Today’s businesses have many challenges to contend with, but one of the most pressing – and the one most likely to have far-reaching PR consequences – is data privacy. Unfortunately, hackers are savvy and constantly developing new ways to breach complex security systems, which is why even the best-prepared organizations experience data leaks.
This sense of inevitable vulnerability can be discouraging for businesses, but the presence of risk doesn’t mean your organization can just give up. Instead, businesses need to continue to pursue new security solutions for strong data privacy, and one tool organizations are turning to is the virtual data room.
Virtual Data Rooms: The Basics
To understand why virtual data rooms are such a valuable security intervention, it helps first to understand the origins of these tools. The basic concept stems from the world of mergers and acquisitions (M&A), in which the two companies involved set up physical space to hold critical documents, conduct due diligence proceedings, and engage in contract negotiations.
Drawing on the above concept, a virtual data room is a digital parallel, a secure online space where involved parties can access, share, and manage documents securely, collaborate on tasks, and track document use and engagement throughout the process. Simply put, anything you can do in a physical data room, you can do in a virtual one.
While virtual data rooms have a clear predecessor in the form of their physical counterparts, they clearly have to contend with a different set of challenges, particularly when it comes to security. So, given the broader security issues impacting digital tools, how do virtual data rooms overcome these issues? One of the most important tools at their disposal is end-to-end encryption, the gold standard used by most major security protocols, including HIPAA and GDPR.
In addition to strong encryption protocols, virtual data rooms back up their security with activity tracking tools that monitor all documented use. That means that every time someone opens, edits, or otherwise engages with a document uploaded to the data room, it keeps a log of that information. This is valuable for a number of different reasons, including the fact that it offers insights into what documents are most important, but it also means that if there’s a concern about a data breach, organizations have a record of who has had access to that information.
Activity tracking is part of a broader notion of transparency in data security, and transparency is a much overlooked element of data privacy. So often we associate privacy with a cloak of invisibility, but industry experts have always known that security hinges on a high level of internal transparency and tracking.
While most team members don’t need access to this kind of information, high-level IT professionals can use this kind of information to help them track unauthorized access, though that’s highly unlikely with the use of a reputable virtual data room.
There is a growing need for businesses to communicate with business partners virtually, even beyond M&A proceedings, and to share critical documentation in a secure setting. While virtual data rooms may find their origins in a particular business function, then, they may provide valuable and secure support for a variety of activities.