2023 has shown that even corporate giants like Twitter, Paypal, Suzuki, and Western Digital are susceptible to data breaches. Thus, the average global cost of a data breach in 2023 was $4.45 million, up 15% over three years. With all this, about 40% of cases lost sensitive data across multiple environments, including public cloud, private cloud, and on-premise. It indicates that attackers compromised multiple environments without being detected.
There are many reasons for data leaks, including human error, hacker attacks, insider threats, and compromised credentials. Moreover, your data is especially susceptible when transferred, which can complicate business workflows and transactions.
In our post, you can explore a proven way to protect your data in transit and at rest — a secure virtual data room. We’ll tell you what this software is, how it protects your data, and why it’s the best solution today.
What is a virtual data room?
A virtual data room, or a virtual data room M&A (as it is often used for M&A), is a highly secure cloud space for storing data and sharing files. Additionally, the platform includes tools for business collaboration and communication, making it a full-fledged solution for transactions such as due diligence, mergers and acquisitions, fundraising, initial public offerings, etc.
What fundamentally distinguishes data rooms from traditional file-sharing services is robust data protection. The thing is, online data rooms were created with business security needs in mind. As a result, software functionality reliably protects your documents against all possible threats. Therefore, as soon as you select a virtual data room, you can rest assured that your information is entirely secure.
How does a virtual data room protect your data?
Virtual data room solutions feature security mechanisms at different levels, making them immune to hackers, malware, human error, insider threats, and other risks. Here’s how they all work in simple terms:
Level 1: Infrastructure security
- Physical data protection. The providers employ physical security measures, strict access policies, and secure storage to prevent unauthorized access by third parties.
- Real-time data backup. No document uploaded to data rooms can be damaged, destroyed, or stolen because the software includes backup via encrypted VPN tunnels.
- Multi-layered data encryption. Since documents are encrypted with 256-bit AES keys, they are unreadable to unauthorized individuals.
Level 2: Data access security
- Granular user permissions. You can define data access for an individual user or group based on their tasks and roles. This way, you protect your organization from insider threats by limiting access to highly confidential data to trusted personnel only.
- Multi-factor authentication. Unlike solutions that rely solely on a user’s password to secure data, a virtual data room employs a multi-step authentication process. Specifically, you should enter a one-time code sent to your mobile phone to access the storage.
- User security impersonation. This tool effectively prevents human error when you invite users to data rooms. So, you can see workspaces from others’ perspectives to ensure they can only access the documents they need and no more.
Level 3: Document security
- Document access rights. Just as you can set permissions for a specific user, you can do this for a file. For example, you can make a document unavailable for viewing, eliminating the risk of leakage. Data room users can restrict the printing and downloading of some data.
- Dynamic watermarking. Customizable watermarks containing the username, IP address, date, and time help identify the source of the leak immediately.
- Fence view. Data rooms protect users not only from cyber threats but also from prying eyes behind their backs. Thus, fence view mode allows you to view only some sections of the document’s content while the rest is barred.
- Remote wipe. Even a lost or stolen device is under your control since you can lock and wipe encrypted data remotely.
Now that we have gone through the primary mechanisms used by virtual data room providers to ensure the safety of user data, it is important to highlight another key factor that adds to the reliability of the software.
What is virtual data room compliance for your data security?
In addition to multi-level protection of your confidentiality, M&A data room vendors provide services following international data security standards. Therefore, you can rest assured that all your data is processed and managed in compliance with the highest regulations of global legal frameworks for data security and privacy.
The following list provides several examples of data privacy policies that data rooms adhere to:
- SOC 1
- SOC 2
- SOC 3
- ISO/IEC 27001:2013
- GDPR
- HIPAA
- CCPA
- FINRA
We recommend checking for all the security and compliance features listed to find the best virtual data room and ensure robust data protection.
Final thoughts
Although all data rooms are designed with document security in mind, their functionality may vary. Moreover, your choice may depend on your needs and budget. Therefore, study the features, compliance, virtual data room pricing, and user reviews when choosing software to find the best fit!
