A company needs to deploy AWS CloudFormation templates that configure sensitive database credentials.

AWS CloudFormation supports dynamic references to AWS Secrets Manager, which allow sensitive values to be retrieved securely at stack runtime. According to AWS Certified Security – Specialty guidance, dynamic references prevent secrets from being stored in plaintext in templates, stack metadata, or logs.

Using dynamic references ensures that secrets remain encrypted at rest and are accessed only when required. CloudFormation does not support SecureString parameters for Secrets Manager references, and encrypting templates does not prevent exposure during execution.

Referenced AWS Specialty Documents:

AWS Certified Security – Specialty Official Study Guide

AWS CloudFormation Dynamic References

AWS Secrets Manager Best Practices