Data security is indeed a hot button in the news around the world. Just the healthcare industry in the US recorded data breaches affecting more than 1 million records in 2024. It isn’t hard to imagine what happened globally. Security breaches are not only a major headache for C-suite leaders but they jeopardize the wellbeing of customers. The real question is, how can businesses minimize the chances of data threats? One viable and globally used solution is virtual data room software. It is one of the platforms built on the zero-trust principle and helps businesses minimize the chances of breaches by 50%.
Let’s give you a detailed tour of virtual data room security and why it is beneficial for businesses around the world.
Also Read: VDRs Explained: What’s New in Secure Document Management
Virtual dataroom defined
Online or virtual data rooms are secure, fully controlled online data management solutions used in complex and data-sensitive transactions like:
- Mergers and acquisitions
- Initial public offerings
- Private equity transactions
- Fundraising
- Due diligence
- Strategic partnerships
Data rooms are not like traditional cloud storage platforms. They come with banking-grade security features like 256-bit AES encryption and granular access. High-end data room providers like Ideals, Merrill Datasite, DocSend, and Onehub VDR strictly comply with the best data practices and standards set by regional and international bodies.
Why are virtual data rooms better than free cloud storage platforms?
Free cloud storage solutions often lack the robust security necessary for confidential corporate data. Choosing reliable virtual data room providers offers significant advantages: they typically adhere to industry-grade compliance standards (e.g., FINRA), incorporate advanced security features like multi-factor authentication and single sign-on, and utilize strong 256-bit AES encryption, which surpasses the basic encryption offered by free platforms.
Key virtual data room security features explained
Here is a breakdown of strong virtual data room security features.
1. Multi-factor authorization
Multi-factor authorization means the user has to go through multiple identity confirmation steps to access the data room. The first step is using the right password and then completing the login process by using a one-time generated code sent to the user’s email, authentication app, or personal number.
Why is it beneficial? Hackers cannot access a data room even if they have the right password. They still have to complete the second identity confirmation face to complete the login process.
2. Single sign-on
Single sign-on (SSO) is a feature that allows virtual data room users to log in using one set of credentials. However, SSO technology uses a strong token for every authorization event.
3. IP-based access
IP-based access is the next step to prevent unauthorized logins. Virtual data room administration can narrow down IP addresses eligible for login purposes. IP restrictions are a great way to prevent sign-ins even if the password or MFA is compromised.
4. Strong encryption
Data encryption in virtual data rooms is stronger than that used in other cloud storage tools. Data is only encrypted in cloud tools when moved to or from the servers. Virtual data rooms ensure that the file itself is encrypted. In simple words, the data is encrypted at rest and in transit.
5. Digital watermarking
Digital watermarks are important to prevent unauthorized reuse or copying of information. Users can embed a video, image, or text in a file, which helps track who downloaded, shared, or printed the document.
6. View-only mode
View-only mode offers remarkable protection when sharing data with external parties. It prevents users from taking screenshots, downloading, editing, or printing a file. It is an important feature in VDR due diligence.
7. Document shredding
The document shredding feature allows data room admins to immediately revoke users’ document access. It also deletes the concerned file from users’ browsing history or devices.
Also Read: How Can Secure IT Support Solutions Safeguard Your Business Data?
Benefits of using virtual data rooms
Security stands as the top virtual data room benefit; here are some others.
1. Remote Collaboration
Data rooms are comprehensive business suites that simplify complex business deals in different ways. Collaboration tools in VDRs allow users to conduct real-time Q&A sessions and send messages to personal inboxes. There are discussion boards and you can integrate dataroom software with third-party communication apps.
2. Organized data management
Data rooms not only allow you to safely store data, but they also make data management highly organized. Many virtual data rooms have an auto-indexing feature which helps users access any file with ease. You can create folders and subfolders for better data organization and use built-in due diligence checklists to efficiently organize data for the due diligence process.
3. Cost-effectiveness
Digital data room software eliminates the need for physical storage spaces as well as paper and printing costs.
Summing it up
VDRs are highly secure data management platforms that provide maximum control over your sensitive data and limit external threats. It is important to choose a vendor that complies with regulatory standards set by ISO and other similar bodies. Always compare virtual data rooms based on:
- Security
- Ease of use
- Customization
- Third-party integration, and
- Virtual data room pricing
Some of the available virtual data room solutions include those from multiple vendors.
