and Monitoring Improvement

Segmentation helps to alleviate network congestion. Network performance and monitoring enhance as there are fewer hosts per subnet to manage in a well-segmented network. Network segmentation improves overall network performance by restricting specific traffic only to those parts of the network that require it. For example, mission-critical embedded devices of the SCADA systems and servers can be separated from the guest network in a manufacturing factory so that internet traffic generated by the guests does not affect production devices.

Furthermore, network segmentation improves analytics for network monitoring, network devices, and network access. The more segmented a company's network is, the more visibility it has into its LAN traffic.

2. Reduced Impact of Cyberattacks

Unsegmented or flat network design has high cyber security risks. The design of a network has a significant impact on an organization's ability to identify, defend against, and recover from cyber-attacks. Since segmentation limits the spread of an attack, it improves the security of a network. Attacks in one section are prevented from affecting systems in another, limiting their spread and minimizing damage. Segmentation, for instance, prevents a malware outbreak in one section from spreading to other systems. Also, well-isolated network segments can minimize the ability of an attacker to move laterally and pivot from system to system. If a company network is compromised by a hacker and that network is segmented, breaking out of that compartmentalized network segment, and gaining access to the resources he truly desires will take a significant amount of time for him.

Literal movement of a hacker on a flat network

Figure 1. Literal movement of a hacker in a flat network

 Literal movement of a hacker on a segmented network

Figure 2. Literal movement of a hacker in a segmented network

According to the Cost of a Data Breach Report 2020 published by IBM, it takes an average of 280 days to locate and close the breach. That means the hacker has been in the company system for more than six months, with access to corporate data and systems. Efficient network segmentation may also help detect signs of an attack. Security teams can prioritize incidents that are likely to have the greatest impact on the organization by concentrating resources in more sensitive areas of the network. So, patterns in traffic flows with unusual activity potentially indicating an attack between network segments can also be detected. Network and security teams can control what traffic flows in, out, and between network zones, preventing compromise and meeting compliance and audit requirements. Separating sensitive data servers in different network zones makes it easier to protect them and reduces the risk of fraudulent activity. Administrators can respond to network events more quickly thanks to distinct network zones. When an attack or error occurs, it is simple to determine which segments are impacted. These help in narrowing the scope of troubleshooting.

3. Keeps vulnerable systems secure

Segmentation can prevent malicious traffic from reaching systems that are unable to preserve themselves and protects the endpoint devices, especially IoT devices. For example, SCADA systems or some embedded devices in a production line of a factory may not be designed with effective security defense mechanisms. Since some systems, such as industrial control systems (ICS), require extremely high availability, it is difficult to update them regularly and protect against cyber attacks. They can be protected from potentially harmful Internet traffic by implementing network segmentation as a best practice.

4. Reduces Regulatory Compliance Costs

By implementing the network segmentation all IT assets that require the same level of protection in terms of privacy, integrity, accessibility, and access are gathered in the same zone. The higher the protection demands of a system, the higher the costs to build and maintain the system and protection mechanisms. This also means that for economic reasons, systems with high-security requirements should be kept as small as possible.

By limiting the number of in-scope systems, segmentation lowers the costs of regulatory compliance. For example, segmentation distinguishes between systems that process payments and those that do not. As a result, the costly compliance requirements and audit processes apply only to the in-scope systems, rather than the entire network.

5. Implementation of a Policy of Least Privilege

Since users are the weakest link in the network security chain, the Policy of Least Privilege is critical. According to Verizon's 2020 Data Breaches Report, more than two-thirds of malware network breaches are caused by users clicking on the links in malicious emails.

With the help of network segmentation, user access to the most sensitive information and systems may be restricted easily. User access restriction can be extremely useful in protecting information if one of the user's credentials are exploited. As a result, network segmentation is beneficial in protecting valuable corporate assets from both outsider and insider attacks.

Who Needs Network Segmentation?

A well-designed network can benefit organizations of all shapes and sizes, but good segmentation is especially critical in certain industries.

Organizations that are concerned about security and compliance should implement network segmentation to protect their valuable assets from breaches by limiting attacker lateral movement.

Enterprises that must meet healthcare cybersecurity compliance obligations, as well as PCI regulations, are two typical examples of the need for network segmentation.

  • Healthcare Companies In order to protect sensitive patient data, healthcare organizations should implement a well-designed, properly segmented secure network infrastructure to store medical records. Healthcare companies must protect PHI data while adhering to healthcare cybersecurity compliance frameworks. There are common security frameworks available to assist the healthcare industry and its providers in showing their security and compliance in a consistent and simplified way. Isolation of sensitive systems, accurate mapping, network segmentation and segregation, and network connection control are all critical security controls that must be applied.
  • Retailers Due to PCI regulations, network segmentation is critical for retailers. it entails strictly controlling access to network segments where cardholder data is kept. PCI compliance standards require sellers and other businesses to handle credit card information in a secure manner, which reduces the risk of sensitive cardholder financial account information being compromised. Therefore, network segmentation is used in Payment Card Industry Data Security Standard (PCI DSS) corporate compliance to isolate system components within a Cardholder Data Environment (CDE).

