How to Ensure Maximum Security in Your Data Room

Virtual data rooms (VDRs) are already indispensable in the complex finance world. Business owners and dealmakers use them to manage sensitive information during such high-stakes processes as mergers and acquisitions (M&A), fundraising, clinical trials, initial public offerings (IPOs), etc. And of course, it makes the VDR market expand — it’s forecasted to grow at a CAGR of 18.1% and reach 5.6 billion in 2029. 

And one of the main reasons why VDRs are so in demand now is because they offer the required security to business data. This is especially important considering the $4.4 million cost of an average data breach. No one wants to have financial losses!

And this is exactly what a secure data room can help with. This article explains the core attributes of a secure virtual data room. Additionally, you’ll learn what to do to select the best secure data room for your needs and how to make a VDR experience even more secure.

What Makes a Data Room Secure?

Let’s start with a quick definition.

A secure data room is a virtual data room software that offers a secure cloud-based repository to store and share various sensitive data, such as contracts, legal documents, financials, or confidential personal information.

At first sight, you might notice that the purpose of a data room is quite similar to what basic cloud storage solutions like Google Docs or Dropbox offer. It’s file storing and sharing. But that’s exactly when the main difference between these two storage types kicks in.

Virtual data rooms were created with security in mind. Meaning providers offer enhanced security measures that can ensure better security and confidentiality for important, sensitive, or confidential data. 

While traditional cloud storage solutions still do offer a certain level of security to your data, it’s still not enough for complex use cases like M&A. That said, Dropbox experienced several major data breaches during the last six years. However, it makes such tools a perfect solution for personal use, such as sharing photos, for example. 

Virtual data rooms, in turn, offer a variety of dedicated security features, ensuring your sensitive data confidentiality. We review the main ones further.

Core Security Features of a Data Room

So these are the main security features/measures most virtual data rooms provide:

• Dynamic watermarks. It enables user details like name or email to appear on top of every document they open, which prevents them from making screenshots and file leakage.
  
  
• Access expiry and revocation. VDR administrators can revoke user access to files or set certain access limits (like a deadline), which helps to maintain full control over file access.
  
  
• Granular access permissions. Virtual data room administrators decide on what each user can do with each file in a data room. Most commonly, it refers to deciding who can view, edit, print, or download specific documents.
  
  
• Redaction. This feature blacks out sensitive parts of a file or document, like personal information, to keep it safe from people who shouldn't see it. It looks like censorship in some critical documents.
  
  
• Fence View. It enables a digital fence to appear on top of the documents, which makes it impossible for a user to view the entire file. This helps to prevent screenshots.
  
  
• Remote shred. Virtual data room administrators can disable user access, even to the files that were already downloaded by users on their devices.
  
  
• Compliance with international standards. Reliable and secure data room software providers meet international security standards. You can expect at least ISO 27001, SOC 2 Type II, GDPR, and HIPAA.

Human and Operational Best Practices to Enhance Data Room Security

Even with the best security feature set of a VDR, certain human actions won’t do harm. 

Here’s what you can do to make the virtual data room experience even more secure for your sensitive data:

• Train users regularly. There’s no better way to prevent security accidents than to train your staff accordingly. For this, ensure that all VDR users you’re going to add understand everything about its offered security measures and know how to use them. What’s even more important, everyone should know what to do when any kind of security incident happens. And who to contact.
  
  

• Do not allow vast access to all users by default. There’s no need to grant the same access rights to the whole team just in case. It might lead to huge problems. It’s much better to dedicate time and assign users only the access rights they need.
  
  

• Review and update access permissions regularly. Logically, a user's access rights might change with the flow of a project. It might happen, for instance, when a person switches roles, so that their area of responsibilities changes as well. So, do make periodical checks regarding their access rights inside a VDR.
  
  

• Use strong password policies. To be secure, a password needs to be complicated — something like "123456789" just won't cut it. Plus, you and all other team members should change your passwords often.

Evaluating a Secure Data Room Provider: Checklist

Now, what should you do to ensure you choose the most appropriate secure VDR from the variety available on the market? 

We have a checklist for that. Follow these key steps: 

• Review the variety of security features
• Verify compliance and certifications
• Check data hosting and residency laws 
• Confirm encryption protocols
• Review user access controls
• Assess activity monitoring tools
• Review data retention and deletion policies 
• Check update frequency and testing 
• Evaluate customer support quality 
• Test usability and interface clarity
• Research vendor reputation 
• Ask about uptime guarantees and disaster recovery

Final thoughts

So, a secure virtual data room solution is already a must for any business that needs to securely share its data with third parties. 

Virtual data rooms provide a variety of dedicated security features, which makes them a better option than Dropbox or Google Drive in situations like M&A. 

If you’re currently on the search for a reliable and secure data room, start by reviewing the variety of security features of each provider. Then proceed with customer support assessment, interface test, and much more, which are no less important to ensure a secure VDR experience for each user.