diff --git a/openhands-sdk/openhands/sdk/agent/base.py b/openhands-sdk/openhands/sdk/agent/base.py
index c2a33a69ad..16736a84d2 100644
--- a/openhands-sdk/openhands/sdk/agent/base.py
+++ b/openhands-sdk/openhands/sdk/agent/base.py
@@ -144,13 +144,14 @@ class AgentBase(DiscriminatedUnionMixin, ABC):
             "- An absolute path (e.g., '/path/to/custom_prompt.j2')"
         ),
     )
-    security_policy_filename: str = Field(
+    security_policy_filename: str | None = Field(
         default="security_policy.j2",
         description=(
-            "Security policy template filename. Can be either:\n"
+            "Security policy template filename. Can be:\n"
             "- A relative filename (e.g., 'security_policy.j2') loaded from the "
             "agent's prompts directory\n"
-            "- An absolute path (e.g., '/path/to/custom_security_policy.j2')"
+            "- An absolute path (e.g., '/path/to/custom_security_policy.j2')\n"
+            "- Empty string or None to disable security policy"
         ),
     )
     system_prompt_kwargs: dict[str, object] = Field(
diff --git a/openhands-sdk/openhands/sdk/agent/prompts/system_prompt.j2 b/openhands-sdk/openhands/sdk/agent/prompts/system_prompt.j2
index fdd4626c39..220d19c29a 100644
--- a/openhands-sdk/openhands/sdk/agent/prompts/system_prompt.j2
+++ b/openhands-sdk/openhands/sdk/agent/prompts/system_prompt.j2
@@ -76,7 +76,9 @@ You are OpenHands agent, a helpful AI assistant that can interact with a compute
 </SELF_DOCUMENTATION>
 
 <SECURITY>
+{% if security_policy_filename %}
 {% include security_policy_filename %}
+{% endif %}
 </SECURITY>
 
 {% if llm_security_analyzer %}
diff --git a/openhands-sdk/openhands/sdk/conversation/impl/remote_conversation.py b/openhands-sdk/openhands/sdk/conversation/impl/remote_conversation.py
index 7398ec7ab7..2dec73d91d 100644
--- a/openhands-sdk/openhands/sdk/conversation/impl/remote_conversation.py
+++ b/openhands-sdk/openhands/sdk/conversation/impl/remote_conversation.py
@@ -1169,7 +1169,11 @@ def set_confirmation_policy(self, policy: ConfirmationPolicyBase) -> None:
 
     def set_security_analyzer(self, analyzer: SecurityAnalyzerBase | None) -> None:
         """Set the security analyzer for the remote conversation."""
-        payload = {"security_analyzer": analyzer.model_dump() if analyzer else analyzer}
+        payload = {
+            "security_analyzer": analyzer.model_dump(mode="json")
+            if analyzer
+            else analyzer
+        }
         _send_request(
             self._client,
             "POST",
diff --git a/openhands-sdk/openhands/sdk/security/grayswan/analyzer.py b/openhands-sdk/openhands/sdk/security/grayswan/analyzer.py
index a4ce518f3e..47d4af2d73 100644
--- a/openhands-sdk/openhands/sdk/security/grayswan/analyzer.py
+++ b/openhands-sdk/openhands/sdk/security/grayswan/analyzer.py
@@ -91,34 +91,25 @@ def validate_thresholds(self) -> GraySwanAnalyzer:
 
     def model_post_init(self, __context: Any) -> None:
         """Initialize the analyzer after model creation."""
-        # Resolve API key from environment if not provided
-        if self.api_key is None:
-            env_key = os.getenv("GRAYSWAN_API_KEY")
-            if env_key:
-                self.api_key = SecretStr(env_key)
-                logger.debug(
-                    "API key resolved from GRAYSWAN_API_KEY environment variable"
-                )
-
-        if not self.api_key:
-            # Design choice: Graceful degradation instead of fail-fast.
-            # This allows deployment without API key configured, returning UNKNOWN
-            # risk for all analyses. This is intentional to support environments
-            # where security analysis is optional or configured later.
+        # ALWAYS prefer environment variable - this ensures Docker gets the correct key
+        # even if serialization didn't work properly
+        env_key = os.getenv("GRAYSWAN_API_KEY")
+        if env_key:
+            self.api_key = SecretStr(env_key)
+            logger.info("Using GraySwan API key from environment")
+        elif not self.api_key or not self.api_key.get_secret_value():
             logger.warning(
                 "GRAYSWAN_API_KEY not set. GraySwanAnalyzer will return UNKNOWN risk."
             )
 
-        # Resolve policy ID from environment if not provided
-        if self.policy_id is None:
-            self.policy_id = os.getenv("GRAYSWAN_POLICY_ID")
-
-        if not self.policy_id:
-            # Use GraySwan default coding agent policy
+        # Always prefer environment variable for policy ID too
+        env_policy = os.getenv("GRAYSWAN_POLICY_ID")
+        if env_policy:
+            self.policy_id = env_policy
+            logger.info(f"Using GraySwan policy ID from environment: {self.policy_id}")
+        elif not self.policy_id:
             self.policy_id = "689ca4885af3538a39b2ba04"
             logger.info(f"Using default GraySwan policy ID: {self.policy_id}")
-        else:
-            logger.info(f"Using GraySwan policy ID from environment: {self.policy_id}")
 
         logger.info(
             f"GraySwanAnalyzer initialized with history_limit={self.history_limit}, "