How does network segmentation protect payment cardholder data to meet PCI DSS compliance? For example, if another zone of the network is compromised, sensitive cardholder data can remain safe. Because a random point of sale system leak does not compromise databases containing payment card information. Network segmentation isolates the cardholder data from the compromised system, preventing hackers from gaining access to sensitive data without violating additional security measures.

There would be nothing separating the compromised system from the cardholder data if there was no network segmentation, allowing attackers near-immediate access without breaching additional security measures.

  • Guest Wifi Another common application for network segmentation is to allow guests or visitors Internet access in the company network. The traffic from the guest VLAN or subnet is kept separate from the rest of the corporate network, ensuring that guests do not gain access to corporate data.

How Is Network Segmentation Implemented?

Network segmentation may be a difficult process that requires a wide range of skills and has a massive effect on operational processes. The complexity is determined by factors such as the size of the infrastructure, the management's eagerness, the available staff, the current state of affairs, and the budget.

Network segmentation may be implemented by following the five steps given below.

1. Zone Model Creation

To create a zone model for network segmentation, the following concepts should be defined.

  • types of zones that will be implemented
  • security and assurance requirements for the security functions that isolate the zones

2. Identify what needs to be segmented

It must be determined which system should be segmented. To do so, a high-level picture of the systems that should be segmented, including the boundaries to other systems must be drawn. Also, the data flows that will exist in and out of the systems must be identified.

3. Security examination of included systems

The systems that will be part of the segmentation must be classified based on their criticality and sensitivity. The company should perform classification on a continuing process, but a security analysis can identify systems and data that have not been regarded.

4. Set up the systems in accordance with the zone model

The systems should be set up in accordance with the defined zone model. Availability, security, operational responsibility, and functionality are all factors in placement. Recognizing how various systems communicate with one another at the network level is critical. Also, communication across zone boundaries, i.e. between zones, should be reduced and the flow of data between the zones should be monitored.

5. Implement, test, and put into operation

To implement the network segmentation, various IT components such as routers, switches, firewalls, and applications must be reconfigured, and in some circumstances, networks must be partially reinstalled. Also, the different security solutions will be configured, tested, and deployed. During this stage, the network segmentation runs the risk of disrupting ongoing operations due to outage.

Segmentation works by regulating the flow of traffic between the various parts. A segmentation policy describes how you decide to divide your network into segments. All traffic in one section may be prevented from reaching another. Alternatively, traffic flow could be restricted based on the source, destination, traffic type, and several other factors.

There are numerous methods of network segmentation. The most widely used method is to rely on the network itself. In this method VLANs or subnets are implemented. It is common for businesses to segment their networks by business department, assigning different VLANs to each department such as finance, human resources, R&D, and so on. Depending on the business requirements, network packets between departments can then be inspected or restricted. Accessing the internal HR database, for example, could be restricted to computers in the HR VLAN. As another example, IoT devices are frequently placed on their network partition to harden security. For example, in the health sector, X-Ray machines and other connected medical devices may be kept isolated from the rest of the network.

Deploying a firewall in the network infrastructure is another way of segmentation. In this approach, different zones are created with different security concerns. For example, servers are commonly placed into a different zone with much stronger security measures than client desktops. This can keep viruses from spreading from a company workstation to servers hosting critical data.

Enforcing network segmentation on the host level is a newer approach that allows the segmentation to take place without affecting the network.

Depending on technical and business requirements, various perspectives on segmentation can be customized.

What are Examples of Network Segmentation?

There are numerous examples of how network segmentation can aid in reducing attack surfaces and the likelihood of a high-profile breach.

  • Financial Organizations

Organizations may use segmentation to isolate a specific application from the rest of the environment. For instance, PCI, SWIFT, and healthcare systems can be isolated from the rest of the environment in an enterprise network by network segmentation.

Also, the network infrastructure of a large bank with multiple branch locations is another good example where network segmentation is a must. The bank's security policy prevents branch employees from gaining access to its financial reporting system. By preventing all branch traffic from reaching the financial system, network segmentation can help to enforce the security policy. Furthermore, by reducing overall network traffic, the financial system will function better for the financial analysts who use it.

