Definitely is: A https://www.terraform.io/language/settings/backends/configuration#credentials-and-sensitive-data Warning: We recommend using environment variables to supply credentials and other sensitive data. If you use -backend-config or hardcode these values directly in your configuration, Terraform will include these values in both the .terraform subdirectory and in plan files. This can leak sensitive credentials.

I will go for option C. Whenever possible, it is best to authenticate outside of terraform to keep secrets out of state file

C. Defined in a connection configuration outside of Terraform (Most Secure) This is the most secure option. Here, you store your secrets in a separate dedicated location outside of your Terraform configuration. There are several ways to achieve this: Secret Management Tools: Utilize tools like HashiCorp Vault, AWS Secrets Manager, or Azure Key Vault to store and manage your secrets securely. These tools offer access control and encryption mechanisms. Encrypted Files: Store secrets in an encrypted file outside your Terraform configuration directory. Terraform can access these secrets during execution by referencing the decrypted content of the file.

C. Defined in a connection configuration outside of Terraform The most secure option for storing secrets for connecting to a Terraform remote backend is to define them in a connection configuration outside of Terraform. This involves using external configuration files or secure credential management tools. Option A (defined in environment variables) is also a good practice for sensitive information, but it might be less secure than an external configuration file if, for example, there is a risk of exposing environment variables. Option B (inside the backend block within the Terraform configuration) is generally not recommended for storing sensitive information like secrets because Terraform configuration files may be versioned and shared, posing a security risk. Therefore, when dealing with sensitive information, it's a good practice to use external and secure methods for configuration, such as a separate configuration file or a secure credential management tool.

Option C

Chat GPT: The most secure option for storing secrets for connecting to a Terraform remote backend is typically: C. Defined in a connection configuration outside of Terraform Storing sensitive information, such as authentication credentials, outside of the Terraform configuration helps enhance security by preventing accidental exposure or leakage of sensitive data. Using external tools or configuration management systems to manage secrets can provide additional layers of security and access control. It is generally not recommended to store sensitive information directly within the Terraform configuration (option B) to minimize the risk of inadvertent exposure. Additionally, environment variables (option A) can be a good practice for storing secrets securely, but they need to be managed carefully to avoid unintended exposure.

Let's imagine use AWS S3 bas a backend. Credentials to S3 Bucket are stored in ~/.aws/credentials file - Outside of terraform, most secure way.

C vault as example

choose A: when we use vault, we still need to download it into a file,here is official doc: - **File**: A configuration file may be specified via the `init` command line. To specify a file, use the `-backend-config=PATH` option when running `terraform init`. If the file contains secrets it may be kept in a secure data store, such as [Vault](https://www.vaultproject.io/), in which case it must be downloaded to the local disk before running Terraform. https://developer.hashicorp.com/terraform/language/settings/backends/configuration#credentials-and-sensitive-data

https://developer.hashicorp.com/terraform/language/settings/backends/configuration#credentials-and-sensitive-data:~:text=and%20apply%20steps.-,backend%20types,-The%20block%20label

Authentication outside of Terraform is more secure than environment variables. Like using terraform vault or cloud

From the documentation : Warning: We recommend using environment variables to supply credentials and other sensitive data. If you use -backend-config or hardcode these values directly in your configuration, Terraform will include these values in both the .terraform subdirectory and in plan files. This can leak sensitive credentials. So it's A

Definitely C. Authentication outside of Terraform is the most secure way.

The most secure place to store secrets for connecting to a Terraform remote backend is typically defined in environment variables.

Warning: We recommend using environment variables to supply credentials and other sensitive data. If you use -backend-config or hardcode these values directly in your configuration, Terraform will include these values in both the .terraform subdirectory and in plan files. This can leak sensitive credentials. ANSWER SHOULD BE "A"

It seems to be D

https://developer.hashicorp.com/terraform/language/settings/backends/configuration Warning: We recommend using environment variables to supply credentials and other sensitive data. If you use -backend-config or hardcode these values directly in your configuration, Terraform will include these values in both the .terraform subdirectory and in plan files. This can leak sensitive credentials.