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The use of data encryption could make organisations vulnerable to new risks and threats, a panel of security experts warned today.

Many organisations are encrypting their stored data to relieve concerns over data theft or loss - for example, US mandatory disclosure laws on data breaches do not apply to encrypted data.

However, experts from IBM Internet Security Systems, Juniper, nCipher and elsewhere said that data encryption also brings new risks, in particular via attacks - deliberate or accidental - on the key management infrastructure.

The change comes particularly with the shift from encrypting data in transit to encrypting stored data - often in response to regulatory demands - said Richard Moulds, nCipher's product strategy EVP.

"Lot of organisations are new to encryption," he added. "Their only exposure to it has been with SSL, but that's just a session. When you shift to data at rest and encrypt your laptop, if you lose the key you trash your data - it's a self-inflicted denial-of-service attack.

"Organisations experienced with encryption are standing back and saying this is potentially a nightmare. It is potentially bringing your business to a grinding halt."

Encryption is also as big an interest for the bad guys as the good guys, warned Anton Grashion, European security strategist for Juniper. "As soon as you let the cat out of the bag, they'll be using it too," he said. "For example, it looks like a great opportunity to start attacking key infrastructures."

"It's a new class of DoS attack," agreed Moulds. "If you can go in and revoke a key and then demand a ransom, it's a fantastic way of attacking a business."

Another risk is that over-zealous use of encryption will damage an organisation's ability to legitimately share and use critical business data, noted Joshua Corman, principal security strategist for IBM ISS.

"One fear I have is that we're all going to hide all our information, but companies are information-driven, so we take tactical decision and stifle ability to collaborate," he said.

"Sometimes, the result of implementing security technology is actually a net increase in risk," added Richard Reiner, chief security and technology officer at Telus Security Solutions.