  • Protecting critical servers by implementing network segmentation

In this scenario, a company had decided to segment its network to prevent critical servers from a network intrusion. Therefore, the following security measures may be implemented:

  • compile a list of critical servers and documented their sensitivity, as well as any necessary communications with such devices
  • plan the implementation of security measures on a timetable that was feasible given the resources available, ensuring adequate testing before deployment
  • restrict the logical network connectivity to key servers to only the necessary ports and protocols
  • connections could only be established from more trusted to less trusted zones, not vice versa.
  • whitelisted application layer content, allowing only that content to flow between trust zones.
  • If the function of a user or service was more sensitive than that of other users or services sharing the same host or network, multi-factor authentication should be used in addition to a separate set of credentials
  • reduce the use of implicit trust relationships between hosts in different trust zones.
  • implement web, file, and email content filtering for connections to external organizations and the internet to detect and clean potentially harmful content
  • Use intrusion prevention and host-based antivirus to detect and quarantine identified malicious content
  • Implement centralized logging, monitoring, alerting, and auditing capabilities, which will be managed by a dedicated security operations center.
  • Keeping high-risk applications separate from a network

In this scenario, a company determined that the majority of their network contained sensitive data and that segmenting or segregating all of that data was not cost-effective. Instead, the organization chose to isolate high-risk applications from the rest of the network (such as content management systems, web browsers, and email clients). To maintain business requirements while reducing the risk of a cyber threat, the following security measures may be implemented:

  • Clients who need internet access launch a remote desktop application on their corporate workstation to connect to a virtual desktop and authenticate with a user account created specifically for that purpose. This virtual desktop is delivered by a dedicated server located in a different authentication domain and network segment. This dedicated remote desktop enables users to engage in high-risk activities such as web browsing and email reading while limiting an attacker's ability to exploit a single compromised application.
  • Clients who need access to high-risk applications launched a local virtualization application, which runs a hardened virtual host that is connected to a less-trusted remote system protected by a layered security gateway that separates and isolates all necessary communications protocols between high-risk applications and the corporate network.

Best Practices of Network Segmentation

Network and security architectures should be aware that network segmentation should not harm overall network performance when implementing it. Best practices of network segmentation are as follows:

  • Avoid Over Segmentation

When computer networks become too segmented, network and access management may be difficult resulting in lower productivity. The key here is to strike a balance between security and manageability.

  • Restriction of third-party access

Since data breaches happen to vendors all the time in enterprise networks, it's best to protect network infrastructure. With so many third-party vendors and providers requiring access to the corporate network or IT resources, keeping separate access points for each vendor is an essential best practice.

  • Consolidation of network resources and data categorization

Combining similar network resources into distinct databases to streamline security policies while protecting data is an effective strategy for network segmentation. If network audits are conducted regularly, it may be possible to determine which resources should be consolidated. The data can then be classified based on its type and level of sensitivity. Defining the importance and value of all data and assets is critical for network segmentation. These labels are useful to identify various zones of trust in the network.

  • Regular Network Audit

When the number of IT assets and applications accessing a network increase and change continuously, managing the access and activities on the corporate network will be more difficult. Regular network audits, which may include vulnerability scans, are vital for the network segmentation process and will aid in identifying security holes.

  • Automation

Because determining a network segmentation policy is an extremely complicated task particularly for enterprise-level networks. Manually performing all of the segmentation phases may be difficult or impossible.

It is critical to use automation capabilities whenever possible. Automation, particularly during the discovery and classification phases, can be extremely useful in determining new assets added to the network whether they contain any security flaws, and applying the network segmentation policy.

What are the Network Segmentation Best Practices to Maximize Cybersecurity

Cybersecurity is the practice of protecting computer systems, networks, devices, and data from malicious attacks.

It addresses recognizing risks, isolating them, fighting them with no or no data loss, and moving toward threat prevention.

While avoiding attacks is the purpose of cybersecurity, it's also necessary to recognize that an attack might occur and plan for the consequences of a successful breach. Network segmentation is a technique for reducing the impact of an attack before it occurs.Some of the best practices of network segmentation can be listed as

  • Identify who is connected to your network

You can't segment appropriately if you don't know who has access to the network or what they require access to in order to accomplish their tasks. Know which data has to be accessible by whom before beginning any segmentation project so that you don't have to re-architect the segmentation process afterward.

  • Don't under- or over-segment.

Projects requiring segmentation might be challenging. A solid successful segmentation strategy includes a few required and distinct subsections. Too many can become very complex. Too few might jeopardize the security of your system.

  • Separate access gateways for third-party users.

Some of the most high-profile data breaches in recent history occurred as a result of a bad actor using a third party to get access to a company's data. Worryingly, when a third party is engaged in a breach, it takes longer to detect the incident

Create segregated portals for third-party data users that require data to deliver services. That way, they only have access to what they require.

  • Ensure that legitimate access to data is more convenient than the illegitimate path.

When segmenting your network, keep your network's architecture in mind. You may design a path that requires a third party to bypass a number of firewalls in order to get the data they need — but what would a hacker do in order to access the same data?

  • Regularly audit your network.

Regular network audits are critical for defending your networks and preventing intruders from moving from one sub-segment to another. If you don't routinely monitor your network, you risk ignoring vulnerabilities in your design that a bad actor may exploit.