Despite multiple data protection solutions available today, companies are still at an increased risk of breaches when sharing business documents. Thus, the average global data breach cost reached US$4.45 million in 2023, a 15% increase from the last three years. Based on these statistics, business leaders must pay more attention to data security.

In this post, we will clarify the significance of secure data sharing and tell you how virtual data rooms can help.

What is meant by secure data sharing?

Secure data sharing means exchanging sensitive information in a way that ensures protection from misuse or unauthorized access. It also includes compliance with data sharing and privacy laws such as the General Data Protection Regulation (GDPR).

Secure data sharing is critical for numerous reasons, including compliance with data security laws, business reputation protection, secure collaboration across borders, and enhanced productivity.

What is a data room?

A virtual data room (VDR) is a digital solution that offers advanced security mechanisms for protecting confidential data during storage and sharing. In fact, it’s an electronic alternative to traditional physical data storage but much more secure and feature-rich.

Typically, business teams use VDRs during mergers and acquisitions, due diligence, initial public offerings, audits, fundraising, and other transactions where protecting sensitive information is crucial for success.

As data security is becoming more crucial, the usage of virtual data room solutions is gaining momentum, owing to their robust data protection features that significantly reduce the risk of breaches.

Virtual data room features for secure data sharing

Unlike other solutions that may include only one or two security features listed below, data room services provide a complete set of functions and measures. Some of them are as follows:

Data encryptionEnd-to-end data encryption makes documents unreadable in transit and at rest, protecting them from unauthorized access or interception. Virtual data room providers typically use 256-bit AES encryption, considered the strongest.
WatermarkingWatermarks, usually displaying the recipient’s name or other identifying information on the document being shared, are a reliable way to track a file and determine who leaked it.
Fence viewA user can view only a specific document part by hovering over it. Fence and watermarks obscure the rest of the content, making it unreadable to prying eyes. Only some vendors offer this feature, including
Audit trailsAudit trails carefully track document access and user actions, including viewing, editing, printing, and sharing. It ensures transparency and accountability.
Granular access controlsA VDR admin grants users or user groups certain data access levels. Consequently, those with only view permissions cannot change or print shared documents.
Remote shredWith the ability to revoke user rights remotely, you retain control of the data even after the recipient has downloaded it.
Time and IP restrictionsFor an additional layer of security, a VDR admin can limit the hours during which the data room is available to a specific user and the IP address from which that user logs in.

Now you know how online data rooms protect document sharing. You can also use this feature list when making a virtual data room comparison.

What are other virtual data room benefits?

In addition to secure document sharing, an electronic data room offers many other opportunities for deal-making, distinguishing it from other solutions.

1. Data organization

Typically, file-sharing platforms only allow basic folder organization, but more advanced capabilities are needed for managing large amounts of data.

A virtual data room automatically indexes folders and files according to the specified parameters, no matter how much data you have. As a result, you get an organized and easy-to-navigate document tree, streamlining data management for your team and other parties.

2. AI-powered tools

The software intuitively adapts to your specific needs thanks to AI features. Specifically, it optimized workflows with full-text search, duplicate request elimination, automatic indexing, and auto-redaction.

All these tools help you gain confidence in M&A, due diligence, and any other transactions where data accuracy is critical.

3. Compliance with international regulations

International transactions require compliance with international regulations such as GDPR, CCPA, and HIPAA. Ignoring them may lead to expensive fines, inadequate cybersecurity, and reputational damage.

Since data rooms are designed with privacy as a priority, they provide companies with comprehensive compliance. Therefore, along with a feature-rich solution for data protection and management, you also get a way to comply with international data protection regulations.

Final thoughts

A secure virtual data room can greatly simplify routine workflows and complex transactions. You can work more quickly and efficiently without worrying about the security of each exchanged file. To minimize risks, select the best virtual data room using the list of functions from our post and confidently exchange documents.



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