Data privacy is an increasingly sensitive and hotly debated topic among consumers and corporations. New legislation is always in the works to govern how data is collected, used, and stored. Beyond consumer data, organizations may have large volumes of critical data that need protection, such as trade secrets, intellectual property, employee information, and financial data.
Startups and multinational companies alike are turning toward virtual data rooms (VDRs) as a solution for more secure file storage, sharing, and collaboration. However, organizations must be in tune with how to leverage VDR technology to enhance data privacy. Let’s highlight a handful of best practices for promoting data privacy in virtual data rooms.
First — a word on why data privacy in virtual data rooms is so important.
Organizations – big and small – should never underestimate the importance of data privacy. Actively protecting consumer and organizational data is a safeguard against legal, financial, and reputational damage while strengthening brand loyalty and promoting good working relationships with stakeholders.
Prioritizing data privacy helps your organization reach at least three critical objectives:
- Regulatory compliance – Various industries are subject to increasingly stringent data protection laws at the state, federal, and even global levels. Examples include the California Consumer Privacy Act (CCPA), the Health Insurance Portability and Accountability Act (HIPAA), and the EU’s General Data Protection Regulation (GDPR). Organizations are expected to operate in compliance with these laws with demonstrable due diligence. Non-compliance can have serious penalties, from hefty fines to criminal prosecution.
- Risk mitigation – “As of 2024, the average cost of a data breach in the United States amounted to 9.36 million U.S. dollars,” reports Statista. By beefing up your approach to data privacy, you help shield your organization and customers from cybersecurity threats and the costly consequences of a successful attack.
- Trust building – “Data breaches are becoming common experiences for consumers globally. A majority of global consumers report being impacted by a data breach that targeted a company from which they purchase goods or services. More than 80% of impacted consumers said they are likely to stop doing business with a company after it is the victim of a cyberattack,” says the International Association of Privacy Professionals. However, when an organization takes a proactive approach to data security by implementing cutting-edge technology for data storage and protection, like VDRs, it may engender trust among stakeholders and consumers.
Since the stakes are high, let’s dive into how organizations can implement the best practices for data privacy in virtual data rooms.
6 Actionable Ways to Align Your Operations with VDR Privacy Best Practices
Adhering to these six best practices can help your organization enhance data privacy in virtual data rooms:
1. Configuring Digital Rights Management (DRM)
Virtual data room administrators are responsible for carefully controlling access to digital assets through digital rights management. Admins, document owners, and copyright holders can configure digital rights settings, controlling who has access to view, edit, download, and even print a document.
Document owners must remember to:
- Revoke access to anyone who should no longer have access to a document.
- Avoid data entry errors when configuring DRM settings.
- Check whether a document has inherited permissions settings from its parent folder.
Some virtual data rooms have built-in DRM tools that allow document owners to rescind access to a document even after documents have been downloaded and even set a date for document access to expire automatically.
2. Conducting Regular Internal Security Audits
As with other compliance functions, organizations should take the initiative to create a schedule and follow through on regular internal data security audits. Executives should instate policies regarding data storage within the VDR and entrust reputable admins with the responsibility of sweeping through at predetermined intervals to ensure that data is being properly stored and handled in line with internal and regulatory policies.
VDRs make audits easy by maintaining a timestamped audit trail to reveal how each individual document has been handled.
3. Establishing Document Organization Protocols
At the outset of implementing VDR technology, an organization’s administrative staff should thoughtfully establish file structure protocols. Administrators should consider implementing various strategies, such as data segregation and document labeling policies.
VDRs allow custom file structuring to match the needs of various industries and organizations.
Recommended reading: The Ultimate Guide to Secure Document Storage
4. Providing Ongoing User Training
To create continuity and maximize security, your organization may provide ongoing employee training on navigating and using your virtual data room effectively.
VDR users within your organization should be trained on…
- How to securely share a file
- How to manage document permissions
- How to create a strong password
- How to descriptively label a folder and document
- How to structure files and folders
- How to set a link to expire
- How to watermark a document
- How to track document activity
- And more…
Make VDR training part of your onboarding process and provide continual training for even long-time employees as technology continues to advance.
5. Monitoring User Activity
Virtual data rooms are equipped with real-time document activity trackers, keeping a record of who has viewed and even downloaded a document. Monitor these logs to ensure no unwelcome activity has occurred. Immediately rescind document access of any users who are no longer welcome to view a file.
6. Carefully Selecting Your VDR Provider
Before committing to a virtual data room provider, take time to review the security features they have to offer. Find out what value their tech can add to your operations and how their tools can help you boost security.
High-Security Virtual Data Room Provider
CapLinked takes a proactive approach to data security by equipping organizations with highly secure virtual data room technology.
Note these security features that make our VDRs worth your investment:
- Military-Grade 256-bit Advanced Encryption
- Secured HTTPS Connections
- Premium SSL/TLS Protocols
- EU-US Privacy Shield and AICPA SOC 2 Certified
- HIPAA, ISO 27001, and PCI SAQ-D Compliant
- Plugin-free Software
- Comprehensive Digital Rights Management
- Real-Time Virus Protection
- Multi-layer Security Firewalls
Our virtual data room solution furnishes your operations with enterprise-level security, protecting your data according to the strictest international standards and accreditations.
Learn more about how CapLinked makes data privacy in virtual data rooms a much easier target for your organization to reach.
